Thank you very much, s ir. We will now begin with the question -and--answer session. The first question is from the line of Surya Narayan Patra from Phillip Capital (India) Private Limited. Please go ahead.

Yes. Thanks for the opportunity and c ongrats for the good set of numbers in t he difficult time. My first question is on the growth number that we have witnessed on the generic business front. Interestingly, after kind of a two-year period, we are seeing a kind of strong momentum in the generic business both sequentially as well as YoY. And similarly , if I just comparatively see that even the margins also had seen a similar improvement, the exit rate for the quarter is strongest in the last two year period. So, how should we see this the generic growth, whether it is driven by the price rise and whether that has contributed to the overall margin scenario here?

As I have mentioned during my speech, right now , the generic performance itself is at a high competition level whereby we have continuous pricing pressure in the generic side. As market share continues, we are still a dominant player in the market, and we continue to play that role. In terms of new molecules that are being coming off -patent, as and when they come off -patent, we will start producing them and slowly start building our shares.

And regards the margin scenario, sir, that we are seeing the exit rate for the quarter in terms of either gross margin or even the EBITDA margin, it is, I think one of the strongest number over the last two- year period. So how should one think going ahead or it is just a quarter-specific product mix that is driving this number or how should one going ahead think about the margin scenario?

This is mainly to do with the product mix that we have and it would keep changing quarter -on- quarter. So, I would recommend like looking at it on a yearly basis rather than just focusing on one quarter.

Okay. Just last question from my side is that, see in the last one year period, obviously, we have seen a significant pricing trend in the RFQs for the CDMOs generally. Obviously, that was supported by the potential implementation of the Bio secure Act, China Plus One and those kind of things. But now, those kind of things are now in the back stage. So any practical change in terms of your RFQs or the customer engagement, although that you have indicated there is a heightened engagement that is still there. But since we are completing the financial year , any commentary that you can provide for the next year in terms of your outlook or guidance or anything on that front?

Firstly, we have always been in the CS business, custom synthesis business right from the inception. It’s not something that we started after China Plus One or the Biosecure Act has started, our business was there. We’ve been in this business even before anyone has ever been in it. So for us, RFQs, RFPs coming in on a continuous basis is always there. W ith the Biosecure Act or China Plus One, we are seeing a little more than what we have seen before. And we have several products in the pi peline, some are going through R&D phases, some are in pilot scales right now. So it ’s hard for us to put a finger on it because of confidentiality. But what I can say is Divi ’s is very strong in the custom synthesis business as well as the generic side of the business.

Sure, sir. Yeah, I have a couple more. I will come in the queue, sir.

Thank you. The next question is from the line of Neha Manpur ia from Bank of America. Please go ahead.

Yes. Thanks for taking my question. My first question you know just understanding the gross margin expansion that we have seen . While I understand you mentioned the product mix, but has the backward integration, given the Kakinada that just commissioned, has the backward integration from Kakinada started already helping gross margins or would that take time to reflect a nd that ’s something that we should build in going forward?

So Kakinada definitely, we started in January; the production and the backward integrated material has slowly come into the product. So we will see the benefits going in the future as Phase -I and slowly we will start constructing Phase-II where we will add additional blocks. Definitely , we will see benefits that ’s coming in. But Kakinada more than creating space or controlling our price , the main reason of having Kaki nada is for having continuous supply of our own raw materials and our critical starting materials. So, to avoid any disruption in supply for us, to have continuous supply for our customers, is why Kakinada also started, apart from pricing and controlling our impurity profiles and several other factors.

Understood. And if I have to also think about Kakinada ’s impact on earnings, would it be fair to assume that it will take a couple of quarters for Kakinada to become like an EBITDA-neutral from a cost versus the benefit from Kakinada, would that be a right way to look at it?

I would rather instead of looking at Kakinada as a single unit because see the raw material or the starting material it ’s producing goes straightly into one of the units where GMP material is being produced. So we have to look at the molecule as a whole. We cannot look at the molecule into separate unit and then break it up. So as a whole, yes, there will be a benefit. I would look at it more as a company and then look at the molecule being manufactured in different areas.

