Gufic Biosciences Limited ($509079)

Ladies and gentlemen, good day, and welcome to Gufic Biosciences Limited Q4 and FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Ami Shah, Company Secretary, Gufic Biosciences Limited. Thank you, and over to you, ma'am.

Thank you, Yusuf. Good afternoon, everyone, and I thank you all for joining us today to discuss Gufic Biosciences Limited's financial results for the fourth quarter and full year ended FY '26. The press release and investor presentation relating to today's results have been submitted to the stock exchanges and are also available on our website for your reference. Let me now begin with introducing the management team who has joined today's call. We have with us Mr. Pranav Choksi, CEO and Director; Mr. Devkinandan Roonghta, CFO; and Mr. Avik Das from the Investor Relations team. We will now commence the session with the opening remarks from Avik, following which we will open the floor for an interactive Q&A session. Please note that this conference call is being recorded. The record will be made available on our website later today, and the transcript will be shared within the prescribed time line. Before we begin, I would like to remind everyone on the safe harbor statement. Certain comments made during this call may contain forward-looking statements. These statements are based on management's current expectations and are subject to various risks and uncertainties that could cause actual results, performance or achievements to differ materially from those expressed or implied in such statements. We encourage participants to review the relevant disclosures and risk factors available in our public filings. With that, I would now like to hand over the call to Avik for his opening remarks. Thank you.

Thank you, Ami, and good evening, everyone. Thank you for joining us today. Before I get into the business updates, I want to take a step back for a moment because I think Q4 FY '26 and actually the full year deserves a bit of context before we jump into the divisional performance. FY '26 was a year we came in knowing would be heavy. We were carrying the full fixed cost load of a new facility that was just finding its peak. We were simultaneously making a deliberate call to fix our working capital structure in one of our main divisional clusters, which cost us revenue in the short term. And we were investing significantly in the leadership bandwidth, bringing in new heads across the international infertility, aesthetics and the hospital care platform, [indiscernible] whose contribution will reflect more in FY '27 than in FY '26. So when you look at the full year numbers, INR 940-odd crores in revenue and a PAT of INR 63 crores on the surface, it may look like a flattish year. But the more important story is what Q4 looks like versus where we started. Revenue in Q4 was around INR 252 crores, our strongest quarter ever. EBITDA came in at almost INR 44.7 crores with a margin of 17.7%, up from 13.2% in Q4 of the prior year. And the PAT more than doubled year-over-year in this quarter. The sequential trajectory from Q1 to Q4 is exactly what we said it would be, and it ends in a place that gives us genuinely a cleaner runway heading into FY '27. That's the context. Now let me take you through what actually moved within each of the divisions and business units. So Indore, I will start here because Indore has been the centerpiece of our journey for the last 6 quarters, and Q4 is where we closed the loop on what we committed. We told you at the start of the year that we would reach 30% capacity utilization by year-end. We got there on target. Indore in Q4 reached its EBITDA breakeven with the capacity scaling up. What I want to flag because it matters for how you think about FY '27 is that Indore is now moving into a different phase, the qualification, tech transfer, validation batch phase, that's essentially behind us. We have 40 product tech transfers complete with another 2,700 development and stability testing. We have almost 200-plus state FDA approvals in hand. We have more than 20 Indian pharma companies that have audited or actively using Indore as the CMO base. That's not just revenue, that's third-party quality validation of the facility and built the foundation for the next leg of our growth. The new GMP audit, which was also committed was completed in the first week of December 2025 by the [indiscernible] competent authority. The certificate is pending, we expect that to come through soon, and that will open up multiple new markets for us. Now on the international business front, the international business grew highest ever in FY '26, but the number itself is less important part of the journey. What actually changed this year is our model. We spent several years building up an opportunistic distributor-led filing model where the distributor held the marketing authorization, and we were essentially a price-sensitive supplier. That model has its limits and themes. We spent FY '26 switching to a model where Gufic now holds the marketing authorization through Gufic Ireland for the EU market, for example, and our own filings in key markets. We controlled the IP [ Indore ] setup. When you hold the MA, you monetize the asset in 3 distinct ways. The direct supply, the out-licensing and the tech transfer fees. That's a structurally different and more durable business in our opinion. So to give you all a sense of the progress in Q4 alone, we received new product approvals in Myanmar, the Philippines, South Africa, Colombia, Germany and Ecuador. We filed dossiers in 18 EU countries for multiple of our complex injectable molecules. And a major global health organization has now finally partnered with us on our most complex injectable asset, giving us access to public health procurement across 109 countries. This is the kind of partnering that takes years to build credibility for and it tells us that international positioning is working for us. The 824 million addressable market across select molecules in the identified geographies that we laid out in our presentation, that number hasn't changed. What has changed is the quality and structure of how we are going after it. Now coming to our domestic business, on the domestic business side, there are 2 very different journeys this year, and I want to be clear about both. The first is the working capital reset within the critical care cluster. We went into FY '26 with outstanding receivables from direct hospital billing that was sitting at almost 140, 150 days plus, and that was simply not sustainable. Over the course of FY '26, we made a conscious decision to shift back to [ CFA-led ] led stocks driven distribution architecture. That transition roughly caused INR 22 crores in revenue impact spread across the second, third and the fourth quarter. But we took it because the alternative was continuing to fund hospital working capital at our own balance sheet expense. The Marg data layer we rolled out to our distribution partners means we haven't lost visibility. We just moved the credit risk now again. The connection is now essentially complete, and it does -- we are very certain this will not recur in FY '27. The second story on the domestic side is the genuine growth that was happening in parallel, the women's health platform, which spans our fertility and gynecology businesses then were its strongest year ever. The reproductive immunology franchise in Ferticare achieved category leadership. Our gonadotropin flagship hit its highest ever new sales milestone, a new hormone introduced 2 years ago across its annual target and was ranked among the best new introduction in its segment by IQVIA in the last quarter of this year. Zenova's power brands continued to compound and we began building out into chronic therapy adjacencies in women's health that gives this platform a much longer runway. On the botulinum toxin front, we are now firmly the #2 brand in India, sitting at approximately 23% market share in a market that the innovator holds dominant position. We had a strong growth this year. The more important development in Q4 is that we formally signed an in-licensing agreement with a leading Canadian aesthetics company, one that holds a significant market share in U.S. for fillers and biostimulators. This deal fills what was the biggest gap in our aesthetic portfolio, a credible seller offering, doctors who currently hesitate to shift their full aesthetic business to us because we offer only a toxin will now have a reason to consolidate with Gufic. Launch preparations are underway, targeting maybe the third or fourth quarter of this financial year. The neurology side of our toxin platform, our therapeutic franchise continued its methodical expansion into urology, ophthalmology, pain management and neurosurgery. This is a long cycle business built on guidelines driven indications where adoption once established is sticky and recurring. In our mass specialty Nutraceuticals and Ayurveda division, we continue to sharpen the portfolio around chronic [indiscernible] pain, arthritis and GI. Some differentiated formulation launches in Q4 includes a first in India formulation in our heritage orthopedic brand using an upgraded delivery format. This showed meaningful early traction and reinforce our conviction that modern formulation science applied to a well-trusted brand is a durable competitive edge. So with that, it wraps up our update on all the divisions, and I'll hand over the call to Roonghta, sir, for financial updates.

