Onesource Specialty Pharma Limited (ONESOURCE) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to OneSource Specialty Pharma Limited Q1-F527 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Abhishek. Thank you and over to you, Abhishek.

Thank you, Renju, and thank you all for joining us today for the earnings conference call of OneSource Speciality Pharma Ltd. for Q1FI27. We are pleased to have with us Neeraj, CEO and MD, and Anurag, CFO of the company, who will walk you through the key business and financial highlights of the quarter. I trust you have had the portion to review our results release and the investor presentation, both of which are available on our website as well as our stock exchange website. The transcript for this call will be posted on the company's website within the next week. Please note that today's discussion may contain a forward-looking statement, which should be viewed in context to the risk inherent in our business. Should you have any further questions after this call, our investor relations team will be happy to assist you. I now hand over the call to Neeraj for his opening remark.

Thank you, Abhishek, and a very warm welcome to everyone joining us today on this Saturday morning. I really appreciate your time. And happy to share the Q1 results with you. So the quarter has been, you know, fairly strong for us. Revenues are at 4490 million Indian rupees and have grown 37% year on year. And these are, yes, driven by the Samaglutech commercial launch, new MSA contract, and also new customer wins across our various businesses. EBITDA has also come in at INR 1233 million, which has been up significantly, 39% year-on-year, as well as sequentially 34% versus last quarter, and which has been in line when we have said last time that we will be showing a sequential quarter-on-quarter growth. The quarter also marks really a meaningful step up in our SEMA commercialization in Canada, which, as you all know, is the largest off-pattern market available today in the world. Currently, all three approvals which are there in the market are with us, and in fact, two of our partners who you know have already launched in the market. Even in India, which is the other significant market open available, many of our customers launched on day one. And as of June 26, more than 40% of the generic pens market sold in India are manufactured at our site. In fact, I also want to say that, you know, despite the temporary disruption in supplies, which has been announced by Dr. Redis, Our available capacities are full, thanks to really our customer base which spans across markets and across companies. And this has really helped us pull the demand while the DRL supplies resume. And in fact, in the same time, as we have announced earlier, you well know, that our first phase of the 100 million capex, which we have put, investment which we have put in our capex, is now reaching fruition with our second cartridge line being set for commercialization in this quarter. This line, as you know, will double our number of sterile days available for production, and this additional capacity will not only support supplies to DRL, as and when they resume, but also to multiple countries, which are due to open in the remaining part of the year. But also, this will help expand our customer base. We have been saying we have not been able to add new customers because of the supply gap. Now, with this new supply available, we would be adding customers. In fact, the process has already begun with our first new GLP customer coming on board last quarter. Within FY27, we will have yet another line which will get installed, which will make us really one of the very few global CDMOs offering this level of capacity and having complete end-to-end capabilities, including assembly, packaging, the works in drug device combination. In fact, the strength of our complex peptide development and drug device capability was also demonstrated once again with two of our customers successfully getting the first-to-file status in the U.S. with terzipatide, which is a significant achievement for the team which has worked very hard on it. At the same time, our second key future growth pillar of biologics saw us adding yet another marquee global biotech major. Our partnership with Formicon really brings together their biosimilar development expertise and our integrated manufacturing capabilities really to expand access, which is what is really key, access to high-quality, affordable biologics for Really global patients. It also speaks very well on how India and us, specifically, are emerging as a trusted partner for the global biologics development and manufacturing. Our pipeline, I think this is what, you know, it's important for us to say, that the pipeline continues to be built with our RFP funnel today is almost 4x of what it was just over a year ago. And this spans across innovators, biosimilars, as well as animal health companies. Now, this is strongest ever and also very significant because, as you know, biologics is a long gestation business, but at the same time also very sticky. And thus, this business will be a significant contributor to our growth even beyond FY28. Also, across our base business, injectables of gelatin, we see a very strong customer engagement, and it spans across our businesses. We have had nine new launches during the quarter. We added six new logos, which is really expanding our already wide customer base. One thing which we have always been proud of, and it gets reiterated in this quarter, that our compliance track record remains exemplary. We had 12 successful inspections this quarter across regulatory inspections and customer audits, including two surprise FDA audits across two of our sites. So really, really proud of our achievement there. So, in a nutshell, I just want to say that it was a strong start to the year. The commercial momentum in our DDC business, which is supported by our new capacity coming online, and a very strong build-out in our biologics. With all this, we really remain confident and are happy to reiterate our FY28 outlook of 400 million. I really thank you once again and would be happy to take questions along with our CFO, Anurag.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchscreen telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. The first question comes on the line of Rupesh Tatiya with longevity partners. Please go.