My second question is just understanding our peptide capabilities, just wanting to know if we ’ve expanded these capabilities to non-GLP -1 areas as well ? And just an extended question is on the capabilities. If I look at presence across other modalities, are we targeting ADCs or even nucleotides, any updates that we can give on the capabilities that we are developing in terms of client interest on custom synthesis?

Could you just repeat your question again please?

So first is on peptides, do we have capabilities that extend outside of GLP , are they extending even to non-GLP areas and also are we focusing on A DCs or nucleotides, when should we start seeing there, are investments that we are making there based on client RFPs?

So to answer about the peptides, we are right now looking at peptides only for manufacturing for the innovators and looking at their pipelines and working with them. As you know, Divi’s is very strong in manufacturing their individual peptides and protected amino acids and that is how which we have entered about 18-years ago and that’s why we are now entering into manufacturing fragments either by solid -phase or by liquid- phase, I cannot comment more on these because I am bound by confidentiality, so I can only talk about that w e are working with several customers and at several phases right now . Divi’s has actively invested in both solid -phase and liquid- phase so that, as and when required, we can support customer requirements. Coming to your ADCs and nucleotides, it’s still in the preliminary phases right now. I cannot comment too much on those molecules.

Got it. Thank you so much.

Thank you. The next question is from the line of D r. Kunal Dhamesha from Macquarie. Please go ahead.

Hi, thank you for the opportunity. One more strategic question. Several of the large pharma companies in the US have announced large capital expenditure to kind of reshore the manufacturing. So, how are you viewing this announcement in context of overall industry growth rate a nd specifically, do you read across for Divi ’s since we kind of work with all these large pharma companies? And recently, because of this, have you seen any change in c onversations that you are having with these companies?

So as you know, Divi’s is in both custom synthesis, custom also includes peptides or if you look at we are in contrast media, generics. Any business related to custom synthesis is based on a long-term contract. It is not like we just jump in , make something and then we forget. So , we have long-term multi-year contracts with structures in it; and we are seeing new opportunities in the pipeline. We do not see any issues at this point. But if something arises , of course, we will definitely k now. As of now we don’t see anything.

Sure. And the second one on the GLP-1 portfolio that we have with multiple innovators. Would you say that our portfolio would extend beyond peptide GLP -1s, we would have some non- peptide or maybe small molecule GLP-1s also in the portfolio?

Like I told you in my presentation, Divi’s is working on GLP-1s, GIPs, GLP-2 analogs and on small molecules and we are very active with different customers at different phases… they are at different phases in our development or in our advancement.

And lastly, if I can just ask one more on the Kakinada plant, I think we are more or less done through phase-1. So one part is how much we can scale here, how many phases we should expect, you know whether it’s a 3-Phase journey, five phase journey? And In terms of whatever phase-1 that we have commercialized, what proportion of that is as percentage of total phase-1 capacity?

So Kakinada is a total of 500 acres. In 500 acres we have occupied about Phase-I we have used 200 acres and we have built production blocks which about seven of them which will help us in taking care of certain raw materials s o that it helps us in our backward integration. Apart from this , it will also free some of our existing blocks in our Unit-I and Unit-II; thereby we can add certain molecules and manufacture G MP products, while Kakinada goes through its own regulatory phase . We still have 300 acres. Based on the requirement in the market and opportunities we see, we will expand, it can be either in two phases, maybe it will be Phase-II and III, or it will be in one phase you may use the remaining 300 acres. Everything is based on the opportunities we have and when for example in a CS molecule will come to life and we need space immediately , of course we have t o invest and move forward.

Sure. Thank you and all the best.

Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.

Good afternoon. Thank you for taking my question. Just the first one on the announcement in April and also from last April, right, similar kind of amounts like Rs.700- crores odd that was a long-term supply agreement, this is again a long-term supply agreement. Can you just compare in Contrast? I don’t know whether you put out anything on the last year, but this year was advanced intermediates. So, if you could help us, I know you are not going to call out the names but just want to understand, why not API in this one ?. So just to compare in Contrast the type of a nnouncements, these are the largest two announcements we have done, so just wanted to understand the qualitative color?

