Gufic Biosciences Limited (509079) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Gufic Biosciences Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand over the conference to Ms. Ami Shah from Gufic Biosciences Limited. Thank you, and over to you, ma'am.

Thank you so much. Good afternoon, everyone. I, Ami Shah, Company Secretary, welcome you all to the investor call of Gufic Biosciences Limited financial results for first quarter of FY '26, '27. The press release and investor presentation relating to the results has been submitted to the stock exchange on Friday and are also available on the company's website. Let me begin by introducing the management team joining us on today's call. We have with us Mr. Pranav Choksi, CEO and Whole-Time Director; Mr. Devkinandan Roonghta, Chief Financial Officer; and Mr. Avik Das, Investor Relations Head. Before we begin, I would like to remind everyone of 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. Participants are advised to review the relevant disclosure and risk factors available in the public filings. With that, I would now like to hand over the call to Mr. Avik for his opening remarks. Thank you.

Thank you, Ami, and good evening, everyone. Thank you for joining us. Starting with Indore. The plant is running to plan. Qualification and validations are behind us. Product tech transfers are progressing on calendar we have set out, and our contract clients continue to migrate across from Navsari. What is new this quarter is capability that depot and microsphere suite are nearing completion. So during this year, we will manufacture long-acting depot presentations in-house at Indore itself. We have also begun setting up a lipid-based antifungal by both an alternate approach over and above the conventional route. Very few sites in India run either and both are targeted to be operational during this year. In Critical Care, we launched our monobactam and beta-lactamase inhibitor combination immediately on expiry of the innovator patent, and it is now introduced across corporate, tertiary and secondary care networks. Early acceptance in large institutions has been encouraging. The division's focus this year is depth widening and coverage within the hospital groups we already serve rather than adding portfolio with. Sparsh has completed a full quarter on the rebuild channel. Outstanding days are within standard trade terms. Hospital onboarding has resumed at scale and coverage is now balanced between nursing homes and corporate chains. Two points worth noting, our focus has moved towards our own manufactured brands, which help both margin and supply reliability and the dual chamber bag is gaining acceptance in major institutions. The division also entered Northeast and Jammu and Kashmir, applying the new channel architecture from the outset. Its launch pipeline for the year is the widest it has ever carried. In the women's health, Ferticare retains its leadership in recurring implantation failure. The Puregraf Group secured entry into major corporate IVF chains this quarter. The investigator-led studies with senior Indian clinicians have begun. [ Zenova ] continues its planned shift away from injectables towards prescription-led chronic therapies. The antioxidant range we introduced is now a meaningful growth player. And the 2 first mover launches are ahead, one in osteoarthritis and one addressing metabolic ovarian segment. On botulinum toxin, we remain the #2 brand in India in toxin type, a manufactured from our own strain. The in-licensed pillar and biostimulator portfolio is progressing through its supply and regulatory steps for launch during this financial year with no significant capital expenditure from us. On the therapeutic side, the franchise continues its expansion beyond the core neurology into urology, ophthalmology, pain management as well as neurosurgery. In the nutraceutical and Ayurveda division, our lead joint care range outperformed its relevant product market this quarter. Our asset blocker continues to build gastrointestinal therapy into second pillar alongside pain, and the division has prepared its first entry into an alopathic pain management segment, which launches during the year. In the international front, the model change is now producing fee income alongside supply revenue. During the quarter, we progressed licensing in Europe, executed a contract manufacturing and licensing arrangement with a North American counterparty and received first contract manufacturing orders in Australia. On our registrations front, we secured approvals across 8 countries during the quarter and in one of them, 5 presentations in a single therapy area cleared on the same day, which is exactly what the therapy basket approach was built to do. So the platform is in place and the pieces are moving to schedule. Our medium-term expectations, which Pranav and Roongta sir have set out in previous calls are unchanged. With that, I'll hand over to Roongta sir for the finance update.

Thank you, Avik. I'm going to give the highlights of Q1 of '26, '27 versus Q1 of '25, '26. Total revenue of the operation in Q1 of '25, '26 versus was INR 226.9 crores compared to Q1 of '26, '27, INR 226.8 crores. The EBITDA for Q1 of '25, '26 was INR 33.2 crores whereas the Q1 of '26, '27 is 47.2% -- INR 47.2 crores. EBITDA margin in Q1 of '25, '26 was 14.6% whereas Q1 of '26, '27 is 18.09%. Profit before tax in Q1 was INR 16.3 crores whereas Q1 of '26, '27 is INR 13.1 crores. The PAT margin in Q1 '25, '26 was 7.1%. In Q1 '26, '27 is 11.56%. The profir after tax in Q1 of '25, '26 was INR 12.1 crores. In Q1 '26, '27, it's INR 22.46 crores. The PAT margin in Q1 for '25, '26 was 5.3% whereas in Q1 '26, '27 was 8.61%. Now I'm giving you financial highlights of Q1 '26, '27 versus Q1 -- Q4 of '26 -- '25, '26. The total revenue of Q4 of '25, '26 was INR 252.1 crore whereas Q1 of '25, -- '26, '27 is INR 260.8 crores. The EBITDA margin in Q4 of [Foreign Language] was INR 44.7 crores. Q1 of '26, '27 is INR 47.2 crores. EBITDA margin in Q4 of '25, '26 was 17.74%. Q1 of '26, '27 is 18.9%. PAT margin, profit before tax in Q4 of '25, '26 was INR 27.6 crores whereas Q1 of '25 -- '26, '27 is INR 30.1 crores. The PAT margin in Q4 for '25, '26 was 10.96%. Q1 of '26, '27 is 11.56%. The profit after tax in Q4 of '25, '26 was INR 20.6 crores whereas Q1 of '26, '27 is INR 22.46 crores. Thank you.