Thank you, Avik. I am going to highlight the financials for the Q4 of the financial year '26 versus the Q4 of the financial year '25, as well as the financial results for the financial year '25, '26, as well as the financial result for '24, '25. For Q4 of the financial year '25, the top line was INR 205 crores. In the Q4 of the financial year '25, '26, the top line is INR 252 crores. There is a jump of around more than 15%. The EBITDA for the Q4 of the last financial year was INR 27 crores. The EBITDA for the financial year '25, '26 is INR 44.7 crores. The EBITDA margin in the Q4 of last financial year was 13.17%. The EBITDA margin for the current financial year was 17.73%. Profit before tax Q4 of the last year was INR 10.8 crores. The Q4 for the current financial year was INR 27.6 crores. CapEx margin in last year Q4 was 5.27%. The current Q4 was 10.95%. Profit after tax Q4 of the last year was INR 8 crores. This year Q4 is INR 20.5 crores. The PAT margin has further increased in Q4. It was 3.90%, and Q4 of this year is 8.3%. Now I will highlight the financial result financial year '24, '25, also '25, '26. The top line for financial year '24, '25 was INR 820 crores. The top line for financial year '25, '26 was INR 940.50 crores. The EBITDA for the financial year '24, '25 was INR 138.6 crores. The EBITDA for the financial year '25, '26 is INR 152.9 crores. The EBITDA margin of financial year '24, '25 was INR 16.91%. The EBITDA margin for financial '25, '26 is 16.26%. The profit before tax of financial year '24, '25 was INR 94.4 crores. For financial '25, '26, it's INR 85.5 crores. The profit after tax for financial year '24, '25 was INR 69.9 crores. The financial year '25, '26 was INR 63.2 crores. The profit after tax '24, '25 was 8.53%, and '25, '26 was 6.72%. Thank you very much.

[Operator Instructions] First question is from the line of Bhavya Sonawala from Samaasa Capital.

Thank you for the opportunity and on not losing to the whole deal. So a good set of numbers. Just a couple of questions. Can you just talk about how sustainable these margins are? Is it operating leverage playing in or some product mix or something that's changed?

Yes. So Bhavya. So in regard to the operating margins, as you must have seen in the last few con calls -- I mean the conferences also in the quarter and otherwise, we always feel that there will be an improvement happening in the gross margins for 2 or 3 main years. The first reason is, of course, the business reset happening between domestic and international versus the CMO, also a launch of new molecules and also in international market upgrading to more profitable geographies. So these are the main things which will be also where, as Avik also rightly mentioned that most of the efforts are also being put that this continues to mature further and there's a huge scope before saturation kicks in. So these will continue to help us to go for the improvement of 0.5% to 1% year-over-year gross margin improvement.