That’s quite a difficult question because I am bound by confidentiality. Both are related to CS projects. Yes, the recent one is an advanced intermediate, the one before all I can say is it is an active API.

Helpful Kiran. In your opening remarks, you alluded two projects in the latest announcement to s ay it has opened new avenues of growth. Can you like double click?

Could you repeat your question again please?

So, Kiran, in your opening remarks, when you talked about the second announcement, you said that this had opened more avenues of growth on the innovation side. So what do you mean?

So within the peptide division or if you look at our existing… new chemistry development like continuous flow chemistry, this is a new thing that several customers are looking at a nd also on biocatalysis where we have been investing heavily and this is where most of the innovation and new molecules are coming from, so that’s what I meant by new opportunities.

Understood. Thank you. Just the second question is on the financials. So if you look at full year Fiscal ‘25 versus Fiscal ‘24, EBITDA margins have gone from 29% to 32%, gross margins have been flat, but the biggest delta has come from other expenses, which is excluding wages I am talking about which has come down by 250, 300 basis points. So if you could explain like what is driving and that’s been the case for the quarter as well, so just want to understand what are we doing right to keep other expenses to actually in fact declining for the year when we had like 18%, 19% growth?

Can you just repeat your question again? The voice was not pretty clear.

Mr. Srinivasan, I would request you to use your handset, sir. Voice is muffled.

Yes, sure. The question was on other expenses. Other expenses as a percentage of sales last year was 17% and this year was 14% . This is despite we are having 18% constant currency growth. So just want to understand what is driving this operating leverage.

I am sorry, ma’am, you are not audible.

So, I would say the major driver behind it could be like quite a few things, it’s not just one thing that has led to the other expenses being the way it is. It could be from various expenses, it’s not just one expense that I could put my finger on. We did have higher repairs on the older plant and machinery considering some of the units are about three decades old. And besides that, there has been an increase in freight and travel expenditures and as well as the environment management expenses.

So the costs have come down, not gone up. I am just confused.

These are the ones that have made all the changes. That’s what I was trying to say.

Understood. And then lastly, any guidance for the revenue and EBITDA for Fiscal ‘26? Thank you.

The revenue guidance, as I would say like I have said earlier, we would always look at double-digit growth and we would always assume, and our work would always be towards making sure the organization grows at a consistent pace of double-digit growth.

Thank you. Thank you and all the best.

Thank you. The next question is from the line of Amay from JM Financials. Please go ahead.

Yes. Thank you for taking my question. M ost of the questions are answered. So one incremental question is on GLP-1. We said that we are only working with innovators. So, next year, which the generic opportunity in the Semaglutide which is opening up, so are we not going to participate in that opportunity?

: Like I said, we are working with innovators on several phases. A s of now, we are not looking at working with GLP-1s at the generic space.

And any rationale behind is it because we are bound by the contract with the innovator, or you believe that it’s not lucrative enough to enter?

See, as of now, I am bound by confidentiality. It is whether I am producing for innovator, I mean, based on our knowledge , knowhow and everything, we believe we are best suited now to work on innovative molecules in the GLP space.

Sure. For the innovator space, b ecause the products have been there in the market for a w hile now, so is there any wallet share being committed to us by the customer or like how are we thinking about that?

So like I said, because we have long-term supply agreements with several customers. Apart from the ones which are also in the market, you also have to understand, there are several molecules in the pipeline at various phases, GLP -1s, G IPs, GLP -2s in place which are in various stages of development where we are active ; and we will see as an d when opportunities grow w e have long- term contracts in place and we will see how it forms out.

Sure. And the next question I have on the next year, we have given the double-digit growth guidance. So within segments, do you expect API also to grow in double-digit, the generic segment?

I cannot comment on that. I would say the overall revenue of the organization would be approximately double-digit growth.

Sure. Thank you so much. I will join back in the queue.

Thank you. We will take the next question from the line of Abdul kader Puranwala from ICICI Securities. Please go ahead.