Thank you. We can now proceed for the Q&A session.

[Operator Instructions] The first question is from the line of Bhavya from Samaasa Capital.

A I audible?

Yes, you're audible.

Yes. Congratulations on good set of numbers. Just 2 questions. The first one, just wanted to know 2 things on GLP. Are we also participating in terms of our own brand? And also has the third-party GLP manufacturing started kind of coming into our revenues?

Bhavya, i's Pranav. So in terms of GLP-1 specifically semaglutide, as we have mentioned in the calls before, we have partnered up with Hetero. So Hetero got their permissions in May 2026. So our traction of their revenues was resided in the Q1. But yes, to answer your question, we have started the CMO operations, which will, I would say, take some steam in Q2, but have further in Q3 objective would be CMO in the domestic space on maybe 30% level, but 70%, we hope at the end of the year, it would be a capacity use for the international market where Hetero and Gufic as a single channel has filed in more than 22 countries. But of course, our revenues would be purely as a CMO. Again, I'm reiterating, we are not going to do any front end neither in India, neither abroad. We will be using this as a CMO opportunity to support Hetero like we did in the past with remdesivir, and they will be front-ending the product internationally as well as doing CMO in India.

Understood. [indiscernible] the internal market, there was a change in model from a distributed to IP. So I mean if possible, can you just explain how that changes things and how that kind of benefits us?

Sorry, can you repeat your question again? I lost your voice in the middle.

No, I was saying in the presentation you had [indiscernible] IP-led...

Yes. Right. So I think I got your question, correct me if I understood. So your question is that basically, in our presentation, we have mentioned that we are going from a B2B as well as to a B2C. In other words, that earlier we used to just manufacture products and give it to certain distributors in the emerging markets. Now our strategy is specifically for markets like Africa, Southeast Asia as well as South Asia where we have a front-end, I would say, ambition. So just to add upon that, so we have just recruited around a team which is based in Mexico, one person who is based in -- I mean, Africa recruiting for the people, one person who's based in Philippines, and 2 more people who have an African and a Southeast Asian, I would say, legacy in Mumbai. They will be seated in Mumbai, but of course, traveling 15 days of the month. So gradually, what we are trying is, as we have done it in Europe in the past by trying to get our own subsidiaries made in Ireland and U.K., where the marketing authorizations remain with us. In these markets also now -- actually not now, but since the last 2.5 years, we have been always saying that we are trying to get our registrations in. So some of our registrations have started coming in, and we hope in this coming year and next year, we should have more registrations in place. So right now would be the best time for us to actually have a separate team. Of course, in some countries, maybe start off with the distributor field force till we reach economic of scale. Wherever we have enough registration and economic of scale, we would like to deploy our own, I would say, field experts, which help us to get a better pricing. So in somewhere if we are getting let's say, a 50-50 -- anything around 40% to 50% margins. We hope we can push them our upwards of 15%, 20% more when we have our own field force. At the same time, also the IP and the trademark belongs to us. It's also creating our own IP and intangible assets going forward. So that's the strategy which we have started doing since March once Dr. Raja started coming in last year. We started first in Europe and then this year in emerging markets. So this recruitment has happened in the Q1.

The next question is from the line of Arav, an individual investor.

Am I audible?

Yes, you're audible.

Sir, I actually wanted to ask first of all, congratulations on the quarter. I wanted to ask if you are expecting a certificate for the Europe export? Any update on that?

So I think in Navsari, we already have EU certification, which we already contain the exports. The EU certificate, I think what we are referring in our presentation would be for Indore. So the Indore certificate would -- I think we are just waiting for the feedback from the authority. There were some compliance which we already have applied since the last 2, 3 months and even the final data also has gone. So hopefully, in the next maybe a month or 2, we should be hearing something from them.

Okay. And sir, about the Indore factory, it was unused. It was only used 30% capacity, right? Are we expecting a jump on that?

