Vimta Labs Limited (VIMTALABS.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '26 Earnings Call for Vimta Labs Limited hosted by Systematix Institutional Equity. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Manchanda. Thank you, and over to you, sir.

Thank you, Sasha. Good evening, everyone. On behalf of Systematix Institutional Equities, I welcome you to the Q2 FY '26 Earnings Call of Vimta Labs. We thank the Vimta management for giving us an opportunity to host the call. Today, we have with us the senior management of the company represented by Ms. Harita Vasireddi, Managing Director; Mr. Satya Sreenivas Neerukonda, Executive Director; Mr. Siva Rama Krishna, Chief Financial Officer; and Ms. Sujani Vasireddi, Company Secretary. I'll now hand over the call to the company management for opening remarks. Over to you, sir.

Thank you, moderator. Good evening, and a warm welcome, everyone, to Q2 and H1 FY '26 Earnings Call of Vimta Labs Limited. Please note that the investor presentation and the financial results are available on the company website and the stock exchanges. Also, anything said on this call, which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. The conference call is being recorded, and the transcript along with audio of the same will be made available on the website of the company as well as on the stock exchanges. Please also note that the audio of the conference call is the copyright material of Vimta Labs Limited and cannot be copied, rebroadcasted or attributed in the press or media without specific and written consent of the company. From the management, we have with us Ms. Harita Vasireddi, Managing Director; Mr. Satya Sreenivas Neerukonda, Executive Director; Mr. Siva Rama Krishna Kambhampati, Chief Financial Officer; Ms. Sujani Vasireddi, Company Secretary. Now I request Ms. Harita Vasireddi, Managing Director of Vimta Labs Limited, to provide you with the updates for the quarter and half year ended 30th September 2025. Thank you, and over to you, ma'am.

Thank you, Siva. Good evening, everyone. Thank you for joining our Q2 and H1 financial year '26 earnings call today. We will start with a brief business update, and then our CFO will take over to discuss the financial highlights for the period ended 30th September 2025. I'm very delighted to share that Vimta Labs has recorded highest ever quarter 3 sales revenue crossing a mark of INR 100 crores with INR 104.5 crores, making an upward shift of 22.3% on a year-on-year basis. This growth is a result of hard work by the entire Vimta team. Pharmaceutical research and testing and food testing services are the major contributors to revenue growth, and these services continued to perform well in this quarter as well, while electronics and electrical testing and environmental testing services maintained steady performance. With the technological advancements, tightening quality norms and the rapid growth of the wellness sector, the spotlight on product quality and safety has never been stronger. Equipped with the cutting-edge testing infrastructure and deep domain expertise, Vimta stands ready to harness emerging opportunities across pharmaceuticals, nutraceuticals, food testing, et cetera. Our pharmaceutical testing services continued to demonstrate strong performance this quarter, driven by sustained demand from both the domestic and international clients. We are happy to report that the Clinical Research division went through a successful WHO audit, reflecting our commitment to maintain strong quality and compliance in our operations. Our food testing division experienced good growth during the quarter. The Electrical and Electronics division delivered a stable performance. We have commenced operations with the new testing chamber installed at our Life Sciences facility. With this capacity expansion, we are ready to drive growth from this segment as well in the coming quarters. With respect to our biologics contract research and development services, I wish to update that the project is on schedule. Majority of the equipment and important vehicles have been ordered. The facility will be ready by the end of third quarter, post which we will take up qualifications of the area and equipment. So at this point of time, we are confident of commercializing these services by Q1 of financial year 2027. With this, I would like to hand over back the call to Siva for him to discuss the financials.