Okay, understood. Also, I think in the presentation, the GLP-1 validation matches was spoken about. Just trying to understand, is this like a confirmed contract or deal or how is it working? If you can just throw some light on that?

So basically, there are various drug delivery systems for the GLP-1 right now, mostly I'm talking the injectable space, there are mostly vials and cartridges, which are being there from the [indiscernible] factory, as you mentioned in the last few conferences, we are working on the cartridge and the pen, right? And now from indoor, we have signed an agreement with another player who will be focusing on the lyophilized vial form. So we are very clear that our focus and our, I would say, play in this entire supply chain would be purely as a CDMO or a CMO, let's put it very specifically. And that is where we see that we will be playing a role. Our front-end ambitions right now are limited maybe to a couple of brands in India. But for international markets, we would be riding the way with our partners.

Okay. Is it possible to quantify what kind of revenue can come from this? Or is it too premature?

It's too premature. If you see both India and international are going to have 2 different road maps. Of course, there will be quite, as you must have seen in the IQVIA data for the last few quarters and even before when Mounjaro came in, this is here to stay, and it's going to be growing. Maybe the margins what you see might come down, but definitely, the markets will be increasing. So we see a good upside, but how much -- and because like I said, our projections never spoke about this. This is an additional benefit, which will come by the CMO operations of the organization and where our front-end partners have more of a role to play. So it will be very immature on my part or very preliminary on my part to comment on the numbers. It depends on my customers and my partner's [indiscernible] efforts.

Just a last question. When you spoke about the in-licensing, so just to understand it better. And sorry for my [indiscernible] be for India, right, whenever we get in-licensing or do we manufacture and can supply it internationally, too?

The in-licensing, you're referring to which particular product line?

Sorry, the Canadian, yes, yes.

So as you know, toxin and fillers always go hand-in-hand in every aesthetic practice. So currently, the in-licensing is for the India market only. And down the line, if economies of scale comes, there are of course other trigger points which the relationship going forward. But right now, very frankly, for the next 2 to 3 years, a maximum until 5 years, we're looking at in-licensing of the molecule to complement our toxin journey in the India market only.

Next question is from the line of Nitya Shah from KamayaKya Wealth Management.

Congrats on a good set of numbers. Nice to see the capacity finally reaching breakeven. So I had more of a bookkeeping question. So I saw there was an investment made into a cooperative bank of INR 6.5 crores. So I just wanted to understand what is the entire arrangement? Is this due to some regulatory requirement? And what kind of benefits do we get out of doing this investment?

Yes. So Roonghta, you like to take this?

Yes, Basically, the [indiscernible] Bank is one of the leading bank with a boutique, and we are associated with this strength from last more than 15 years. The bank has come with a proposal to allot only 24 -- to around 24 top customers this year alone as a face value of [ INR 10 ]. The past history of the bank is that they are giving a dividend of around 15% every year. And if we get a 15% return on the investment, whereas we borrow the same amount at 8%, one advantage is that we are going to earn because of this extra income of 7% to 8%. That is one reason. And secondly, to keep the relationship with the bank, we decided to go for with investment.

Okay. Understood. And what's the total exposure you all have with this bank in terms of borrowings?

Total, I think the total exposure, including fund-based, nonfund based and some loans will be around INR 250 crores.

Okay. INR 250 crores. And your interest rate, you said is around 8%, right?

There is -- in case of [indiscernible], then there is one is [indiscernible], one is [ WCDL ] and one is working capital. Working capital is 8.2% on loan and [ WCDL ] is 8%.

Okay. Understood. So in the Q4, since you plan to continue working with this bank, that's why you have made this.

Yes, yes. We want to continue because this bank has been associated with the group and all the difficult times this bank has been given us very big help to the company to grow this table. And for a [indiscernible] of amount, we do not want to [indiscernible] the bank. We want to continue that. Yes, we added another bank also now in a consortium [indiscernible] banking, there is [indiscernible] Bank.

And say, for example, once you finish all, for example, finance banking arrangement with this bank, do they return you this investment? Or does it continue to stay?

Yes, you can. You can, any time you -- when you want to break the relationship with [indiscernible], you can sell the same share to the [indiscernible] bank. They were going to return only to face value, not take on anything.

Next question is from the line of Vishal Mehta from Oaklane Capital.

Yes, I just had a couple of questions. One is regarding botulinum toxin, what is the size of the revenues and profit for botox today as in FY '26?

Yes. Sorry, actually, I was on mute. Yes. So the total botulinum toxin market is divided into therapy and aesthetics. Totally, it must be contributing to around 3.5% plus or minus to the total revenue.

Okay. So in terms of this filler, do we need to do any CapEx for that? Or that will not do anything significant.

