Sai Life Sciences Limited (SAILIFE) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to SCI Life Sciences Limited Q4 FY26 Earnings Conference Call. As a reminder, all participants 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 then zero on a touch-tone phone.

Please note that this conference is being recorded.

I now hand the conference over to Mr. Diwakar Pingli from E&Y. Thank you, and over to you, sir.

Thank you, Yusuf. Good evening to all the participants in this call, and good morning if you are logging in from the rest. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements, may more known groups, uncertainties, and other factors. It must be written in connection with our business groups. That could cause future result performance or achievement to differ significantly from what is expected or implied by the power of efficiency. Please note, we have made the results and the presentation in the same way available on the company's website. In case you have not received the same, you can write to us and we'll be happy to send the same note to you. To take us through the results and answer your questions today, we have the top management of high licenses, represented by Krishna Kanamari.

Thank you. Good evening, and thank you all for joining us today. We are pleased to report that FI Life Sciences has delivered a strong performance in FY26, with overall revenue growth of 29%, EBITDA growth of 56%, and PAC growth of 109%. Both our CRO and CDMO segments registered healthy growth, despite operating in our environment characters with geoport uncertainty, supply chain disruptions, evolving regulatory expectations. This performance underscores the strength of our integrated CRDM platform and our increasing relevance to global innovator companies. A key highlight of our growth continues to be increasing contribution from large pharma in FY26. The revenue contribution from our 19 pharma clients went up from 28% FY22 to 49% FY26. Building a full level. We are increasingly seeing a trend of large pharma moving to consolidate the full life cycle from early development to commercial manufacturing. Similar to trends witnessed in China, our CDMO strategy remains firmly anchored on deepening engagement with large pharma clients. As you are aware, Sire Life Science today works with 19 of the top 25 global pharma companies. We believe that this foundation is a strong platform to build our growth on. We continue to build a strong pipeline of commercial molecules with a tally standing at 34 commercial molecules, 11 in Phase 3 pre-historation, but 155 in the earliest stages of development. Importantly, we're also seeing strong traction on a dedicated development R&D team model with Large Karma. An initiative we started skating last year, we believe this model will fundamentally shape how we partner with Large Karma towards larger, more customized, and longer duration programs. On the CRO side, our integrated discovery strategy continues to gain momentum, particularly with biotech customers. Our CRO revenue mix between pharma and biotech stands at 48% to 52%. We're also seeing increased cross-selling opportunities with our CDMO large pharma customers, reinforcing the strength of our integrated model. A key differentiator for us is our focus on automation and scale in DMPK and biology, enabling us to handle large integrated programs for our clients. At the same time, we are investing in next-generation technologies, particularly in ADCs, where we are seeing significant interest and program inflow from large-forma. Let me touch upon a few broader industry trends shaping our strategy. First, evolving a regulatory landscape, particularly the FDA's push towards new approach methodologies, is expected to reshape discovery workflows over the next several years. While AML testing will continue to remain relevant for complex toxicology and global regulatory environments, We expect increasing demand for biology-heavy discovery services, including in-metro biology, human cell-based assays, and organites. We believe Cybe is well-positioned to capitalize on this shift, and we are continuing to invest in these areas. Second, biotech funding has shown encouraging signs of recovery, with year-to-date funding up 52% year-over-year, and April 2013 funding reached $10.6 billion, up over 4% year-over-year. IPO activity has also strengthened significantly. While funding remains somewhat constant in larger, late-stage biotech companies, this trend still supports overall CRDMO demand, particularly through increased outsourcing and program progression. Third, we are closely monitoring the evolving global trade environment, including potential tariff-related developments. Increasingly, we are seeing large-scale increasingly structured deals in ways that mitigate tariff exposure. We also remain mindful of near-term challenges. Ongoing GAPL tensions, including medley situation, are impacting input costs and disrupting logistics of the supply chains. Despite this, our customer conversation and disability gives us confidence as we enter FY27. We continue to believe that our growth will be led by pharma, driven by increasing outsourcing intensity, movement of biotech assets into pharma pipelines, and strategic long-term partnerships. As we scale, a few priorities remain central to our approach. Science-led capacity expansion, rather than POV reactor-led growth. Continued product and pipeline diversification, especially in CDMO, given the inherent variability in product life cycles. Careful management of customer concentration. In FY26, top 10 customers contributed 54%, top 537%, and top 1.12% of revenues. Our top customer engagement spans multiple services, reducing cost-based risk at any service level. Given the momentum we have seen through FY26 and the nature of customer discussions underway, we are entering an increasing investment cycle to support future growth opportunities. Our current estimate for investment in FY27 is in the range of 1,100 to 1,300 crores. Importantly, these investments are being undertaken either with clear demand visibility or through active strategic conversation with the large-farm of customers. Finally, on the digital AI transformation, we are investing capabilities that improve productivity, speed, and problems of our organization. We believe this will be an important lever in enhancing competitiveness and narrowing productive gaps across the industry. At the same time, adoption of AI within the CI demo sector must be carefully balanced customer confidentiality and data security considerations. for the next 18, 24 months. We expect AI and digital skills to become increasingly embedded in not only enabling functions, but also across the core scientific and development workflows. As we enter FY27, long-term opening of the CMO sector remains very robust and our integrated model with strong common relationships, technology investment position as well for sustained growth. We would like to reiterate our stated aspects of maintaining revenue growth of 15-20% while maintaining EBITDA margins in the 28-30% range over a three-year period. Just a pointer. Given some more new capacities and investment progressively coming on stream during the year, we expect the second half of FY27 to be stronger than the first half. With that, I will now hand over to CEO Poshiva to talk through the financial performance.