Yes, hi. Thank you for the opportunity and congrats on a good set of numbers. Sir, my first question is with regards to your investments on the new project. You talked about GLP -1, GIPs and GLP-2 products. So, in terms of whatever you have spent in terms of your capacity addition , any color if you could provide to us what is the investments done into this space so far?

Can you repeat the last part of your question?

Yes. My question was with regards to the capital investment, which you would have done for your newer projects which include GLP-1s and other opportunities.

We haven’t classified it as a particular investment towards GLP-1s because several of the equipments could be used both for the API or other custom products or GLP -1s. So we haven ’t classified it in particular saying that this is only a GLP-1 based situation.

Okay. Next one is on the two new projects which you have announced on the CS side. So, any color on when the revenue generation would start from these plant s? And secondly, with the quantum of investment what you have done, any of this project could it be in line with what the opportunity you would have seen during the COVID time?

Firstly, this is a long -term opportunity is how I would put it which are quite promising molecules . Number 2, we completely depend on the regulatory approvals of our customer s, once we produce our commercial batches. So maybe by 2026 end, or 2027 is when we hope to see commercialization of these projects.

Understood. Thank you. I will get back in the queue.

Thank you. The next question is from the line of Bino Pat hiparampil from Elara Capital. Please go ahead.

Hi, good afternoon. Most of my questions are answer ed. Just one. What would be the CAPEX for the coming financial year?

It would be mainly the projects that have been announced this particular financial year, would be the additional CAPEX that we are expecting.

So sorry, so that is around Rs.1,400 crores if I get it correct, plus some maintenance CAPEX?

Yes, so it would be Rs.1,400 crores plus some maintenance CAPEX, I mean, that would be the one that we would be looking forward to.

Got it. Thank you very much.

Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead.

Hi, sir, t hanks for taking my question. Sir, on the two long-term contracts , by when would the commercial impact of these two contracts likely to be visible?

I think there would be around late 2026, early 2027 we would be seeing the impact of those, but this is also subject to when the regulatory approvals would take place. It ’s not just the CAPEX that we need to look into, but one is the CAPEX, but also when we start manufacturing, we need to also get regulatory approvals, so that would take time as well.

Just to clarify, this calendar year ‘26 end that you are talking about, right?

Yes, we are talking about sometime in 3rd Quarter end of 2026 or 4th Quarter or January of 2027 around that time hopefully if all regulatory approvals come in place.

: And just secondly on Kakinada, how much incremental CAPEX have we planned for the first phase?

Currently Phase-II, we haven’t planned anything, we are still in the phase one and we are working on, like based on the newer opportunities we are getting and how we are planning , we are still working on how to go about Phase-II, we haven’t started anything in Phase-II.

In Phase-I, we’ve spent almost Rs.1,497 crores so far. How much more are we intending to spend in Phase-I?

About Rs.200 crores is what we are looking at Phase-I.

Thank you so much.

Thank you. The next question is from the line of Lakshmi Narayan from Tunga Investments. Please go ahead.

Thank you. So what I understand is the success of our company is dependent on three aspects; one is production, one is research and thi rd is the client development or the business development /sales, right. Now, while on the first angle , we had mentioned the capacity . Just want to understand in the last two, three years, how have you beefed up your research capabilities and also your front end sales capabilities? That’s my first question. My second question is that qualitatively how do you think the next three years is going to be far better than the past few years, and can you just help me understand what are the two or three things as investors we should look for and what gives you confidence that the next three years is going to be better than the last three years?

I will answer your second question first. We have always been a conservative organization. We have not been extremely competitive or extremely proactive in sharing our numbers or revenues or growth so because we believe in being conservative in the way we project, and we would want to deliver what we promised. So my stand on that would be, as I said earlier, we would be thinking about having a double-digit growth for the next few years. Now , coming to your first question, we weren’t clear what the question is in the first place. So can you please repeat your question again?