No, no. So if you see in the last few calls also, currently for the India and ROW markets and emerging markets, I think the capacity has already been baked in the last 4, 5 years. Tomorrow, if we decide to go to the international market specifically, regulated markets like U.S., Europe or for that matter, even for Japan or others, then there is a different CapEx required, where also when the time comes, there will be other options of joint investment or getting someone else in for the CapEx and focusing on the front end on our own. So those are the thoughts which were explored in the past also and in the future also we need because it's a very selective and a niche thing, we'll always be takers who help us to take care of the investments to join with us going forward for the regulated markets.

Sure. Sorry, I was asking about the fillers in-licensing. Will that...

Fillers? I thought as a pillar. Okay, yes. No, no fillers in license, there is no CapEx involved. It's a direct product manufactured in Canada, and we are importing it and selling it in India in our brand. So it's not our branding, in the international brand name only. Sorry, I missed it. Yes.

So how do you see this maybe from 3.5% today? How do you see the botulinum toxin growth over the next 2, 3 years.

Yes. So to put it into perspective, always the reason for getting them as a complement is the toxin and fillers go hand in hand, and that is where the doctors also normally filler, if I want to use your toxin, I am getting my arm twisted with the competition when I have to use their fillers. So that is one thing which we hope that we will get the upside because of that. Going forward also, like I said before, the total market of India of toxin and filler versus the total population versus when we compare it with Russia, Turkey, Philippines, Thailand or any other country for that sort where the penetration also is much higher, there's still a long way to go. So apart from not only helping us an additional tool to satisfy the doctors' needs, the use of toxin and fillers with the help of when the Canadian comes in, the company comes in, they already are the top 2 of the top 3 players in the U.S. also, that's a U.S. FDA approved thing. They also have the best doctors of -- especially in the U.S., in Europe, endorsing their brand. Those will be also called as special speakers here to get the new development and training done of toxin and fillers in combination. The certain beauty trends which are not being done by the Indian doctors can be further enhanced. So we feel that market expansion also will be helpful. At the same time, our market share increase also will be there because of this relationship.

Got it. That's very interesting. Also, my second question is regarding your guidance. So if you could just give us some guidance in terms of what is your expectation of how the top line goes will pan out over the next 2 to 3 years? And how do you see margin profile changing with the new higher exports or coming on stream and operating leverage playing out. If you could just give some guidance on that? And also if you could add, how do you see the debt standing out over this period?

So I think part of this question, I request Roonghta to help me. Before that, I'll give you a little bit of a revenue guidance. In terms of the debt and in terms of the margins also, then Roonghta will come and help me answer the remaining questions. So firstly, as I always have been saying for the past few quarters, we expect a 15% revenue jump year-over-year. That's how, of course, the effort is for much more, but of those are internal targets. But we feel a 15% year-over-year is something which we fall is achievable. Secondly, the gross margins, as I already discussed some time ago, we expect that 0.5% to 1% gross margin improvement will always be there. That is what we factor in for -- we factor in for more because of the product mix, the geography mix and the pricing, I mean, budgeting when you get into. But always something like what happened just recently like the Middle East issue and there are always challenges on the rupee and the dollar equation also changing. Sometimes that 1%, [ 1.1% ] suddenly goes to 0.5%, 0.6%. So that's why, but I still see on a minimum level, 0.5% gross margins will be possible. Coming to the debt thing and the other margins, I request Roonghta to please address it.

If you see the EBITDA margin for the financial year '25, '26, it was 16.26%. After the scale-up of the Indore, I feel the EBITDA margin for '26, '27 should be in the range of around 18%. And over a year by year, there will be improvement of between 0.5% to 1% over year-to-year comes, and it can go up to by 2030, it can go above 20%. That is our EBITDA margin. Today, our debt is around INR 400 crores. Total debt, gross debt is around INR 400 crores. And looking to the present situation because the top line is going to increase, there will be additional requirement of working capital. So we feel this INR 400 crore will be the [indiscernible] loan and it is going to remain at this level only.

[Operator Instructions] Next question is from the line of Kumar Saurabh from Scientific Investing.

Sir, my question is on the Slide 12, the international business, the business model change going from the traditional distribution model to more IP-based. How this is going to impact in terms of P&L? Will there be any change if you can update?

So there are 2 things to answer that. Two things are there. One is whenever you go for this change in model, the additional cost which comes in are most important in terms of dossiers, and also in terms of the registration costs. So every year, you see that in our other expenses also these have been already factored. I mean if you remember in 2023, this thought process was already initiated and as how when Motilal Oswal also invested with us, we wanted that cash flow coming into ignite and to kick start this process of having our own IP creation globally. So year-over-year, you will see -- I mean, in the last 3 years, you have seen in the other expenses. And so going forward, you see the other expenses and registration costs, your cost goes up, given our gross margins in spite of getting the [ RM, PM ] and the consumption done of all the contribution matter to get dossiers and 3 batch filings done. In spite of them, we will see a 0.5% to 1% improvement because more and more investment is being done in terms of getting the dossier processes done. However, there's a natural improvement also happening. But once we move on to more countries or we have gone from a B2B to a B2C in certain countries like Africa, Southeast Asia or the Philippines going forward, we see those margins improvement happening. Of course, initially, there is a little bit of a cost escalation because of registration costs because of, again, dossier costs and also manpower costs. Last year also, there was some expansion of manpower done for certain geographies. Again, this year, we continue for having our own head office in the Philippines. We're also having a separate team in Africa, which is directly working on the field on [indiscernible] some other team members have been taken from Mexico to control the Central and the South America. We also are looking at a Southeast Asian market head based in the Southeast Asian market outside India. So such things will be all factored in, in our expense going forward. Hopefully, I'm sure it will be leading to a gross margin improvement year-over-year.