Yeah, hi, Niraj. Thank you for the opportunity and congratulations on Good Steps. I have several questions. Let's see how many I can get in. The first question, Niraj, is on soft gelatin capsules. The capacity went from 800 million to 2.4 billion. It has been quite some time now. The business was around 550 crore kind of revenue. I thought by now it will already be 800, 900 crore and maybe 1,200 crore next year. You don't give the split, but it doesn't seem like that business has grown. So what is the issue there? And the corollary to that is the broader group companies are facing issues in ibuprofen. So is that impacting this business?

Thank you for your question. So I think we have been very clear in saying that our new capacity has come on board. Softgel is a significant business with very long legacy. We are among few companies with such deep expertise in development and manufacturing, and with the capacity we have put up, we are certainly among the top four or five companies when it comes to pharmaceuticals of gelatine capacity. Having said that, you know that this business under Stride was primarily focused on captive IP-led products, and with this new capacity which we have added, We have started offering CDMO services, and there is a significant amount of interest in this, considering some of the largest players in Europe have had various challenges, either because of acquisition or otherwise. And this interest, you know, it takes... Finite amount of time for tech transfers to happen from other companies, other sites to our site. The process is on. In fact, we see our capacity, which was added to be, you know, completely taken over the next 12 to 15 odd months. And I also want to share with you that because we have no possibility to increase capacity further in the current site, we have already initiated a process of starting a green field, and over the next quarter or so, we'll be sharing with you the update on that. But we are very confident of our soft gelatine business, and we continue to add customers. It will be a strong driver of our growth in this foreseeable FY28 guidance, but also beyond that period.

That's encouraging. And also, any updates on the margin improvement program we had for sterifiance? That also, I think we haven't discussed that for a while now.

So, in the injectable business, we had, as we had said, you know, it's a focused, we have, you know, our injectable business is very, very focused on scarcity play, whereas, you know, that, you know, we either go for products which are very, which require dedicated manufacturing, like penicillins. You know, we have one of the few FDA-approved penicillin plants anywhere in the world with an absolutely excellent compliance track record, thanks to which we have a significant share of penicillins in the U.S., and the products which are perpetually in FDA shortage list. Now, which is, you know, so it's a focused portfolio. It's not a huge portfolio. It's a focused portfolio. And also our customers there are those who really... Thank you. And as we had said earlier, in fact, this first half itself, we will be taking a shutdown on one of our trial injectable sites, basically to add this capacity. So you will see, you know, this addition will be a significant contributor to our FY28 numbers.

Thank you. Mr. Tatiya, please rejoin the queue for more questions. Next question comes from the line of Abdulkader Puranwala from ICSA Securities, and a reminder to all the participants, such as Dharan, want to ask a question.

Yeah, hi. Thank you for the opportunity. Just, you know, taking the conversation ahead from the previous participant. So you mentioned about, you know, the plant shut down on the injectable side. So did that have any impact in this quarter as well? Or that's something you plan to do in the second quarter?

So, Abdul, it will be starting this quarter. The Q2 will be the quarter in which the shutdown will be taken, and it will last, you know, between this quarter and the next quarter.