Yes. Of course. So if you see quarter-by-quarter, the capacity utilization is going up as more and more products for the domestic or for CMO or for our own brands or for that matter, wherever certain 2, 3 countries which we have been able to go for the transition and I would say, site addition, we have already started that. Apart from that, we have taken validation batches. So in terms of pure capacity expansion, yes, the amount has gone from 18% to 22% last year -- 20% to 25% last year, then this year, close to 30%, 35%. And hopefully, like I said, we should end up the year on around 40%, 45% capacity utilization. So we are on course for that. Margin expansion using the Indore facility would, of course, come once we have what we call our EU in place. EU market -- EU certification really opens a lot of markets for us. So we are just waiting for that. And also apart from that, one of our, I would say, partners have also triggered their, I would say, submission for U.S. from our site. So we expect them also in the next, I would say, a quarter or to visit us as per the goal period. So yes, we are looking for all these movement of export markets, which would help us to not only utilize the capacity, but help us in the margins also.

Yes, sir. Regarding the margins, from June 2023 to, I think, September 2024, we had operating margin of 18%, but it dropped after that. But now it is 18%. So is 18% the new normal margin for the year coming?

Yes. And I'm sure Roonghta sir explained this in the last 2 calls also because in the period which you have mentioned, at that time, the total expense of Indore as well as the depreciation and the interest were being capitalized. So hence, all those factors were until, I believe, October 2024 or that Q3 '25 were part of capitalization. And that's why after that, you saw a drop over Q3, Q4 2025. But now with capacity utilization, with natural business progression as well as exports margin expansion along with domestic business also. So what you are seeing as you're right, this is the, I would say, start of the improvement of margins going forward, yes.

The next question is from the line of [ Agam ] Shah, an investor.

Yes. 2 questions. One, if you can maybe still early, but you can elaborate on the tie-up which we did last quarter with the Canada [indiscernible]. How can can it scale up this year in terms of revenue going ahead? And one more question on the GLP-1, you said you're doing he CMO route as a partnership. So how much revenue or how much growth can it come this year?

Sure. So the first question being about our aesthetic division, where I think we have done the tie-up last year for the fillers. So the fillers as a category complement our botulin toxin products because toxin and fillers are 2 important tools in the hands of aesthetics practitioners for their therapy. So the fillers market in India is around INR 200 crores. I think this is as per the import data and other data which we have, which we have derived from. So we feel that this filler market is much bigger than the toxin market as of now in India. And anywhere we used to go to meet our doctors, we always expected the same company to have a toxin in a filler. So this just helps us in our practice. It helps us in our training. It helps in the knowledge disseation. And I just didn't want to tie up with any other filler provider. So we are fortunate enough and my team did a great job that revenues [indiscernible] from Canada, who is #2 in U.S. and also present in more than 32, 33 countries in the world have selected us to partner with them for India. So we feel that the revenue would be captured maybe by post December because we have started the registration process in Q1 -- sorry, Q4 last year. So we feel that maybe by Q2 or mid of Q3, we should get the registration. And we hope at least December -- if not December, maybe January, we should launch the pillar in the Indian market. So our first year projections are decent. But let's -- again, instead of me giving you numbers, I've given you total market numbers. And we hope that with the help of these pillars, we can also not only strengthen our #2 position, but very close to -- very close we can grab the #1 position in terms of toxin and fillers in the next 3 to 5 years in India. So that answers, I think, part 1 of your question. Part 2 of your question is about GLP-1. So yes, in GLP-1, again, I reiterate that our focus is purely on CMO. In the Q1 also, we had a 10- to 15-day plant shutdown because we were introducing a new machine, assuming that in March, Hetero would get the permission. And Hetero got some part of the, I would say, strengths of semaglutide approved in May and some other strengths also are in the process of getting approved or have been approved last month. I'll check and get back to you. So we hope that the traction will pick up from Q2. Some traction has happened in the month of July, much more we see in August. We hope there's some again, media involved by which again, the plant will be close for 5 days when there are visits. And Q3 is when we will see the actual traction happen. So again, in terms of numbers, they would be part of our 15% year-over-year growth, which we always tell to people, and we're already embedded in this. And again, I'm saying our role is purely as a CMO. We have no front-end plans or revenue forecast for the GLP-1 on our own.

And are you being conservative when you say you want to grow by 15%?

You mean 15% year-over-year as a company? Yes. I'm not being conservative because there are some product mix we are also squeezing out and we'll be getting a low yielding. So I would say 15% to 20% is what we say we should grow year-on- year as overall, as a company, yes.

So is it that maybe from next year, you will be reaching that inflection to grow beyond 20% or the business that we'll be growing at 15%, 20%. So the thing I'm trying to understand is, is it somewhere or is it the pedal beyond 20%. The scale we are, it does look like 20% plus is achievable.

All right. So I think I would love to give you any other comment right now on the call otherwise, but our efforts are on to grow much beyond. But 15% to 20% is what we commit to you that would be a bare minimum.

Okay. And Botox, are we launching in export markets?