Thank you, Ms. Harita. A very good evening once again, everyone. We appreciate you taking the time to join our Q2 and H1 financial year 2025-'26 earnings call. I will begin by presenting an overview of our financial performance for the quarter and half year ended September 30, 2025. Following that, we will open the session for questions. Before discussing the financials, I'd like to specify that in light of the divestment of our Diagnostics and Pathological Services business announced on August 30, 2024, the figures for the previous period have been regrouped to enable a like-for-like comparison with the current quarter. I will start with the financial highlights for the quarter. Total income for Q2 FY '26 stood at INR 1,045 million as compared to INR 854 million in Q2 FY '25, up by 22.3% year-on-year. EBITDA stood at INR 369 million in Q2 FY '26 as compared to INR 306 million in Q2 FY '25, up by 20.6% year-on-year. EBITDA margins for the quarter stood at 35.3%. Profit after tax in Q2 FY '26 stood at INR 199 million as compared to INR 170 million in Q2 FY '25, a growth of 17.1% year-on-year. PAT margins for the quarter stood at 19.1%. Basic EPS in Q2 FY '26 was INR 4.5. Coming to half yearly performance. Total income for H1 FY '26 was at INR 2,038 million as compared to INR 1,610 million in H1 FY '25, up by 26.6% year-on-year. EBITDA for H1 FY '26 was INR 723 million as compared to INR 572 million in H1 FY '25, up by 26.4% year-on-year. EBITDA margin stood at 35.5%. H1 FY '26 PAT was at INR 388 million as compared to INR 309 million in H1 FY '25, up by 25.5% year-on-year. PAT margin was at 19%. Basic EPS in H1 FY '26 was INR 8.7. On the balance sheet side, we continue to have net debt-free balance sheet with cash and cash equivalents, including bank balances of INR 545 million. With that, we can now open the floor for Q&A. Thank you.

[Operator Instructions] Our first question comes from the line of [ Darshan Zaveri ] from Crown Capital.

Congratulations on a good set of numbers, sir. I just wanted to know that we've crossed the INR 100 crore quarterly run rate, sir. So any kind of guidance that you would like to give for this year or next in terms of revenue and margins?

We don't issue any forward-looking numbers.

Okay. Fair enough, ma’am. But this run rate that we are at right now, so we'll be looking to continue that run rate going forward? Or how will the new CapEx that we are investing in, how will that help us grow further, sir?

That question was not very audible to me. Srinu, can you take that?

Even I could not hear that.

Sorry. I hope this is better. So I'm saying that, okay, now we've reached INR 100 crores run rate. So now going forward, will we have any capacity constraint? Or how would we ensure that our growth momentum continues that -- because you're investing in CapEx, right? So how will that kick in? And what kind of an asset turnover do we expect from the new capacities?

There are no capacity constraints that we envisage for the immediate future. Recently, we have taken up expansion of the infrastructure. So the infrastructure is available. The required resources in terms of manpower and equipment will be added as we are able to grow our revenue.

The next question is from the line of [ Tadawati Sai Surendra ], an individual investor.

My name is Sai Surendra. I'm retail investor. Congratulations to the management for the strong Q2 performance and the steady growth in momentum. My question is, which service line will support higher growth in the next quarter, pharma testing or clinical service line or electrical testing. And as the exploration is completed and biological work is processing, can we expect even better growth for Q3 or Q4 financial year '26?

The growth we expect to continue from the pharmaceutical research and testing services and food services. These 2 anyway make up the larger portion of our revenue pie.

[Operator Instructions] The next question is from the line of Aditya Chheda from InCred Asset Management.

I have 2 questions. First is if you can elaborate on the utilization of the Phase 1 of the new capacity and the status of the Phase 2 of our new facility. Any commercialization time lines that you would want to share? And my second question is on the other expenses where we've seen a slight bump. If you want to elaborate any nature of expenses perhaps maybe related to starting of the new facility, et cetera. If you can comment on the nature of these expenses, that would be helpful. These are the 2 questions probably.

Yes. Coming to the first one about utilization, the new facilities that we have created, they are occupied and already commercialized. So we have built these capacities for a long time -- a long period. So even going into the next few years, we think as of now that these expanded capacities will suffice and will support the growth that we wish to pursue for the organization. And coming to utilization in the Phase 1, there also, I think since we have built the Phase 2, some spaces have opened up there, but every space is more or less earmarked for the kind of activity that we wish to take up. And these spaces, we will start using from Q1 of next financial year. Coming to the little spike in other expenses, I think the spike you see is because of the additional travel, we are infusing some energies into the business development overseas. So there, you see a little spike in expenses and probably some -- that's all.