Okay, sure, understood. And, sir, if I have to just understand your sequential performance, so, you know, if I look at the US dollar terms, so your revenues were quite identical. But the margin in this quarter, I know, has improved significantly. So, you know, anything to highlight here, both on a mixed point of view as well as on your overheads, you know, if you could help us understand the numbers a little better.

Yeah, so, you know, I can, I definitely can say, Abdul, that it's basically the mix which is driving this, you know, the, as you see, there's a significant improvement in margins, which is primarily coming from higher contribution from the drug device combination business, which I already said in my opening remarks. And also, you know, traditionally, it's always the case that our base business, soft gelatines as well as injectables, is primarily H2 heavy. So the contribution from soft gel obviously starts more towards the second half of the year when the flu seasons pick up, etc. So primarily coming from that, the margin gets driven up. That's why the mix between revenue as well as margin.

Got it. Got it. And the next question is on, you know, one of your customers have been talked about, you know, shutting down their API manufacturing, and they've been talking about some kind of a delay in terms of the market reentry. So, you know, I understand we would have many customers to cater to, but, you know, are you assessing some kind of a temporary disruption in the near term because of, you know, that customer, you know, pulling out for a temporary field?

So, I think, Abdul, as you rightly mentioned, I alluded to it also in my opening remarks, that the benefit of having a very diverse customer base, you know, we have more customers in Canada, we have customers all across, you know, we have customers with commercial launches, we have customers with MSAs. So thanks to all these, we are able to actually pull demand into this quarter, therefore, you know, which is what the timeline which Dr. Reddy's have shared publicly, and therefore, thanks to that, you know, we have had, we don't anticipate any impact on that, on our supplies. As I said, we don't have any reasons to, you know, to not believe what Dr. Reddy has said in terms of resumption. And therefore, for us, we are very, you know... We are very clear that we have enough capacities. All our capacities right now are full, thanks to multiple customers, and at the same time, you know that we are adding new capacities starting this quarter itself, and as and when Dr. Reddy's resume, our capacities will be sufficient to meet their demand as well as demand for other customers.

Okay, okay. So when we talk about, you know, our capacity addition and, you know, customer demand, so just, you know, directionally, if I have to understand, you know, what is the kind of order book visibility do you have today? I know we are reaffirming our FY28 guidance, but, you know, achieving that 400 million kind of revenue, do we have, you know, that kind of an order book visibility today?

So, I can tell you, Abdul, the short answer to your question is yes. The little bit longer answer is that, you know, we have got multiple pillars of that business, right? So, yes, indeed, you know, drug device combination is going to be one of very important contributors. And there, as you know, that apart from the customers who already are there, and we, you know, in Canada, for example, three on three, even if, you know, Dr. Eddie has a temporary disruption, still three on three approvals in Canada are with us. You know, India, you know, we are today almost 40% of the market, you know, our generic brands we are supplying. You know, multiple new markets opening up in the next, you know, six, eight, nine months, and our customers being present across all those markets. So, you know, keeping all those in mind, we, you know, the drug device combination business has a very significant traction, and that order book is very clear. When I come to our other key pillar, which I have already mentioned, our biologics business, very significant traction. We have already announced new contracts, new customers coming on board. We have a very strong funnel there, which is going to be converting over the next coming quarters. Our base business, as I mentioned to you, soft gelatine, new customers getting added, the capacity available getting filled, the injectables, which I... Just mentioned to you while we did. Entirely going to be available, the new capacity and the new capability available for the full year FY28. So, each of our business offerings is going to be contributing to our FY28 guidance, what we have given.

Got it, sir. Thank you, and all the best.

Thank you.

Thank you. A reminder to all the participants that you may have a star and want to ask questions. Next question comes from the line of Giddish Bakru. I'll be made. Please go back.

Thanks. Neeraj, just trying to assess line two utilization. I mean, can the customer from line one be added to line two? And I mean, in case, let's say, Equitex in this case requires more capacities. I mean, who takes that call? Is it the customer or you can shift given the eye that says in line two?