My question is that success for a company like us comes from three different part s in my view; one is the production capability, second is the research capabilities and third are your sales/client mining capabilities, right? While on the first one , you have outlined kind of capital expenditure you have incurred in the last c ouple of years. just want to understand at least in the last two or three years, how have you enriched our research capabilities, some kinds of a quantitative or qualitative feedback would be helpful, which means that we have increased our workforce and research or we have actually got into two or three new areas, that could be one way to think about it. And the last is from a client mining capabilities , how have we beefed up our you know front end or so-called front -end workforce?

Okay. So coming to research and development, we have always been very proactive and yet being very, very smart in grabbing opportunities, which has been one of our biggest strengths. I mean, If you ask what D ivi’s has done in the last two, three years and for the years going forward, we have been very active in peptide chemistry, we have been very active in fragments, then we have gone into solid-phase peptide synthesis, liquid- phase peptide synthesis. Apart from this, we have gone into flow chemistry , biocatalysis. So we are constantly looking at opportunities and discoveries and innovations across the world understanding what technologies are available and how it is helping us in our own manufacturing by increasing either our yields or going towards green chemistry or we are looking at atom-to-atom efficiency, looking at all these factors is one of the Div i’s biggest strength. If you look at customer base what have we done, our reputation as one of the top CDMO for being on-time delivery for someone who has supplied material with zero recalls and on-time delivery and maintaining our commitment itself gives us a lot of credibility in the market whereby several customers approach us and we have continuous business and continued molecules which keep coming to us.

Got it. Okay. And in terms of your sales or the mining team, how have you enriched that particular part?

I didn’t get your question. What were you trying to ask?

Like what I understand is we keep going deeper with the ir end client in terms of their research and trying to understand what are the products the re are there, what are the molecules they are coming out with and so we are actually proactively looking at it and so in that count, how have we increased our sales force or the client development activities qualitatively in the last two, three years?

So to answer this right, Divi’s has been in custom synthesis from the from the inception, it’s not that it’s something new we started today where I have to develop my BD and then give them incentives and ask them how to move forward. Like I explained to you, our reputation is where we have been given opportunities with several of our existing and new customers. We have already been working with several multinationals, it’s not something today that I am developing this story, I mean, if you go back even 10 years or 15 years, our CS business worth 50% of our total revenue. To answer this question, our teams are already in place, there’s nothing new about it.

Got it. Okay. Thank you, sir. Thank you for a detailed answer.

Thank you. The next question is from the line of Gaurav T from Antique Stockbroking. Please go ahead.

Hi, good afternoon and congratulations to the team for every accomplishment. We understand the confidentiality nature of the custom synthesis business, you can’t talk about clients or products, but any insight that we can get in terms of the quantum of total order book contracted which is yet to be executed?

I am sorry we cannot comment much about that particular kind of numbers.

Any insight on how that Contracted backlog has been growing over the last two, three years? I respect that you can’t disclose the number, but any growth trends historically?

See, historically and as well as in the future, what we’ve seen so far has been a double -digit growth year-on-year, be it generics or our revenue as a whole or custom synthesis. So, that’s something that we also expect to see in the future, its the double-digit growth.

Okay. Just in terms of understanding the sales cycle from RFP to contracting in the custom synthesis business how long can that take from contracting to revenue accretion start, typically what ’s the timeline we can see, some kind of insights on your sales cycle please, if that’s possible?

So just to give a brief about it, right, so when you get an RFP, it could be a Phase-I, Phase-II, Phase- III. You don’t know which phase is the molecule first. So once you get an RFP, the time cycle of what the customer is expecting, then his regulatory approvals, then our regulatory approvals, whether the lifecycle of the molecule is going to go through. So t ypically, once you get an RFP, it could be anywhere that we have seen RFPs where we launched it and got it commercialized within one and a half to two years as an aggressive RFP to all the way we have seen an RFP, which we even took about six, seven years. So it’s hard to comment because there’s not a fixed timeline , it completely depends on the nature of the molecules, the approvals from the regulatory bodies and how interested the agencies are in getting this product into the market. So there are several factors entangled into it. We are only a part of it who only manufacture the active ingredient and then supply to innovators who has to take it much, much forward. So it’s a complete matrix. It’s very hard for me to say it goes in certain times. But what I can say is we have executed projects within two years ’ time and there were also times where even some projects even took six to seven years.