Thank you, Krishna. Let me begin by reiterating that Crystal 26 has been a year of strong financial performance and discipline execution. We delivered a revenue growth of 29 percent, an EBITDA growth of 56 percent, and a PATH growth of over 100 percent. This growth was supported by balanced contributions from both the CRO and the CDMO businesses, alongside continued operational efficiency. The CRO and the CDMO business for the year demonstrated a healthy growth rate. 24% for CRO, and 33% for the CDMO business. Our revenue contribution from the top 19 out of the 25 global large pharma companies increased to 49% in FY26, as compared to 28% in FY22, demonstrating the steady deepening of our strategic relationships. Our revenue mix continued to evolve in line with strategies, with increasing contribution from pharma clients across both sectors. While the overall revenue growth in Fiscal 26 was 29%, as compared to 16% in FY25, the year Fiscal 26 witnessed a relatively even distribution of revenues, with the split between H1 and H2 being 48% and 52% respectively, as compared to 40% and 60% in Fiscal 25. In addition, Q4 at fiscal 25 was secure at 34% of the total revenues. As we've often stated, the CRGMO sector is inherently characterized by a degree of quarterly lumpiness, particularly as projects transition across different stages. While this will lead to periodic fluctuations in revenue and margin, as Krishna mentioned, the long-term opportunity for the CRGMO sector remains robust, and our integrated model with strong pharma relationships and technology investments position us well for sustained growth. We remain confident in our ability to sustain our long-term revenue growth size of 15-20% and the EBITDA range of 28-30%. As we enter fiscal 27, a key focus area for us is to invest in proactive capacity creation aligned with customer demand. In fiscal 26, we incurred a CAPEX of 633 crores and made a budgeted spend of 700 crores. For fiscal 27, we expect CAPEX in the range of 1,100 to 1,300 crores. Split between CDMO at 65% and CRO at 35%. We expect to fund the CAPEX through a mix of internal accruals and debts. Our CAPEX allocation will be split across capacity expansion, capability, and technology. 75% of the CAPEX will go towards capacity expansion and the balance towards capability and AI and technology. At the same time, while we have put these numbers of 1,100 to 1,300 crores, we will continue to calibrate the face and the facing of these investments in line with the evolving business environment and closely align the spend with our customers' strategic priorities and demand visibility. Importantly, our approach to perfect remains fine-stead, as Krishna mentioned, rather than capacity-heavy, ensuring flexibility and higher long-term returns. During the year, we navigated external headwinds, including increases in input costs and higher logistics costs, and shipment delays arising from the evolving geopolitical environment, which is still continuing. At this point, we do expect some short-term impact on our cost structure. We have approached our customers for appropriate cost provisions in certain areas. However, we believe that the recovery of these increases may not always be consequent with the incurrence of costs. We continue to manage these challenges through operational efficiency, strategic sourcing initiatives, discipline execution, and ongoing engagement with our customers. In closing, I want to reiterate that we remain committed to discipline growth, student capital allocation, and margin resilience. Our balance sheet remains well positioned to support the next stage of expansion, both in terms of debt and in terms of internal accruals that we are projecting. Near-term volatility can persist or medium-to-long-term outlook remains strong. With this, we will be happy to take your questions.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen will wait for a moment while the question queue assembles. First question is from the line of Bineh Singh from Morgan Stanley. Please go ahead.

Hi, team. Thanks for the opportunity. My first question will be on the CAPEX announcement that you shared. We've seen a very sharp increase in CAPEX, you know, from 200 crores or so that we did two years back to now taking it up to 1,300 crores. Could you talk a little bit about what is giving us the confidence for this level of jump in CAPEX? And is there any one-off project that you are doing next year which is leading to this, or this sort of becomes our new level of CAPEX? Could you share thoughts on these points?

So, Binay, if you look at what we indicated at CAPEX a couple of years back, it was based on what we thought the demand was. But if you look at the last 18 months or so, we've been getting more involved with customers across the value chain. And as we work with them closely, they're giving a better sense of what they would like us to look like and what volume they could potentially come in our direction on the discovery side. And CDMO side, as we are getting into more integrated collaborations, really being development partners, we're having greater visibility in terms of pipelines. They're waiting for RFPs to come through. So I think... Given what customers are telling us, where we have to go in terms of technology, in terms of better visibility of what they have in the pipeline and what potentially can come our way, and what they want us to see in terms of other technologies coming in is building next generation technologies, ADC development, or changes in peptide development in terms of high throughput screening and biology to do more integrated programs. And in terms of the level of data exchange they need between us and them, and also just the visibility in terms of not only what they are giving us for development and pipeline, we're seeing a lot more of the programs than we have in the past. And that will give us a better sense of what likely will translate probably 12, 15 months down the road to commercial manufacturing. So it's just better visibility and better engagement of the customers across both diversity of And so there's a lot more new things we're getting from customers as we engage more and more with them. What is extremely clear is companies want to develop strategic partners in India at this point, and they want to see who will be relevant in the next five years. And they want to see partners who can understand, work with them, and build along with them. And that's how we're playing this game at this point. So we have a lot of conviction behind these investments.