Yeah, thank you, Girish, for the question. So, the answer to your question is straight, that the lines, what we have added, even when we had started this program of adding capacity, the idea was all lines should be able to cater to all our customers, and that is exactly how we have planned. And the capacities are fungible across customers, across products. So, based upon... All the work with the teams have done, both our teams and our customer teams, we will be, you know, moving existing customers on the new line as well. In fact, customers will be serviced from both the lines. And as we have said, we, you know, we are working very closely with the customers to actually increase the batch sizes as well from mostly 200 liters to 500 liters, which would, you know, which would be of immense benefit. to our customers as well as for us to be able to bring a significant increase in the output from the same trial days. So, yes, all our, in fact, one line is coming in online this quarter, then another line will also be ready within this current financial year. So all these customers would be able to use.

Understood. And this batch size variation, let's say, does it need to be resubmitted to authorities for approval, or can this be done without any paperwork?

Yeah, so our understanding, Aneesh, along with our customers, is that it should be possible for most geographies. It will depend market to market, but in most geographies, it should be possible to... We've increased the batch size in a pretty good way.

And can you share, I mean, how many CSAs are right now on line one and how many you anticipate on line two at the end of the year?

I think that may not be, you know, usually relevant metric for you. I think what you need to understand is that the customers who we have, you know, are fairly, as I mentioned, you know, three or three in Canada. You have, Dr. Reddy has told you some other names also, which is, you know, on, which are going to be getting added. And these, and we have got, you know, customers who are also, new customers we have added from MSA point of view. So, the lines, the idea of adding capacity is, the new lines is that we should have the flexibility to be moving from one line to another, customer A to customer B, so that not only we are able to meet the demands of all the customers, but to be able to get, you know, right customers and give them the timelines which they really need to. So, therefore, I think the right metric for you is that we have sufficient customers and sufficient customer demand on both the lines which will be available for this year.

Understood. But I'm just thinking more from, let's say, given you have these extra sterile days now available, you would rather have more mix of commercial agreements, right? So is there a significant mix change we will see going forward between what is MSA versus CSA?

The lines are driven by the CSA. We have always said that the mix of the company is going to be driven by significantly more CSA. The whole idea is that the capacity has been constrained till now, right? We have been very open about it, that we have more demand than we are able to cater, but now with the new line coming in, there is significantly more capacity available, and thanks to that, we are absolutely able to onboard new customers, which also in the previous calls I have mentioned that we are not able to add new customers because of this capacity constraint. Now that we have clear visibility of the new capacity getting added, we have initiated adding new customers. We already had a new customer coming in last quarter, and that is what is... But just to, you know, in terms of the mix, it will be significantly more MSAs, I think, significantly more commercial sales than MSAs.

Very happy to hear. Thank you. Thank you so much.

Thank you.

A reminder to all the participants that we have a star and one to ask questions. Next question comes on the line of Gautami Agarwal, an individualist. Please go ahead.

Hello, sir. So, we know about your FY28 guidance of 160 million US dollars EBITDA, but can you highlight few initiatives you are taking for a longer term, which is beyond FY28? So, if we model 5529-30 for one source, do we think of growth trajectory longer term on 28 basis remain intact or otherwise? Can you give some clarity on that bit?