These are regular fixed costs that we are incurring, especially increased because of additional BD efforts that we are putting in.

Got it. So if I have to attribute any number to utilization of Phase 1, it should be adequately utilized at this point of time. And only when Phase 2 comes online, we will see some step growth in revenue, if that understanding is correct?

I wish to correct that. Phase 2 also is under utilization, not the entire facility that we have created, but we have already begun using 50% to 60% of the additional space that we have created.

[Operator Instructions] The next question is from the line of Veer Vadera from Niveshaay.

We started with the clinical services not long ago, and we also in previous calls have mentioned on the strong pipeline on this side of services. And with the other expenses going up and you mentioning that it is majorly for business development purposes. So if you can maybe highlight more on the -- our pipeline, our conversion and when do we foresee maybe newer customers or newer orders on the clinical side? And anything on this, if you can comment?

Can you take that, Siva? Yes.

So clinical business is not new for us. We have been doing clinical for the last 33 years now. But what we were doing earlier was mainly healthy volunteer studies. What we initiated 4 years back is doing studies in patient population, which is being done in the hospital setups. And hospital setup does not require any major CapEx from our side. It is off-site. So it's mainly having the team in place and some regulatory softwares, which are also now available as a service model. So we don't anticipate a lot of capital getting in there.

And sir, from the presentation, we have incurred almost around INR 47 crores CapEx outlay for this quarter. So maybe if you can give some color on -- because previously, our CapEx was bifurcated into maybe 3 portion like a infrastructure and equipment. So how much of this INR 46 crores, INR 47 crores is spent on equipment funding?

Sir, I just want to correct one thing. The INR 47 crores of outflow is not for the quarter, that is for the half year.

[Operator Instructions] The next question is from the line of Vishal Manchanda from Systematix Institutional Equities.

My question is with respect to the CapEx that we are doing. So is this -- can you kind of -- while you would have done this earlier, but I still need some clarity in like how much you are spending on each vertical. So how much on pharma analytics, how much on biologics, how much on clinical research? So if you could break that up?

That's very granular information. Please excuse me, but I won't be able to share that.

Okay. But if you could directionally tell where is the largest CapEx going within among the verticals?

We have expanded our capacities in pharmaceuticals, food, electrical and electronic testing. So CapEx has been spent on all these 3 verticals.

Okay. And while we kind of spend on this -- spend on CapEx, so is it with visibility that we spend on or you have some kind of client contracts that you back up this CapEx with?

Some CapEx is inherent to the capacities that we have added. Like, for example, if you have a building, you will need to spend on the equipment associated with the new space that is created, some of it. Some of it is, of course, because we have the visibility of the pipelines. So there is a play of both here.

Okay. Any update on the JNPT project? Is there a further traction there? And have we reached where we need to be there?

Yes. I would say we have reached where we were expecting to be there.

Okay. So probably we'll not see any further growth from JNPT?

As of now, I don't have any such information.

Okay. With respect to exports, so last quarter, it was 30%. So is the growth largely -- so is more of growth coming from exports or it is coming from the domestic markets for Vimta?

Both.

So the ratio remains -- exports would still be 30% and domestic 70%?

Exports have gone up slightly by, I think, a couple of percent in this quarter.

Okay. Okay. And with respect to the biologics business that we are foraying into, we'll be doing cell line development. Is that right? Or we'll not be doing the cell line development?

We are having the capabilities being built in to do even cell line development. So any portion of the large molecule development, we are putting in place the capabilities.

Okay. And you also have capabilities on analytical part?

That we already have.

You already have those capabilities.

Yes.

And there are -- there is a guideline that the U.S. FDA has recently issued draft guidelines regarding approving biosimilars without clinical trials, only analytical testing would suffice. So would we have the entire capabilities to kind of do the full package of analytical testing? And is it different for each biologic or they are broadly the same for all biologics that would...