Thanks for that.

Sorry to interrupt, Bideh. You are not audible.

Hi, sorry. Sorry for that. You know, one thing I noticed in your presentation, you added one more large pharma customer, right? Earlier, you were working with 18 of 25. Now, it is 19. And if I hear you correctly, in the opening remarks, you said that you now have a dedicated research, sort of a tie-up for large pharma. Because earlier we had it.

Yeah, that's not what we do. No, no, no. That's not what we're talking. That's not what we're talking about. What we're talking about, what pharma has done. So if you look at in the past, pharma never gave us late phase opportunities for outsourcing and process development. They generally used to give us lateral tech transfers. So over the last couple of years, several large pharma have started getting FTA agreements for late stage and mid stage development. This is not a dedicated facility or anything of that kind. It's just that these are dedicated FTEs who are running for large pharma between our global side, both in India and Manchester, which has greater visibility into doing development. So they're mid and late stage assets. And that's what we mean by that. As opposed to dedicated centers, they're dedicated FTE teams working on development. I hope that clarifies that.

Yeah, that's very clear. And lastly, could you comment a little bit about where the capacity will go with this KPEX? And that's it from my side. Thanks.

I'll let Shiva talk about the capacity where it's going.

So, I think, the capacity that we are adding today, I think our current capacities will take us to around the 1150KL capacity that we had mentioned as far as the capacity expansion is concerned. What we are doing, a lot of this is actually going towards, one, our investments in discovery. Second, there is investments in development phase that is kind of adding to our cost numbers. If you remember last year, we had mentioned to you that we had started the plan for going from 700KL to 1150KL, and we said that the FY26 CAPEX will only take into account CAPEX that will be incurred in that fiscal year, while both the plans will not get completed. The majority of the CAPEX will also fall in this year, so capacity expansion, as I mentioned earlier, All of the 1,100 to 1,300 core CapEx direction that we have provided, 75% of that will actually go and satisfy capacity requirements, 25% will be for capabilities.

Thanks. Thank you. Next question is from the line of Amir Chalkev from JM Financial. Please go ahead.

Thank you for giving me the opportunity, and congrats for the management of those numbers. So the first question I have, like the CDMO segment have delivered more than 30% growth during FY26. So what will be the outlook for 27-28? While answering that, there are two data points from the PPT. One is we have added two large pharma customers on the commercial supply side, As well as our commercial products have gone up from 30 to 34 from the last quarter. So how these two, three opportunities on the commercial side in terms of the scale as well as in what areas these commercial opportunities are. Thank you so much.

Thanks. So, I think on the CDMO side, I think what we have stated is that we stated that there are, I think even in the last conference call we had mentioned, there are three new products that have actually gone commercial, and we've added one more product since then, which makes it 34. So, some of them, you know, at least a couple of them will see production and commercial revenue starting this year. My question, Amai, you asked about how is the growth prospect? And I think, you know, we believe that the CDM, you know, as we start the fiscal year, we believe based on the visibility, we believe the growth will be strong and we are confident about a good financial year at this point in time.

Sure. And the second question I have on the margin front, we have given the guidance that we will aim to maintain margins in 28% to 30% range. But there are two headwinds for the margins. One is the RN cost inflation, which will be there next year, as well as the CAPEX, which is getting commercialized at the end of the year or the second half of the year. So how should we look at the next year particularly in terms of the margins? Thank you.

So, our stated aspirational margin is to remain around the 28th edition, and I'll tell you two reasons for it. One, with PAMA, generally, there's an open-book pricing, and from what we've seen, and we've seen this, Across the Chinese companies operating at much larger scale, the margins tend to remain between the 25-30%, which is what we've seen, and our pricing with pharma indicates that 28-30% is what is much more comfortable from a pharma pricing perspective. The second thing, I think, Will there be an operating leverage that we scale up? Yes, but there's also capacity coming in, and there's going to be some amount of inefficiency as we scale up new capacity, which would then add costs into the equation. So that is also something that we need to take care of, and that's why we're giving you an aspirational guidance of 28 to 30%. I know we've hit 30% this year, but we still want to leave you with this guidance, and this is consistent with what you stated, including last quarter.

Sure. The last question, if I can squeeze in, on the CRO side, this is the second year, I believe, where we have delivered 20% plus growth. And over these years, the large pharma contribution or the big pharma contribution have consistently gone up. So is this contribution going up? Is it incidental because the biotech funding has slowed down? Or is it also strategic in nature? And should we expect this large big pharma contract to keep driving our CRO business going ahead? Thank you, sir.