Yeah, thank you for asking. One clear answer for you is that yes, our EBITDA trajectory will continue to go upward. Beyond FY28, and this is going to be, you know, dependent on all our modalities, which all are service offerings. I already mentioned today that, you know, our biologics business, which is, you know, a great contributor to going to be on this growth, Simply because while our RFPs have seen significant growth over this last 12-15 months, Biologics takes time to establish, but it sticks on much longer. And the kind of customers we are adding across the segments, whether it is animal health, biosimilars, innovators, This is going to be a very, you know, long legs of our business because many of these customers, the commercial revenues will start coming in FY29 and onwards. So, right now, over the next two years, most of these will be the development, MSA revenues, and then getting converted beyond. And thanks to the visibility which we have on our customers, we are also going to be taking some of the capacity expansion because we see our current biologic capacity will require expansion. So we are going to be expanding both mammalian as well as microbial capacity. So this will be a very strong driver of our... Sobs and team business, which we just spoke about, that, you know, with the capacities getting filled, Driving growth. For us, the new capabilities being added in injectable business, you know, those will be significantly beyond FY28 for us. And then we should, you know, we should certainly not forget that the drug device business has got also very long lag. The reason we are adding all these capacities is because right now, up to FY28 guidance, we are only dependent on the emerging markets, apart from Canada, emerging markets volumes. However, from 29, 30 onwards, you know, Europe opens up, and then, of course, U.S. opens up with all our FTF customers. So, again, reiterating all the businesses, the drug device combination, biologics, as well as the soft gel and injectables, will be driving our business beyond FY28.

Okay. Okay. Thank you. That perfectly answered my question. Thank you.

Thank you.

Thank you. Next question comes from the line of Pranav Chawla with GM AMC. Please go ahead.

Congratulations, sir, for the good set of results. I just want to understand on the biology, I've explicitly announced a couple of contracts. Can you give some color on those contracts? When will they begin to contribute? And how large can these contracts become for us? And do you plan to add any dedicated capacity for these?

Yeah, Pranav, I think your voice was breaking, but I understood the questions. So, you see, as we have been saying, right, we are really focused on expanding the biologics business, and that's what the new wins are really, really helpful. We announced in the last quarter that one of our pillars, which is the animal health business, we were able to get additional contract. But when we are, you know, in this quarter, another pillar of our business, which is biosimilars, we added a very, very, a very important, large global layer for Micon as a customer. And last year, we had said, you know, we had another European biotech company, which was a customer. So these are all going to be staying with us for long term. The reason they are coming to us is simply because with the change in biosimilar guidelines, as you know, in both U.S. and in Europe, there is a requirement of agile partners of manufacturing who are quick to help companies reach the market and remain competitive over a very long time. And that is what, you know, we in one source of. So, these companies have got a very strong pipeline, and partnering with them, you know, will give us access, is giving us access to that pipeline, and, you know, we see them. We are significant contributors in our growth journey, as I said, beyond FY28, because while right now we will do the MSAs for them, but the commercialization for these companies will be FY29 and beyond. And to your question on the capacity, as I mentioned, yes, based upon the visibility, pipeline visibility we have today, we do see the need to. to go beyond our existing capacity in both mammalian and microbial. And as and when, you know, we have, you know, we have recently, our process is completing the... In the drug device combination, so therefore we would, you know, not shy away from adding capacity as and when it is required to be able to service not only the demand of these existing customers, but also the customers who are in the pipeline.

So, and one last thing from my end. So, within the biologic... Within Biologics, where do you stand in the value chain for a customer? Do we also do R&D or we are primary a CMO partner? Just trying to get some color on your Biologics business.

Yeah, thank you. Sure. So we are, you know, our value proposition to our customers is that we are very among very few completely integrated drug substance and drug product player in Biologics. We actually can take right from a gene to the final product which the patient uses. So we provide entire value chain from scaling up to the drug substance and once you scale up to the drug substance to be able to fill it, pill finish in the same site and to be able to pack it, assemble it. In an auto-injector or in a pen injector and give the final pack which the patient opens at home. So the full end-to-end value chain is our proposition. We have a very strong, significant R&D team, development team, which is able to offer services across the board. So that's the value we offer to our customers.

And one last question, if I may be able to squeeze in. So from what we understand, a lot of domestic players are also trying to get into the CDMO piece for biologics. Obviously, our backward integration or being able to be part of the whole supply chain does help. Do you see this as a material risk going forward for our biologics offering?