Thank you. I will come back in the queue. All the best.

Thank you. The next question is from the line of Nikhil from SIMPL. Please go ahead.

Hello! I have two questions. So in the initial comment, Nilima mentioned that there are still issues at the logistics side and it ’s taking time and all. But if I look at our inventory build up over last four years since Molnupiravir sales, our inventory was held around Rs. 2,800, Rs.3,000 cr ores; and this year we’ve hit the highest sales, but still our inventory is around Rs.3,000 crores. So how should we see it? One way to look at it is that you see the RM environment or the material environment on the pricing side and availability side easing a lot, which is why you are not building a larger inventory, how should we understand here?

If you see the sales that are going up but also our portfolio is increasing over a span of many products and we are also maintaining the raw materials based on the entire product portfolio , and if you are seeing from the time we are looking at Molnupiravir, from that time, there has been some or the other crisis be with respect to COVID or be it with respect to China or be it with respect to the logistics, we have been constantly facing pressure with respect to various factors. So based on the product mix, the kind of raw material that requires attention, we’ve been stocking those kind of raw materials for the product mix we have.

Would it be right to say that going forward as we clock a double-digit revenue growth, like as a percentage of sales t his is the kind of inventory level we would like to keep b ecause in initial year between ‘23-24 we hit almost 40%, 45% of inventory versus our sale which today on our year-ending sales is around 30%. So is this like a normalization on the working capital side?

It’s difficult to comment on this. I wouldn’t normalize it. I would say it would depend on the products that we are manufacturing, whether it is a large molecule or is it a small molecule project or is it a combination of which particular unit we are manufacturing it from and is the material available domestically, are we developing new sources that are manufacturing locally within the country or are we forced to procure only from international sources. So, it all depends on various aspects. But if you ask me what my wishful thinking is, I would love to maintain a lean inventory. I wouldn’t want to have lot of inventory stocks, I would definitely want to have a lean inventory wherein I can implement more of just in time and have it just source what I am manufacturing at that point in time.

Sure. Second question is, see, if I look at our last 15-years we’ve been doing this CSM business for almost 20, 25 years now and we always had a good relationship with the top-20 pharma companies. But prior to COVID, we never had dedicated blocks, all our plants used to manufacture a ll our products. But since the time of Molnupiravir, this is like in a way saying this is like third or two molecules, which are where we are going for dedicated blocks. So, what I am trying to understand is what are the underlying guardrails on which we decide whether we will go for a dedicated block or not and is it a quantum of business size which we want to go for like tomorrow if someone comes and says for a Rs.300, 400 crores kind of a top line, even there we will go for a dedicated block. Just some idea if you can share what are your guardrails and what are your benchmarks on which you decide whether we go for a dedicated block or not?

I would say that we did have dedicated blocks way back if it is a product of large volume and where we are manufacturing throughout the year and we did have multi -purpose blocks for the products that are smaller volume, we would take advantage of t he facility by doing campaign -based production. However, I don’t think we ever mentioned that we are setting up dedicated blocks for the expansion plan. We said we are going to invest a certain CAPEX of certain value but we have never mentioned that it’s a dedicated block.

Okay. So even for the two new molecules, the Rs.700, Rs. 800 crores CAPEX we announced, these would all be multi-purpose plants like this is not dedicated for any customer?

Since these products are mainly custom synthesis projects, I am not at a liberty to divulge on information, I would refrain from answering that question.

Sure. Thanks. I will come back in the queue.

Thank you. Ladies and gentlemen, we will take that as a last question for today. I would now like to hand the conference over to Mr. Satish Choudh ury for closing comments. Thank you and over to you, sir.

Thank you all for joining us today for the Earnings Call of Divi’s Laboratories Limited. In case you need any further clarifications, please reach out to our investor relations. Thank you.

Thank you, members of the management. On behalf of Divi’s Laboratories Limited, that concludes this conference. We thank you for joining us and you may now disconnect your lines.