On that, I'll take this question. So I think they're actually both at play, right? One is strategic. I think large pharma is very clear that they want to build the India footprint. I think this large pharma business did not exist in India a couple of years ago. The only two, three large pharma were actively doing MedCAM in India, I would say, as close as three years back. But now every large pharma is looking at coming to India to do discovery. So this will be a structural trend for the next few years in terms of as they pick partners. But also, I think biotech is just going through a little bit of a slowdown as well on the new company formation. And we expect that to pick up in the next couple of years. So I think secular trend, you will probably see larger Pharma coming in and filling the gap for the next couple of years, but biotech will come back in the next 24 months and give us sector growth. I think from that way, the industry is in a position to kind of the short and long term as where we are right now. And we're also the early part of this big, right? People are just coming to chemistry, but eventually the whole goal right now is to be fully integrated. So I think the opportunity is significant for us because our integrated story is something we've invested in on a biology and DMPK front, which will probably give us an advantage in terms of being a preferred choice going forward.

Sure. Thank you so much. I will join you.

Thank you. Next question is from the line of Sajal Kapoor from Anti-Fragile Thinking. Please go ahead.

Yeah, hi. Thank you for giving me this opportunity. Hi, team. In emerging modalities, many outsourcing relationships begin in discovery, but don't necessarily translate into late-stage clinical or commercial manufacturing. So I'm alluding to one of your other CRDMO competitors in India, Bangalore-based company. What precisely increases the probability that Psi retains a molecule across the life cycle, and where do you still see the highest leakage points today? That's my first question.

I think there's a difference in how we have been built versus other companies. So if you look at where we have been built from day one, we've done this. So we actually were a discovery company first. But then we took a gap in terms of discovery investment and went very heavy in terms of becoming a preferred commercial partner. And so as we become a preferred commercial partner, we also now in the last few years have become a preferred development partner. So we right now are working with companies in all three areas, right? Discovery, development, and commercial. And what is happening because we're integrated. There's a technology thing, right? So essentially what happens is when you're doing discovery, people are looking at newer technologies like ADCs, first generation ADCs will be very different from next generation ADCs. And so whatever we're doing in discovery, the development teams also are doing development to kind of reflect what their new generation ADCs look like and what the technologies are. So because we are partners there as well, and we are commercial partners, it's much easier for them because we're qualified by all three departments to work with them. With other companies that have not made their transition, either they're very manufacturing-heavy or discovery-heavy, and they overlap a little bit on the discovery side, a little bit on the development side, but we're the only company that really sticks all these together, and we're approved by all three of these areas, and that's the strength, why we believe that we can retain. The majority of the molecules, but that said, some molecules definitely leak out of us, because either we don't have specific capacity, people want diversity, or they want to take the molecules in-house. But the chances of us retaining it are higher than most other players at this point. That's how I would frame it. Thank you, Krishna.

My second question is... And that explains the whole scenario very well. So thank you for that. My second question is, historically, many CRDMOs scale revenue faster than organizational capability, which eventually creates execution fragility. So, in that context, as AI increases integration across discovery, development, and manufacturing, where do you believe complexity is kind of compounding faster? Internally, or fastest internally, that is, complexity is compounding fastest internally, and what are the leading indicators you monitor before those kind of stresses show up in numbers or financially? Thank you.

That's a very broad question, but again, Unfortunately, right now, we're at a point right now that we are getting into a very interesting part, right? We're scaling capacity, we're scaling technology, and we're getting deeper relationships. So I think what gives us the advantage to understand where the gaps are, because we're very deep in relationships and not being one-offs, we get to have a much more visibility in terms of what we are doing from a performance standpoint. I think the key, I think if you ask me where the key gap will be down the road is really figuring out how AI plays a big role in terms of bridging the productivity gap vis-a-vis India and other geographies, so to speak, and getting the right talent pool who's next generation ready in terms of working in the digital space, because we believe AI is a great equalizer in terms of one. Is intellectual horsepower in terms of basically knowing what's going on everywhere, more rapid problems shooting. So I think we are putting all the tools in place so we have a much better view of how to scale up, where the gaps are, and be proactive in terms of scaling up at this point. So the idea is, there's no magic bullet here, rather than having your ears to the ground, talking to customers regularly, and this is a 24-7 business. It's about every customer, every bird, one day at a time, and that's how we are able to scale up. That's really how it works. Shiva, you want to add something to this?

Yeah, I think, so I think to add to what Krishna said, I think the one advantage that we've seen, right, working with these large pharma companies, And because you work with them closely, they actually train you, they work with you, they kind of teach you their thought processes, everything from setting up of a lab, setting up of experiments, how do you kind of train, what kind of things to look at, how do you kind of look at a problem, right? So I think that kind of gives us that ability to understand things and what we are doing to reinforce and kind of strengthen this. We are just taking this as part of our learning. We've created our own, what we call an internal sci academy that can reinforce this teaching, not just to that team that is kind of involved with this particular, with any particular program, to broad places across organizations. This is now headed by a senior head of research from a large farmer, who has now taken this full-time as an activity so that this can be a focus area for us. And that's how we kind of make sure, you know, we keep at technology and science that keeps changing every day.

And just kind of adding to that, one thing we keep talking about is that we are building a technology-led role, so we really are focused on building in the foundation, just not trying to over-index in one area, because we realize that if you over-index in one area, then you're really not building the foundation. So we are very, very clear that we want to get the foundation right here, and that's where we're spending most of our effort. Sorry, go ahead, get another question.

That's sensible, Krishna. Thank you for that. Just on that AI thing, I mean... Is it homegrown capability or is it something off the shelf that, you know, even the competitor can buy off the shelf? I mean, how do we plan to differentiate AI so that it adds to the real advantage?