Sure, sir. And we have a slide on R&D regarding peptide and API self-reliance. So one question currently, what percentage of our raw material costs we outsource and how these projects can change that raw material dependent? And if you can tell something more -- and more in layman terms because pharma is very technical, so how the peptide and now, NDDS, whatever they are working on, if you can give more information in terms of layman terms so that we can understand the opportunity.

Yes. So synthetic, there are 2 types of peptide applications. One of the synthetic peptides like [indiscernible]. Again, I'm getting into the technical part so please bear with me. These are peptides, which are used for our [indiscernible] portfolio, our aesthetic portfolio or they are used for our anti-infective portfolio. There are also [ aminoglycopeptides, ] which are used for antibiotics and all that. So somehow, this peptide, I would say, [indiscernible] was important for us because they complement our parent products. Also since some years, we have gone into API backward integration for our funding for anti-infectives also for antifungals, specifically also for these [indiscernible] like avibactam. And now very soon we'll be filing [indiscernible] also. So the API foray is much more where we focus on. Again, I'll be very upfront that it's not that we are changing the -- our percentage, but we are getting more and more deeper where we are importing higher key starting materials by which the value addition, let's say we are buying an item at 100, but now we are starting to manufacture item locally by which the costing goes down to 70. So that is where expansion margins also takes place, but also we become more controlling. So right now, if you have registered some suppliers, API and you are stuck with them for some international market. But when you file a dossier where you file your own API in your own dossier, then you are independent. You can always change around the key starting material by validating 2, 3 different suppliers from day 1. So then you are not stuck to someone and the price increase and price falling out do not hold you at ransom. So that's why backward integration always helps you to control the business, make it more stability, the supply is more consistent. And this also leads to margin expansion going forward. Third thing is there are certain APIs which are not available in the market where we have to be much more upfront. So that is where the peptide market comes in. There are some future peptides for aesthetics where we feel that there are not many, I would say, I would say, dependable supply is coming in, and there are also where the quantity is also very low. And that's why a lot many people are interested. However, for us, as an injection portfolio, they really make sense. So these are the peptides we want to be backward integrated from -- completely from scratch where we import the minor assets and we completely sequenced the peptide on our own so that we're not dependent on anyone. So these are the 3 different types of applications, which help us, and that is where our thought process goes. So we become more and more independent. Earlier, maybe we were 80%, 85% outsourced. Now we have come to around 65%, and we hope that 50% of our API can be done in-house eventually. Of course, this 50% will still come from outside because the product basket expansion is also happening with new suppliers helping us.

Got it. Just one question. Will it require any kind of CapEx or given we are done with our major CapEx next 2, 3 years, you see only maintenance CapEx?

So again, our CapEx has been very clear that expect it's from some strategic new things coming in. I think for the next 2 years, we don't see any foreseeable CapEx. But of course, as you know, and Navsari is almost now some machines are 20 years over some are 15 years old, some are recent. So always, there will be a replacement CapEx of around INR 20 crores year-over-year, which will keep on happening to ensure the continuation of business. But any new greenfield CapEx will not -- at least as of now, I don't foresee any greenfield CapEx happening in the next 2 years.

[Operator Instructions] Next question is from the line of [ Harsha ] from [indiscernible] Holdings.

Sir, my question is on the margins. Again, you mentioned that the Indore equity is now operating at breakeven. We are at 30% utilization and it is operating at breakeven. So if I exclude that, then the margin for our Navsari business comes to somewhere around 21%, 22%. Is that sustainable? And should we assume similar margins, say, 3, 4 years down the line once Indore is fully ramped up?

Roonghta, would you like to take this?

Yes, yes. Indore margin, we have touched to 20% EBITDA, but over a period of time, the Indore capacity has been fully utilized. But the cost is increasing every year by [indiscernible]. There is an increasing in the salary, other expenses. [indiscernible] 20%, and because of increasing the cost every year, we feel that now [indiscernible] margin is going to remain at around 18% to 18.5%. Whereas in case of Indore, because of the new plant, energy efficient plant and [indiscernible] product. Therefore, the Indore margin, we expect around 31% to 32%. The overall EBITDA margin will be going to Indore in the range of 20%.

Okay. And sir, has the tech transfer for our Navsari products already happened for Indore?