See, I can tell you, there is a significant increase in demand for CDMO services globally, especially in biologics. Today, biologics and drug device combination are two of the fastest growing segments in CDMO globally. Thanks to this demand, you know, more than 50% of all drug discovery today is biologics. With all the change in guidelines, biosimilar access is just going to get a huge boost. With all this demand coming in, India today has got a very, very insignificant share of this. So, with the demand coming in, with the challenge, you know, the need to push out of China, all this put together means that... The share which will come to India will be sufficient, you know, there will be enough demand for all the new capacity coming in. Remember, the capacity which is available in India is still a very small fraction of what is available in countries like South Korea, for example. So I see this as an opportunity for companies coming to India, and especially to OneSource, because we are among... A very, very small group of CDMOs offering integrated drug substance and drug product in the same site.

But thank you so much, sir. That is all for me.

Thank you. Next question comes from the line of Hrithika Agarwal with Valley Quest. Please go ahead.

Hi, sir. Thank you for taking my question. First question is, what we understood is you're expanding capacity in almost all of these segments, which is DDC, injectables, soft gel, and biologics, maybe going ahead. Could you help us understand what is the capacity utilization currently for each of these segments?

So, Ritika, you know, as we mentioned, the reason for our investing significant amount in adding capacity and drug device combination was basically because we, you know, we didn't have capacity to service the demand we have. So you can imagine, you know, the utilization of all our current capacity there is complete. And similar function, I can tell you, for injectables, because the reason we are adding so much The demand today is higher than the capacity. Soft gelatine, the reason we decided to add capacity, because till now, under Strides, the entire business was captive. It was in-house development meant for sales by Strides front end. But now, as it comes to one source, we are able to really offer this expertise both in development and in manufacturing to a very wide group. Which is what the demand is. But at the same time, there we need to keep capacity to service new customers. As a CDMO, please understand, we have to have capacity first. And then add customers, because you can't, you know, we can't start building capacity when we have the customers, because that's the whole model of CDMOs, that we build capacity, build capability, and then go and serve. So, it's going to be a combination of. Distinct customers.

Got it, sir. So, we should understand DDC and injectables are running probably at the peak capacity, while soft gelatin, we are adding capacity to serve the CDMO demand. But apart from that of the current 2 billion kind of capacity, what should be our current capacity utilization for soft gel?

Can you just, on soft gel, your question is that what kind of capacity utilization?

Yes, yes, on the current capacity.

Remember that, as I said, right, we increase the capacity to basically cater to CDMO customers. And CDMO customers basically are the ones who would do the tech transfer from their existing location site. And as we speak, right now, that's the process which is underway, where customers are doing the tech transfer. And at the same time, so as I mentioned, we will, you know, over the next two years or so, completing the capacity utilization of this site. And beyond that, we would need a greenfield site to be added. So that's what... Even on our, you know, drug device combination, what we have added while our capacities on cartridge filling are complete. Remember, we also have pre-filled syringes capability capacity, which still is, you know, most of it is available as we add new customers in that specific area. So, both, some capacity is fully utilized, a lot of capacity still available. For us to be able to add new customers and to add to our growth to F528.

Last question, what is the kind of state tax that we are looking for this year and the next year, including all the capacity expansions that we are talking about?

So, we already said, right, that roughly, last year we mentioned we had taken about 100 million U.S. CapEx to be invested across sites, most of it coming to drug device combination. As we sit today, almost 80% of that CapEx has been committed. So, that's where, you know, we are looking at. As and when we do the capacity expansion in biologics, we will see what additional capex will be required, but it will be certainly significantly lower than what we have invested in or what we are investing in drug device combination.

For this year, no significant CAPEX is what we are looking at. What would be the CAPEX number, which is balanced 20% of the $100 million and anything additional apart from that?

So, as of now, this is what we have, you know, clear visibility on. As I mentioned, as and when we expand our biologics, we would be needing, you know, we would be needing beyond this number, but it will be a significantly lower amount than what we have invested in DTC.