Look, I think it's a question of getting the framework ready for using AI, and there are a lot of tools coming in. One is obviously one user tool is available, and you have to understand we're going to be restricted in terms of what we can use of customer data. So, how much internal data we can use is going to evolve. Right now, we have different external sources, but it's not a question of just educating AI. It's a question of... What is the long-term strategy of how you integrate across the board? It has to be a fundamental shift, cannot be I'm buying a single tool and this is what's going to work. It's not a single tool, it's a complete way of operation has to change. And right now, we don't know how it's going to evolve in terms of internal tools, what customers want from IP standpoint. It's early days, but the idea is to make ourselves digitally ready to be able to plug and play different tools as they come in. Our core processes themselves should be data-rich to give us the opportunity to evolve as the tools evolve.

Thank you. Next question is from the line of Girish Bakru from RB Med. Please go ahead.

Yeah, thanks for taking my question. Just on the question only actually on the new modalities. Krishna, possible to give a ballpark figure you are targeting for getting a contribution from new modalities by CFI 30, even their height of sub 10%?

Right now, we're not in the position to give that information yet at this point. We're not that far along to be able to give a prediction of what that will be. But generally, what happens if you really look at the trend of CIOs just to be put in perspective, right? We tend to basically follow whichever way the pharma companies are going. If you look at where pharma is going today, If it's 50% pure small molecule, then the next 30% will be peptides, olgonucleotides, and ADCs. So that's what they consider biologics. So 80% is going to be covered there. So over probably a 5 to 7 year from now, you'll see a similar mix. And purely from a, not the side perspective, but anybody who plays in these areas, you tend to follow the customers from that standpoint. If you look at the way the market is, that might flip, right? In two years, people might say, you know, that price is useless. We go someplace else. But it's very hard for us to forecast what it looks like because we are almost like the, we're almost like we're following the customer and that can switch anytime. But the important part of being a CRO in our opinion is to be a fast follower, be close enough to be able to change the trend, but not be on the bleeding edge where you're left with the debt investment. So that's kind of how we look at it.

Understood. And of course, you've highlighted four of these key ones. Just one key question there. I mean, there are a lot of low-hanging fruits, but where do you think you will potentially take a high market share? Is it more peptides or when you're doing right now fragments, you're limiting yourself to amitites and oligos? ADP side, also, you said that you're evaluating clinical conjugation. So which area do you think will be possibly a big focus area of these four? And probably easy to do also.

Very hard to say at this point. I'd love to come and give you that. I can't really give you the exact sequence how that's going to go, right? It's hard. Right now, honestly, we can't predict that at this point.

But is there an area where customers are asking you?

What's that?

No, I'm thinking a lot of the pipeline.

It's a molecule, so you never really know which one will go ahead, which one will come down. So there's going to be other things that we kind of influence, the number and the revenue. That's why it's a little difficult. To kind of give you a specific growth rate or a number at the end of a particular period.

Understood. Understood. And this last one, I mean, this is probably more like an industry-wide question. We've seen so many companies talking about these new areas, but very few investments going into biologic manufacturing. Do you have any plans for that in future?

Look, we evaluate all options. And when we're ready to take a position, we'll kind of communicate. But obviously, we're evaluating every market at this point. And obviously, we're looking at all options. And even if you look at biologics, you decide where to play. Again, we are constantly talking to customers to see where the demand is, where the gap is. And as our strategy evolves, we'll definitely inform you guys how we look at it.

Thank you so much. Thank you. Next question is from the line of Siddharth Nikandi from CWC. Please go ahead.

Hi, thanks for the opportunity. Just wanted a couple of quick clarifications. One, you know, the new technology revenue salience went down from 7% to 4%, which means that in absolute terms, also, there is likely to have been sort of a decline on a year-on-year basis. If you could explain what caused that, was there a one-off earlier, or was there any particular project that did not go through from one stage to the other, if you could give us some color on that. The second one was you mentioned about some of the CAPEX being on AI. If you could tell us what's the nature of that AI CAPEX that you are putting up, that will be helpful.

Sure. So I think on the first question, I think you mentioned this even last time when we put up this number. A lot of the work on the new modalities are not commercial from our perspective. They are in clinical pipelines. When you work on clinical pipeline, you're going to have a campaign and then you're waiting for another campaign. And so there will always be that stream. And this is the primary reason why CDMO businesses have revenue streams. And so it is primarily there, and it's not about one-off this time or one-off last year. The second question on AI, I think Krishna addresses, but I'll kind of give you the thought process that we have with respect to AI. So the way we are thinking about AI, we need to look at our productivity, efficiency, and kind of scientific output that can be improved by using AI as technology that can aid and enable a scientist who thinks faster. That's the whole purpose of this AI definition. There are a few tools that are available from the market, but we're also building things within our overall system. We are defining an AI canvas, as we speak. This is kind of to make sure that the teams can get as much assistance, automation, analytics, all pulled in one direction, in one set of information that the chemistry, the team either, the leadership team can actually use at any point in time to kind of look, analyze, and kind of present data. Thank you. With respect to the partnerships that we have with the large-forma, we are also trying to integrate with their systems and their needs in terms of what data that we will transmit and send out. So that's the broad concept of the AI.