So it's a continuous process. Already like Avik mentioned, most of them are done. We are not going to take all the products from Navsari to Indore. Indore has its own complex injectable portfolio also. But however, there will be always a calendar set out for the next 12 to 14 months where there will be not only new tech transfers coming directly from the Indore R&D, from the Navsari R&D also. And at the same time, there will be some molecules from the Navsari pipeline, which will also come in as we foresee some saturation happening in capacities in Navsari also. But our major focus in Indore would be the complex injectable depot and liposomal followed by more suspensions going forward, which will be directly tech transfers coming in from the R&D now.

Okay. And sir, how are we -- where are we in terms of new launches? I mean [indiscernible], et cetera, and even on the infertility side. So how much should we expect the new launches to contribute in FY '27 and FY '28?

Newer launches generally depending on like last year, we did not have any new launch. So most of the -- except like I mentioned, what Avik mentioned, the HMG was there, which came in the top launches of the year by IQVIA. Aztreonam-avibactam has just been launched by us this week. So it would be figuring in from the -- not actually, and also in Q1, it will start seeing more prominent side from Q2 '27. But we foresee that every year, there will be around INR 20 crores, INR 30 crores of new launches, depending on the molecules. And also, there are around INR 5 crores, INR 10 crores of molecules, which we stop also the tail-end molecules. So the net delta would be around INR 20 crores, INR 25 crores till, of course, some also new blockbuster comes, which we foresee some of them might coming in '28, '29 or '27, '28 with some special unique molecules for osteoarthritis, one for pain management, other one for infertility. So these things would come with a higher delta media of maybe around INR 40 crores, INR 50 crores also adding to the top line.

Got it. And sir, do you -- well, how much CMO separately contributes to revenue?

Yes, I just did it around [indiscernible] again, I'll do it for you. So export is around 20%, 22%. CMO was around 18%, 19%, and domestic business would be around 48% to 50% and remaining would be APIs and tenders and other businesses.

Sure. And once we fully ramp up in the order, where would our CMO business be in terms of contribution?

So right now, because of GLP-1 this year, we will see this CMO business this year go a little bit higher by 1%, 2% more, maybe at the cost of domestic because of -- it's not that domestic will increase further, but the CMO might be a little bit more higher because of the GLP-1 for this year specifically going up. So I still say that, if you see at peak also, it would be at around 40% to 45% of domestic, CMO will be around 15% to 18% and export will be around 30% plus or minus. That is what we see at peak is our main aim, I think.

[Operator Instructions] Next question is from the line of Kumar Saurabh from Scientific Investing.

Sir, my question is on the critical care vertical, given how we have done that from the direct hospital model. What kind of cash flow improvement, one, should be achieved? And last year, we have lost some revenue because of that. So how do you see the growth happening in the critical care vertical and how you see the cash flows shaping up? If you can -- at a consolidated level side, EBITDA, what kind of percentage of EBITDA will be converted into operating cash flows?

So I'll just talk about critical care, and I'll request Roonghta to talk about the EBITDA converting to cash flow. So for the critical care, we foresee because even when the volumes are increasing higher, there's always a price erosion, which happens there. But even if the volumes increased by maybe double digits, the growth which we are putting up this year and budgeting will be around 6% to 8% only or maximum to 9%, except the new launch, which will add to a different delta for sure. But that is what is our expectation from the critical care as of now, assuming still the volumes would still be to double digits. In terms of now the cash flow, Roonghta, can you take it?

Yes. Basically, the cash flow is basically depending upon a lot of factors. It's collection as well as different sales. In case of domestic sales, our collection will be around 30 to 45 days. In case of CMO business, it is around 190 to 120 days. The cash flow generation will be around 12% to 13% of the total sales of the critical care.

And if we look at the incremental growth for next 3, 4 years, it looks like bulk of the growth might come from export, correct me if I'm wrong. And also primarily from the European market in case we are targeting that 5% to 10% market share, which comes around [ INR 400 crores to INR 800 crores. ] The general sense is usually regulated markets, they trade at a higher EBITDA margin. So given the incremental revenue ideally might come from a regulated market, do you see that also contributing to the margin expansion?

No. Actually, I would still say that the main delta would still come from domestic as well as international. Domestic, I will just give you a brief about the critical care, but the new product launches of aztreonam-avibactam and also future other molecules would add up to that. Also, you have to figure out that we -- as I mentioned in the previous few calls, we also have the dual chamber bags, which have been launched by [indiscernible], which is other offshoot of the critical care division also would start growing at a much faster rate. So there, we have 2, 3 other molecules also launched, but their inherent business changes happened in the strategy. The IVF division, which was in double-digit last year would still continue because we have a recombinant product also being launched in the next 1 year, and then in the year after that, there is one other [indiscernible] product, which is going to be launched in addition to the current portfolio what we have. So IVF also would be in domestic space growing at a decent percentage. The botulinum toxin, of course, even though the base is quite small, like I mentioned, it's around 3.53% to 4% of the current revenue. but they will be growing at a much faster rate. So this, along with the ortho, gyno portfolio where we are launching some injectables, which are the only one in India, first time for osteoarthritis. And there's, like I said, next year, we'll be launching for pain management also. The domestic piece of business, which continued the growth going forward. Overall, the international market, of course, comes with a higher margin expansion, but I see the margin expansion happening both in domestic as well as international business. CMO business is something which again, I'm repeating, the GLP-1 is a, I would say, this year, maybe next year phenomena also because you see that saturation coming in down the line as a CMO partner. So we foresee there will be a static margins happening there. There is other CMO business, which anyway our capacity is being diverted to international domestic market, the CMO business would also a little bit to lead to a margin reduction. So that is why keeping all these 3 factors in mind, we still say that margin expansion is happening more. But again, due to both domestic as well as international business.