Thank you. Ms. Agarwal, please return to Q for more questions. Next question comes from the line of Anish Jubalia with Girik Capital. Please go.

Hi, sir. Good morning, and thank you for the opportunity. So, my first question is, if you can give some comments on how our customers are seeing the response for the generic versions of the waste loss products that have been, you know, like, introduced in our key markets like Canada and India. That would be helpful because they have been recently launched, so just to know how the response has been.

We have mentioned earlier in previous calls as well. Thank you. I'm currently outpacing It's to provide access to the latent demand which has been there. So, you know, if you see all the markets, you know, India, for example, which is a completely out-of-pocket market, you see how within a year, you know, we were at less. 2,000 pens in a month, going up to now 150,000, 160,000 pens. So all this, and this is, you know, you see... Canada is very early, you have to say, but I think there is a clear tragedy because the demand of the patient number is going up, and the availability as well as the price delta versus the brand will all drive significant demand. And that's what our customers are showing. All our customers have, you know, their forecasts remain as robust as.

Okay, sir. Sir, am I audible? That's great to hear. So, my second question is, basically, sir, we have one line coming up in this quarter. So, are there any risks that we have to monitor in terms of scaling up of those lines? If you can just speak a little bit about are there any challenges or, you know, like how they will be scaling up over the next few quarters? And also, if you can comment, like, in this year, we are only looking at one line or, you know, all the four lines will be in place, which we are targeting. Understood.

Yeah, see, as I mentioned, till now we have been really struggling to meet the demand because of one line was, you know, heavily overbooked. And the reason for us to add new line, not new line, but new lines. You know, we have a very clear visibility on the demand. You know, so the current, the new line which is coming on board, you know, we are absolutely sure of getting that capacity filled. And the third line will also be ready. The current financial year. In fact, you know that by three lines will be available fully for FY28. But later in the FY28, we are going to be having a fourth line as well. You know, because as I said, not only we are bothered about filling all the demand over the next two years, but beyond with a lot of new markets opening up from 28, 29 onwards. In other words, we will have sufficient capacity to cover all our customers. Who you know are literally the who's who of the global generic market. We will be able to service all the demand.

Thank you for your time. I'm wishing you all the very best to achieve your ride.

Thank you.

Thank you. Next question comes from the line of Malikwaria with 361 Capital.

Yeah, hi, sir. I hope I'm audible. Thank you for the opportunity. So my question is, you secured your first Oncology Softgel NDA with a top 10 US generic. So has the customer launched the product? And if yes, how should we think about the revenue ramp up as I think there's only one supplier other than you?

Thank you, Malik. Yes, indeed, you know, the product which is our first oncology product going into the market, it is expected, the customer is expected to launch it in the current quarter. What is really giving us, as I said, the first ever oncology, unique, because it's a brand, it's an NDA, and not an NDA, and there is only one other supplier, as you mentioned, so it gives that the capability, basically to showcase the capability of one source in this specialized oral technology. In terms of revenue, I can only say that it's a small market, so we don't really see a very significant contribution to the revenue in near term.

Okay, thank you, sir. Thank you. Next question comes from the line of Mitin Agarwal with Dan Capital. Please go ahead.

Thanks for the question. Some of these things have been asked earlier. I've been trying to get a little more color on this. So on the line one, how would you assess, like, for example, what we've done in Q1 in line one, have we achieved because the line is running to capacity?

But from an EBITDA perspective, is it the optimal contribution from

the sterile date which line one has that we've achieved in Q1?

Yeah, Nathan, thanks. See, as we have said, right, that we look at one line at about roughly 225 odd days, sterile days available, and based upon the per day realization for us, I would say that quarter one we had, you know, reached fairly the full contribution which is there per line. And that's how, you know, that covers, you know, the last quarter. And once the new line gets fully functional from next quarter onwards, you know, we will start seeing the same contribution of sterile days. As you know, each line doubles us trial days. So from 225, on a full year basis, the next line will provide us another 225, and when the third comes in, another 225. So let's say for FI28, we'll have 475 trial days available to us.