Sure. Sir, you also mentioned about some AI CAPEX. Is there any particular CAPEX there, or did I mishear that?

Yeah, so anything that you're building or your tools that you're buying will be capable of.

Got it, so you can use software and stuff. Got it. Right, thank you. Thanks so much.

Thank you. Before we move to the next question, ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the question queue, please restrict yourselves to two questions only. Should you have a follow-up question, please rejoin the queue. Next question is from the line of Sanjay Kumar Iguan from I Thought PMS. Please go ahead.

Hi. So first question on the capex. So I think 1,300 is Yama, but next year's cash flows could be anywhere around 600, 700 crores. So what will be the debt that we are planning? And is it only for the – does this capex only include the land 50kl capacity, or we'll also start work on the greenfield? I think we have mentioned that we have acquired a land.

Sorry, your line is not very clear. Can you repeat your question, please?

So the 1,300 crores that we have earmarked for CapEx. But our cash flows will be somewhere around 600, 700 crores. So we'll have to take debt, right? So how much debt are we planning to take to fund the CapEx? And does this 1,300 crore CapEx, is it only for the 1150 KL brownfield expansion, or is it also for the greenfield that we'll be starting in the new land that we have acquired?

So the 1100K crore, the 1300 crore, I'm not going to give you the debt versus the cash flow number, because that means, you know, I'm trying to give you a projection. So without going, you know, based on where we see this number ending for fiscal 27, our debt to EBITDA ratio will be fairly healthy. That's really what I believe. And if I look at the CapEx trend itself, It will be for capacity also, including the 1150KL that we've talked about, as we mentioned, 225KL of that 450KL capex will only get done at the second half of this year. The other capex is going to be much longer duration, so most of the capex for the plant would actually happen in this year as opposed to last year. Plus, we're also adding capacity on the development side, adding capacity in terms of fume cupboards. And analytical and chemistry equipment, we are also increasing our discovery capability and biology capability, both in terms of film covers and equipment. So this will all be there. There will be slightly smaller CAPEX on the new site. That new site will probably start towards late this fiscal year and early next year, is how I see that CAPEX starting.

Okay, okay. And the second question, we've added four commercial molecules compared to the last quarter and five in the phase three pre-registration phase. Can you highlight some of the high potential ones and the corresponding therapy areas? Do any of them involve new modalities?

So, I'm not going to, you know, I think the directly areas are broad, so there are multiple, multiple things that are, there are, there is, when I say high potential, at least in my belief, there are at least three molecules that would show a good progress in this current financial year. We have started We're manufacturing and delivering or starting to deliver revenue in fiscal 2017 on at least three of the molecules that we have currently added into that pipeline. Of the four molecules, I will say three will have a pretty decent revenue growth and trajectory. The fourth one, in our opinion, will be a smaller one, but it was a fairly important capability to acquire, and hence we've done this.

Okay, just a follow-up then. I think Krishna Sir had indicated in a media interview that you might even look at acquiring new modalities or acquiring small pharma companies for the tech and for the new modalities. Anything that we are looking at?

So, we are open to options all the time. We evaluate deals as and when they get presented from, you know, from the bankers. At this time, we don't have an announcement to make, but as I said earlier, we continue to evaluate multiple deals all the time.

Got it. Thank you. Thank you. Next question is from the line of Vile Rai from Kamayakya Wealth Management. Please go ahead.

Congratulations, sir, on a great set of numbers. Sir, just one clarity on the CAPEX side, we said 25% of CAPEX is in capability, so is it predominantly for our new modalities and which is the key area that we are going to focus on?

It's not necessarily new modalities. This could be newer techniques even for small molecules. For example, a high-throughput experimentation is fairly new in terms of how things work. Or a complete automation on a DMPK biology, which kind of end-to-end kind of gives you a different ability to kind of do precision biology. And handling molecules at scale or volume at scale. Those are the things. So it is capabilities in both sides, both small molecule and, you know, some new modalities.

But this could also include the CAPEX for ADCs and peptides.

So, if you

go back to our conference calls in the last... I think we have stated that we are adding development capability on the peptide side. We probably will also add pilot scale. You know, this is coming up this year, so we started the TAPEX last year, so peptides will definitely include it. In the CapEx that we are talking about this year, we are adding some capability on the ADC side, but that's more on the discovery side. You know, we have some thoughts and we are working on the ADC on the development side. We will come back to you, you know, as soon as we are able to make a public announcement on that.

Okay. I think just one last question. Even in the CRO business, we are seeing that pharma is constantly at higher share of revenue compared to biotech companies. So do you see this increasing in the coming years and how has it been the pipeline and how has it been the development of the biotech companies?

Can you repeat your question? Sorry, you're not able to understand.

I'll take the question. I'll take the question. I think we already answered the early part of the call, right? It's just where the market dynamics are right now. I think biotech will always be a significant part of discovery. I think long-term, I think the 50-50 ratio will hold. Short-term, there might be an imbalance in terms of pharma, you know, maybe the next couple of years. But long-term, biotech still is the development engine for large pharma. So we do expect that balance to maintain 50-50 on the 50-50-ish long-term on the pharma versus biotech. It's just for the short term, you will see pharma probably drive the growth. Longer term, biotech will come back. But overall, the pie should get larger in the next couple of years. Hope that answers your question.