Got it. And I have one request. I know we provide a lot of detailed information on all the businesses, how they're doing qualitatively. But if you can have 1 or 2 slides highlighting each business financial numbers, I think it will become helpful for us to have all the slides [indiscernible] how each of the businesses units are performing. [indiscernible] That's all I have.

Already, in all my season, investors tell me you're giving too much information, don't give more because of the comp. So I don't know. But on the lighter side, of course. But if I see some merit, I will discuss. In the meantime, we'll get back to you for this point, yes.

Next follow-up question is from the line of Nitya Shah from KamayaKya Wealth Management.

I just had a question that in your investor presentation, FY '29 you say U.S. FDA and Gufic will be a pure-play CDMO partner. So could you speak a little bit more about this in terms of vision with regards to CDMO and how you see this shaping up, say, once you receive approvals in FY '29. Just for me to understand how the management is thinking.

Sure. So as you see U.S. FDA is a, I would say, a very new -- I would not say a new thing for us, but it's more in terms of the risk appetite, we are going step by step. And over the years, we always -- I always feel there are so many other delta of opportunities in the rest of the world and Europe and other markets where even the IP would be more focused and we would be much better to have IP created there, which are the next growth levers. U.S. was done simply because there were some products and some complex injectables, which are available to us, which we feel there's a need there. So just give you, again, telling you about the time lines. We have taken some batches. There are some batches that are going to be taken in July and August, which would trigger our U.S. FDA inspection by the end of the year once we file them. We hope for, I would say, inspection maybe as per them. Of course, that our clients and the U.S. FDA, depending on their calendars, they will trigger the inspection maybe next year or something. And that's why we are confident of 2029 or 2028 also, U.S. operations to start, provided everything goes well. Again, U.S. FDA is a very complex market, and the front-end risk are quite I would say, different than what we are used to. So we foresee that for the next 2, 3 or 4 years, we want to be very clear. We want to start to be as a CMO, then a CDMO, where our risks are very well defined and controlled in a black-and-white manner, without going overboard, which should not affect our other growth levers of the rest of the world markets, European markets, Brazil, South Africa, and for that matter, even in Canada and even the Far East. So we don't want to compromise on that. As well as, like I said, domestic also, we have a bandwidth quite shortage. So this is our approach to the U.S. market in a nutshell.

Okay, understood. And also regarding the debt levels or if I'm not wrong, I heard that the debt levels will continue to be the same for the next 2 to 3 years. But I saw that even your cash and cash equivalents are also going up at the same time. I think currently the [ INR 75 crores ] cash on the March '26 balance sheet. So I was under the assumption that could be a scale down in terms of debt. So just correct me if my understanding is wrong.

So I think what Roonghta was trying to explain was keeping in mind the working capital, which might be required for the next 2 to 3 years, we are confident that the current short-term debt level is enough to take care of that. Of course, the long-term debt, as you see, has been reducing year-over-year. And yes, there will be no more greenfield project, of course, except for replacement investment, which might -- which might be part of the CapEx going forward. Those are the only plus or minus changes which will happen. At the same time, just to give you a small example, when this GLP-1 opportunity came up. In the last 2 years also, we have invested more than INR 30 crores, INR 35 crores from these numbers to ensure that we become like a suitable CMO player also in terms of machinery, in terms of validation, in terms of even certain dossier requirements also for our partners. So that's why since that growth, and Gufic always has been that -- we always keep on investing for the future in terms of dossiers, new products or licensing or something. We foresee that always, there will be some investments done in that direction. Like you just saw how we did it for Selvax we are doing it for one more other like a normal clinical trial, which we just in-licensed some time ago, it is going to cost us some INR 40 crores, INR 50 crores or some -- which is going to be a long-acting product, but a short-acting clinical trial is always INR 15 crores to INR 20 crores. So all that also, we don't want any debt to happen. We want it to be done from our own cash flow. So we foresee that this will be the peak. I'm sure that there will be a reduction of debt, but we don't want to say a comment anything on that. Let it come very naturally when we don't want to compromise our growth levers just for the sake of reducing debt.

Next question is from the line of [ Madhu Rathi from Counter Cyclical Investments. ]

Sir, I am relatively new to the company. So I wanted to understand, sir, there is a competitor called Sakar Healthcare. Even they are into lyophilization. So how are we different from them? And why do they make upwards of 25%, 26% margin?

