Alivus Life — Q3 FY25 earnings call

Call held 23 Jan 2025

Management summary

Alivus Life (formerly Glenmark Life Sciences) delivered a strong sequential recovery in Q3 FY25, driven by a better product mix and the recovery of spillover revenues from Q2. While the CDMO segment remains cyclical and subdued YoY, the generic business showed robust growth of 16.9%. Management is pivoting towards new technology platforms and oncology, expecting these to contribute 50% of revenue in the next 4-5 years.

Highlights

  • Revenue of ₹642 crores, representing 12% YoY growth and 26.6% QoQ recovery

  • EBITDA margin expanded to 31.3%, up 90 bps YoY and 310 bps QoQ

  • Generic business grew 16.9% YoY, while CDMO business showed 25% QoQ growth

  • PAT for the quarter stood at ₹137 crores with a margin of 21.3%

  • CVS and CNS therapies collectively contributed 58% to the total top line

  • Company remains net debt-free with cash and equivalents of ₹499 crores

  • Working capital cycle peaked at 182 days, expected to decline going forward

  • R&D expenditure for 9M FY25 was ₹56 crores, or 3.2% of sales

Key financials

  1. Revenue ₹642 Cr +12%YoY
  2. EBITDA Margin 31.3% +0.9%YoY
  3. PAT ₹137 Cr
  4. Gross Margin 55.6%
  5. R&D Spend ₹20 Cr
  6. Cash and Equivalents ₹499 Cr

What they filed

Q1 FY27: revenue up 6.3%, net profit up 31.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue507 642 650 602 588 +16%673 +5%689 +6%640 +6%
EBITDA134 190 198 172 179 +34%231 +22%215 +9%212 +23%
Net profit95 137 142 122 130 +37%150 +9%163 +15%160 +31%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Generic Business
    16.9% Growth
  • CDMO Business
    25% Growth
  • Therapeutic Mix (CVS & CNS)
    58% Revenue Contribution

Guidance & targets

Capex

  • Greenfield Expansion - Solapur Capex · next 3-4 years · High confidence ₹400-500 crores
    CAPEX for next three to four years is well laid out, should be in the range of another 400 to 500 crores easily.

    — Tushar Mistry, CFO

  • FY25 Total Capex Capex · FY25 · Medium confidence ₹300-350 crores
    Yes, that's right, your notes are right [anticipating 300 to 350 crores in FY'25], and in the first nine months it is about 119 crores.

    — Tushar Mistry, CFO

Revenue

  • New Launch Revenue Contribution Revenue · next 4-5 years · Medium confidence 50%
    I mean half the revenue will be from new, so about half the revenue that will come, let's say year four or year five from now will be from new launches.

    — Dr. Yasir Rawjee, MD & CEO

Capacity

  • New Platform Commercialization Capacity · FY27 · Medium confidence Early FY27
    We hope to sort of commercialize these, some of them in early FY'27 So, it's work-in progress.

    — Dr. Yasir Rawjee, MD & CEO

Risks & concerns

  • Price Erosion

    medium

    Management cited price erosion of approximately 6% in the quarter, though they view it as steady at 4.5% to 5.5% for the overall bucket.

    Management acknowledged

  • Geographic Demand Weakness

    medium

    Demand in the US and Latin America (specifically Argentina due to currency issues) remains subdued.

    Management acknowledged

  • High Working Capital

    low

    Working capital stands at 182 days, which management believes has peaked and will decline.

    Analyst acknowledged

Areas of evasion (1)

  • Specific details on the two new R&D platforms being developed (cited competitive reasons).

Q&A highlights

2 direct
CDMO Business Subdued Performance Direct
CDMO, the fourth project has kicked in, but it's just kicked in, right? So, materially, it's not that significant in terms of contribution... we would see a cyclical performance on the CDMO segment.

Explains why the CDMO segment hasn't scaled as expected despite new project wins, highlighting the cyclical nature of demand.

Asked by Ahmed Madha, Unifi Capital

Frequency of USFDA Audits Direct
Their frequency goes up when they sense a riskier company and their frequency, we go down in their ladder in terms of the frequency of audits. We have had successful audits from Japanese PMDA recently, we have had successful audits from ANVISA Brazil.

Management suggests that low audit frequency is a sign of being perceived as a low-risk facility by global regulators who share information.

Asked by Sajal Kapoor, Antifragile Thinking

Oncology Pipeline Commercialization Partial
Commercially, they have not contributed a lot because we have only supplied exhibit batch quantities to customers... We are not yet in the commercial phase with respect to our oncology pipeline as yet.

Clarifies that the $45 billion addressable market for oncology is currently in the 'seeding' stage and not yet generating commercial revenue.

Asked by Harsh Shah, Reera Holdings

2 min read 5 chapters

Detailed narrative

Strategic Rebranding and New Growth Levers

The company officially transitioned to Alivus Life Sciences, marking a new phase focused on life-enhancing solutions. Management emphasized that while operational efficiency and geographic diversification remain core, the strategy is shifting toward building new technology platforms. Work has already commenced on two new R&D platforms, with commercialization expected by early FY27. This shift is intended to move the company beyond just increasing capacity to service existing business.

Financial Recovery and Margin Resilience

Q3 FY25 saw a significant recovery with revenue reaching ₹642 crores, a 26.6% sequential increase. This was supported by a strong EBITDA margin of 31.3%, which expanded 310 basis points QoQ due to a better product mix and stable expenses. Gross margins remained healthy at 55.6%. Despite a 6% price erosion in the quarter, volume growth of 18% helped drive the top-line performance.

Oncology and CDMO Pipeline Dynamics

The oncology pipeline is a major future growth driver, with 21 products currently in development and an addressable innovator market of $45 billion. However, this segment is currently in the 'seeding stage,' supplying only exhibit batches, with commercial revenue yet to materialize. The CDMO business grew 25% QoQ but remains cyclical; management expects improvement from the next quarter as the fourth commercialized project begins to scale.

Capital Expenditure and Infrastructure Expansion

Alivus is committed to a significant expansion plan, with ₹400-500 crores earmarked for the Solapur greenfield project over the next 3-4 years. For FY25, the company maintains a capex target of ₹300-350 crores, despite only spending ₹119 crores in the first nine months due to timing mismatches in land acquisition and project fructification. A new R&D center is also in the works once land formalities are completed.

Regulatory Standing and Market Outlook

Management addressed the lack of recent USFDA audits by explaining that successful audits from Japanese (PMDA) and Brazilian (ANVISA) agencies have likely placed them lower on the FDA's 'risk ladder.' While demand in the US and Latin America is currently subdued, strong performance in Europe, Japan, and India is compensating for the weakness. The company remains optimistic about the US Biosecurity Act potentially driving more business toward Indian manufacturers as a de-risking strategy from China.

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