Thank you. Next question is from the line of Viraj Shah from PGIM. Please go ahead.

Hi, thank you for the opportunity.

I just have one question. In your presentation, you have mentioned 15-20%

revenue CAGR on a current revenue run rate of 2,200 crores with expected capex of 1,100 crores. So, fair to assume the asset turn would remain in the similar historical range as it was? So, I will see a little bit of a depth, of course, it kind of comes back, because we are doubling on our capex. That's really what we have stated. So, what we have committed, and we continue to commit this. Is that asset turn on a net basis, you know, install capacity will be 1.2 to 1.4, but that's medium-term commitment. We will see some fluctuations, but we continue to remain committed to our, you know, the steady state 1.2 to 1.4.

Look, I think the important aspect to understand is that no matter what capex you put in, it's going to take a two, three-year cycle to get back to that scale. It's not like you put it, it's going to be day one, that revenue. So I think as much as... We expect that as a long-term trend to maintain whatever we're forecasting, but obviously there'll be a two-, three-year ramp-up period to get there for any capex we put in. That's it from my head. Thank you.

Thank you. Next question is from the line of Akshay from AK Investments. Please go ahead.

Hi, sir. Thanks for the opportunity.

Sir, my first question is, generally the quarter four should be the strongest for our kind of business, right?

So, in this quarter, we have seen year-on-year growth of only, let's say, about four questions. So, can you put some light on that and, okay, then I will ask another follow-up question. So, I think, Akshay, I think I answered that question in my opening remarks. What I was mentioning to you was, if you look at our fiscal 25, and this has been the general training in Sorsai, we had a 40% in the first six months and a 60% revenue split in the second six months in fiscal 25, while in fiscal 26. Even though we delivered close to a 30%, both our revenues actually fell almost even. So we were like 48, 52. So it's not about, and as we've always told you, you know, this business cannot be, you know, ascertained on a quarter-to-quarter basis. So, you know, kind of difficult to say when the P.O. becomes due and when the P.O. gets delivered, because this is not a business that you produce in anticipation. You produce only based on what the customer wants. So, it just depends on how the PO is.

Okay, sir. And my second question is, despite the heavy

capex of anticipation of around 1100 to 1300 crore, so, are we confident of maintaining 28 to 30% margin in this year, this financial year, and going forward? So, our, so, Akshay, what we, again, we've set this last year, we're continuing to set this year. So, 28 to 30 percent is our steady state aspiration. That's really what we committed, and we actually committed, we'll get there in two to three years' time frame, and we've gotten this 30 percent last year based on how we look at EBITDA, and I believe that we will continue to aim for that same number.

Thank you. Next question is from the line of Avikshit Vijay from Global Conscience Research. Please go ahead.

Yeah, hi. Thank you for the opportunity. I had a couple of questions. So, first one is we had set aside an amount of 1,100 to 1,300 crore as capex. So, when do we expect it to come live?

So, a typical plant takes somewhere around 18 months or so to kind of complete construction. So, depending on what project. So, for example, we started the 700 to 1150 KL capacity expansion sometime during the middle of last year. We are expecting 225 KL to come this year and 225 KL next year. So, similarly, we had put up a capacity to double our process R&D capacity last year. So, anything will take around 12 to 15 months, same in terms of capacity. So, and CAPEX will be incurred in part in one year, and maybe the remainder will come in the second year. These are all ground field expansions within sites that are already developed. If it's green field sites, it's probably going to take you 24 to 30 months.

Okay, yeah, that answers my question. And the second one is, is there a possibility that we could name some of our molecules and the end clientele?

We will not be able to do that due to confidentiality restrictions.

Not even the client is possible?

No. Client is definitely not possible. Okay, yeah, thank you so much. Okay, thank you.

Thank you. Next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.

Hi, thank you for the opportunity. First question, apart from the four commercial molecules that you added in FY26, you also now have 11 phase 3 or pre-registration molecules. This number, as of third quarter FY26, was around 6. Assuming there have not been any drop-offs or further additions. Seems that you have added about five incremental opportunities in phase 3 or pre-registration. Can you elaborate on which modalities would these be in, any technologies that you would like to call out?

Most of these, Alankar, we've identified one that is already there on the new modality, which we said is currently undergoing validation. There is probably one more on new modality, but the rest of them are all small molecules, and some of it is coming from, I think, what Krishna was talking about, right, this whole integrated CDMO play that pharma wants to consolidate as they kind of look at long-term outsourcing partners in India. So, customers who are probably not doing a lot of... Late phase in India are looking to do some of those, which is also a result of some of these additions.

Got it. And out of these 11 molecules, sir, do you expect any to commercialize in FY28?

I think that right now is too difficult. Some of them have just moved. Very, very difficult for us to predict, but as soon as we hear something, we'll definitely come back and provide that information.

Fair enough, sir. The second question is, what is your view on the impact of AI on drug discovery? You spoke about the investments, you spoke about the opportunities, but specifically on drug discovery, do you see that as a threat or an opportunity?