So, I think you're asking me to do your job, right, sir? Because Sakar, how are we different from them.

So my understanding, their margins were higher than us due to a larger share of exports and oncology products. So do we have like -- so you mentioned that the Navsari facility will move towards manufacturing more export-oriented lyophilization injectables. So how should I look at the margin for this particular facility going forward? Can that delta between us and them reduce going forward? Is that a fair understanding?

Okay. So I'll not comment anything on Sakar because I really don't know anything about it. But for my -- and I know it's a good company. But for my -- I'll tell you, Gufic is more if you divide the business of Gufic, it's a domestic business, it's an export business, it's a CMO business and APIs. So if you see in the last few -- last 2 to 3 years, most of our interest going up or our depreciation going up is where most of the investment is because of the Indore facility. Also till last year, the Indore, what do you call cost was capitalized in the third quarter and then you see a sudden cost increase this year and that's the reason where you see certain costs coming in our P&L, coming especially the business side of it. Whenever we do an expansion, I don't know what is the life cycle of the company there. We are right now starting our life cycle of the next foray of Gufic. So when we have to go for the international market, the expansion of capacity. Right now, we have one of the largest [indiscernible] capacity. So anyone -- for anyone in the market who wants to create a capacity of our level, they will at least take 2 to 3 years, and also to get to the level of maybe around 1 million while capacity in that period is very difficult. So our efforts in the last 2 to 3 years have been to not only focus and take care of the Indore expansion but also a side-by-side, blended with a proper dossier as well as regulatory expansion, which is seen in other expenses, which is another load on our P&L, but it's all investment runs for the future. And that's why you see even the employee cost suddenly came up because of the recruitment of now people in the international market, which have taken up. Most until -- when I was a B2B supplier around 4 to 5 years ago before Indore started, I also had a very healthy set of, what you say, numbers. But when the expansion time come when you want to go to a particular scale, there are certain things which we need to invest in the near term to ensure your long term, you are taken care of. Because at that time, also what we realized that today in any country, tomorrow they find a manufacturer who is cheaper than me, they can easily replace me and get it done from them because they have a lower overhead and my overhead year-over-year will always increase. Tomorrow, when you go for your own product investment, your own market authorization and you have a basket to control, your, I would say, pillar or your base is much more solid, it's much more intact and you can actually get a much better pie because the margins are much better. Whenever we in-license any new products from the international market or from our own -- when we do an R&D development. Because every year, we do almost R&D, which is worth almost 10% -- at least 8% to 12% depending on the year and how the CFO gives us any budget. But we spend 8% to 10% of our top line revenue in our R&D budget every year, which I don't know how many companies of our size do that. So the IP created, our patents created are much higher. So answering your question related to the Gufic, we foresee that whatever investment was supposed to be done in CapEx is done. Our dossiers, which was supposed to be done, which is an ongoing thing, but still we have reached that we have done a good -- I mean, decent amount. And we foresee in the next 2 to 3 years to 4 years, we should now reap the benefits of what we have invested in the last 2 to 3 years in terms of our other P&L and other parameters being improvement, what you investors want to see eventually. So let's hope the next 2 to 3 years with our hard work and my team's hard work, we can deliver and we can get those numbers high and get those, I would say, percentages as per your requirement for which we have worked for the last 3 years.

Got it. And also, sir, you mentioned that gross margin improvement, one of the drivers or catalyst would be the higher share of international business, the CMO business. So where are you on that trend? Have we been able to get any orders or some kind of commitment from customers? What kind of products are we targeting? If you could help us understand?

Yes. So again, my reason has not been CMO for gross margin expansion. I've said that the gross margin expansion would be, of course, because of the domestic, some pieces and international pieces for sure. So in terms of the international business, there are marketing authorization, which we are working on, where front-end business would be a little bit more controlled by us and not only in terms of tenders, but in terms of actual private markets also. So this is where we see the margin expansions coming in where for which we have put in people for the last 2 years. There are 2 markets. One is, of course, the Europe, which is a tender market. At the same time, there is the rest of the world markets where it's more than tender, it's the private markets also where our field force goes and actually works in the market similar to how we have in India. So those are the margin expansion. Also with geography is being added in the B2B market like Europe, tomorrow maybe U.S., before that already South Africa and Canada and Brazil and others. There, we see the margin expansion coming in because of not only the existing molecule, but we keep on adding more and more molecules year-over-year. So this is in regard to the margin expansion due to international market, domestic market also, I explained that there are new product launches, there are IVF, I would say, toxin and [indiscernible] and other markets and in divisions where we're going to introduce new products and also there are already -- the natural growth progression also happening by which market expansion will be done.

So as you read more about us, you can reach out to me. I think there are many things to please in Gufic. I'll be happy to take you through it as you build your thesis.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Ms. Ami Shah for her closing comments. Over to you, ma'am.

Thanks, Yusuf. Thank you, everyone, for joining the call. Should you have any additional questions or queries, please get in touch with the IR team, and we will be happy to address them. Thank you, everyone. Take care.

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