So, which I get, my question here is that, you know, from the delta that we're looking at, right, from the two lines coming through, you know, there still is a lot of gap between what we've delivered in Q1 to what we expect to achieve in F28 with the two sterile days tripling, right? So, my only question was, have we achieved the optimal EBITDA contribution from line one in Q1?

So, I would just say, from a revenue perspective, yes, but remember also that, you know, we have been saying that with all this new capacity coming in, the OPEX has to be up-fronted. So, while the new line revenue will be coming in as the lines get installed, but the OPEX is there today already. So, as new lines will come in, the OPEX leverage will play in more. So, the real, you know, Simple contribution from those lines will come when all the lines are in place because very limited incremental OPEX. Because most of the OPEX we have upfronted on these lines already.

Okay, so the revenue is largely sort of reflective of the peak utilization of line one. The profitability is not because there's a lot of costs from subsequent phases already upfronted in the expenses.

Indeed, absolutely.

Okay, thank you so much.

Thank you. Next question comes on the line of Gaurav Shukla with Finvesta. Please go ahead.

I am Aadigar sir.

Yes, indeed you are.

Sir, congratulations for both set of numbers, and thank you for giving me the opportunity.

Sir, my question is, How we see FI-27 and FI-28 in this scenario? What is the effect of geopoliticalism on this? And the latest announcement of President of America wrote a tariff on Genwix after two years. How will you see some comments?

Sure. See, the geopolitics is in a flux, no doubt about that, especially what is happening in the Middle East is in nobody's interest. So for us also, you know, typically it has impacted in terms of the freight challenges, you know, with Suez and Nance Strait, Hormuz being closed. You know, all the shipments from India to Europe and to U.S. have to take a much longer route across the Cape of Good Hope, which actually really increases the shipment time. But not only that, it also, you know, is leading to a constraint in the supply of containers, you know, because the turnaround is reduced. So that is certainly not in anybody's interest. It also increases the cost of rate, you know, but the benefit, let's say, or how would I say, as a CDMO, our impact is fairly muted there simply because, you know, we have all XWorks contracts. So any additional time and cost is actually picked up by our customers. But it is not in anybody's interest because we really hope that things calm down quickly. On the impact of, you know, the announcement from U.S. administration a couple of days back, you know, as we have all seen, right, that the number of changes and backdowns done. By this administration, you know, we see exactly the same story to pan out. You know, it's too early to say, but we don't see this to be causing any.

Thank you. Mr. Shukla, please reach out to the queue for more questions. Next question comes on the line of Part Soda with Trinita Asset Managers. Please go back.

So, first of all, good morning and thank you for the opportunity.

Almost my questions are covered, but I need just more clarity on the FY27. What are the key milestone investors should monitor over the remaining three quarters of FY27 to assess whether the company is on track to achieve FY28 objectives?

I think as we have said, right now we have got fairly strong visibility on our order book and on our capacity utilization. So, therefore, the first thing which we have been tracking is the addition of the capacity, which, as I mentioned, We will be adding new capacity starting this quarter, and our next... Capacity expansion will happen towards the end of the year, as again we have mentioned, which is a key thing for you to see. You will also start seeing once the impact of new line getting added and the revenues ramping up accordingly in the second half, as also we have mentioned. Other than that, I mean, that's the operating leverage. And of course, you will see this as a sequential quarter-on-quarter improvement in our revenue.

Thank you so much, and all the best. Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. And now I'm the conference over to the management for closing comments.

Yeah, thank you. Thank you for all the questions. Thank you for the interest. And thank you once again for spending your Saturday morning with us. Thank you very much.

Thank you. On behalf of one source speciality, Pharma Limited, that concludes this conference. Thank you for joining us. You may now disconnect your line.