So, we see it as opportunity. I don't see a threat. Should I go ahead with you? No, no. Why don't you finish all the math at the next? Look, I think it's an opportunity. I think, at the end of the day, the synthesis part does not change, and the AI moieties are much more complex to make than regular synthesis. Yes, you might make fewer molecules, but the resources need to make the molecule more than the past. And plus, AI itself helps us be more efficient in terms of route design and better options. I think net-net, I think my view of AI is going to be that you probably won't drop the R&D dollars. You probably will redo more with less, more targets. And I think everybody you've talked to so far has indicated that... So the design part is what is going to be affected the most, not the synthesis part. Synthesis part is going to be an important aspect of it. And I think AI for us is a net positive because the complexity of the molecules are higher, and we don't see R&D dollars dropping in terms of what they wanted on the AI front.

Fair enough, Krishna. Thank you, and all the best. Thank you.

Thank you. Next question is from the line of Bharat C. Shah from BCS Capital Ideas Limited. Please go ahead.

Yeah, this has come right at the fake end. I have another call to catch up in two minutes, so I'll be just brief. But I was intrigued by Krishna's statement about AI in terms of aiding the digital capability. I thought, specifically for pharma, AI probably would be a very potent research resource. I'm from a non-science background, but whatever I understand, pharma drug discovery is much more of 70 PTs, some hard work, and some amount of luck trying out zillions of molecules. And AI, along with quantum computing, can tremendously accelerate that process and make the drug discovery process smoother and much, much faster and far more efficient. So, I was a bit intrigued by AI nearly as a digital capability rather than the fundamental core capability of the CDMO, CL, AMO organization.

So, I think the way we look at two things, right? From our perspective, what we presented to you is what we can do without impacting confidentiality and IP of our customers, right? That is what we can do within AI. But if you look at AI on the drug discovery side, right, I think if you really look at AI today has been great at generating molecules, right, it gives you novel binding targets and things like that. But that's probably the least expensive part of drug discovery, right. There is, you know, if you really look at programs actually succeed or fail. And the bottleneck is actually when they move from preclinical to clinical. There are many things that today, these programs, success of a program actually hinge on judgment calls, right? AI will get you efficiency, gains in enrollment and all that stuff. But there is so many things that the model today is not yet trained. I'm not saying five years, ten years down the road how they will behave. I'm up to date. It is attacking probably the lower cost piece of AI and the lower complexity part of AI, right? There is definitely software is giving you, you know, great output, workflow optimization, etc. But I think the whole development side or synthesizing a molecule that is kind of super complex because AI has created things without a constraint is creating more work on that side. That's really what we're talking about.

And I just want to add a little bit to that, right? I think we're not saying digitalization, but AI, you're talking about quantum computing just in terms of discovering what molecule to develop, right? But now you're synthesizing a molecule, scaling up the molecule. AI will help you design the molecule. Synthesis through itself is better. It'll give you a better translation from lab to plant. So there's a lot more AI which goes beyond digital. Also, AI is inbuilt into everything. You have become an AI-native company. But what I say digital is getting to be enabled to handle AI is as if, unless you get to the platform right, you weren't able to apply tools across the board. And AI is just not related to just discovery of new molecules. It's a question of increasing efficiency of scaling up every molecule as they go commercial and reducing their timeline. So I hope that is clear. We're not talking about digitalization here. We already are a complete digital company ahead of the curve. We're talking about how to take that data. And increase your accuracy and speed in terms of scaling it up, and what's the correlation between lab data to plant data and so forth. I hope that gives you a little more clarity as we're talking about this.

Thank you. Next question is from the line of Gaurav Bama from GM Financial. Please go ahead.

Hello, I have an audible.

Your voice is very low. Please use your handset.

Yeah, this is a second. Is it better now?

Yes, please proceed.

Hello, is it better now? Thank you for the opportunity first. I would like to begin with congratulating the company on the good set of annual numbers. I had a question regarding the CRO business. It's more of a bookkeeping kind of question. So, I just wanted to understand how many scientists do we have in the discovery of the CRO business and what was the similar number in FY25?

We don't provide Discovery, CMC, scientists. We have scientists across Discovery and CMC. I think, you know, we provided this number as part of our annual disclosure, and you will see that number.

Understood. And on the second question, I think you did answer it a bit earlier, but nonetheless, I'll confirm again. So, the 1100 to 300 core KPEX outlay, large part of it is going towards the 1150 KL expansion plan, right? The 75% of the, this,

but it's not necessarily the 700 to 1150 only, right? There are also graphics that for discovery, for R&D capability, fume cupboards, all of that stuff included.

And this should, yeah, that's it for my side. Thank you.

Thank you.

Thank you. Ladies and gentlemen, we will take this as the last question for the day. I now hand the conference over to the management for the closing comments.

So, Aik, thank you for, you know, for the call. As we mentioned, we believe, as we enter this to 27, we believe that the trend in terms of outsourcing with respect to the CRDM remains very robust, and we believe we are positioned well to kind of capitalize on this growth. Krishna, do you want to add something for closing comments?

I think it's a very exciting time. I think, uh... For, I think, India in general, and for Sai as well, I think this multi-year trend, nothing has changed dramatically. I think India is going to definitely become a very strategic player in terms of the global supply chain over the next five years. So I think the trend is good, and we're well set to benefit from this opportunity at this point.

Thank you, sir. On behalf of SciLife Sciences Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.