We have the capability broadly for most of the requirements with respect to analytical. Some could be very product specific. So if that is the case, we can always onboard those technologies. But we have been having analytical capabilities for more than 7 years, 8 years now.

But do we have like relevant kind of experience in terms of servicing clients on those capabilities and our analytical studies going to the regulator?

Yes, yes. The team is very experienced.

Even on the biologics front.

Yes.

The next question is from the line of Veer Vadera from Niveshaay.

For the follow up. Around maybe from whatever the CapEx which we had incurred and we are anticipating maybe exit run rate for this financial year for maybe around INR 500 crores kind of exit run rate which we are targeting. Given the current business environment, maybe due to tariffs and all the situation, would we want to reconsider our guidance or anything maybe you would like to comment?

We are still sticking to that goal that we have taken for ourselves. The tariff situations, I think, are more or less stabilized now unless something dramatically changes. That's the number that we are still targeting and pushing for.

Got it -- and ma'am, like for the business split, which we are mentioning that maybe exports have gone up a bit. So on the domestic front, like is it -- what sort of challenges are we currently facing maybe for the segment geographically not to maybe grow to that extent?

Sreeni, you want to take that?

Yes, I will take. Can you just repeat your question? Your voice broke while finishing the question.

So I wanted to know more on the analytics because even in the pharma analytical as majority of our revenue is coupled with preclinical and clinical. But on the domestic business front, maybe if you can throw some light on the business environment as of now? Like are we facing any challenges because even in the regulatory bodies, there have been some changes where maybe only maybe pre-COVID, not post-COVID, only onetime analytical testing is to be done. So there have been some regulatory changes also which have been maybe affecting our business. So I wanted to know more on this side of things, like how has the business environment been domestically? Are we facing any challenges maybe due to the regulatory bodies or any changes in regulations? If you can comment on that and maybe give some outlook on the near future, how do we see things to evolve from here? That will be really helpful.

Yes. So as such, there is no regulation change that we know of. pre-COVID or post-COVID, the regulations remain the same. So that is not impacting anything either for the manufacturing segment, R&D segment or for the testing segment. So nothing has changed as of now. And the landscape is good. I mean, the companies are getting more into complex product development and the new developments in the lines of biologics, peptides, a lot of manufacturing, which is happening now in India. There are some companies who have set up big fill/finish centers in the Bangalore region, Hyderabad region, Bombay region. So business is good for them. And when this thing happens, testing for us increases because fill/finish is done at a different site testing for testing, they need independent laboratories. So in general, pharma is growing. I mean there is no slowdown or anything of that sort. And India being a very big generic player, so there's no impact.

Can we have the next question please?

The next question is from the line of Aditya Chheda from InCred Asset Management.

Can you talk more about the strategic expansion in the Biologics segment, if you can lay some outlook for the same? And if you can call out the CapEx estimate number for '26, '27, that would be helpful.

The CapEx that we have planned for biologics this year, we are expecting an outlay of around INR 25 crores, maybe a similar amount around that range for next year as well. And the strategy is to basically integrate all the services that we have, which is right from preclinical to clinical research and the entire analytical component and backward integrate it to formulation development for the biologics. So we have all the content pieces, which are more expensive part of the development process. The idea is to, with this backward integration, be a provider -- one-stop provider for our customers. That's the basic strategy.

Right. And can you call out the total company-level CapEx estimate that you would have planned for '26, '27?

'26, '27, I don't yet have the company numbers. Biologics, we know we are going to spend over a period of 2 years, and that's why I have that breakup. But I will have CapEx numbers for next year only around March time.

The next question is from the line of Samir Palod from AUM Fund Advisors LLP.

I'm a little new to the company. Is it possible to just give us a steer on the revenue breakup between the 4 verticals, even just broad numbers, which is the -- I understand pharma is, but just what is #1, 2, 3, 4 for you?

Pharma is #1, wherein we offer preclinical research services, clinical research services and analytical research and testing services. So that's...

And how much would that be of the total revenues approximately?

It will be around 65% of the total revenue.

Okay.

And then food comes next. This is around 20%, food testing.

Okay.