Anthem Biosciences Limited

Anthem Biosciences Limited reported consolidated revenues from operations of Rs. 418 crores for Q1 FY27. The CRDMO business contributed Rs. 341 crores, representing 81.5% of revenues, while Specialty Ingredients contributed Rs. 78 crores, or 18.5%. The company achieved an EBITDA of Rs. 176 crores, resulting in a strong EBITDA margin of 39.6%, and a PAT of Rs. 120 crores with a PAT margin of 27.1%. Despite these robust margins, Q1 was a softer quarter due to timing shifts in customer deliveries, leading to an approximate 25% YoY decline.

Unit 1 maintained a capacity utilization of about 78% for custom synthesis in Q1 FY27. Unit 2, which underwent significant expansion by adding 130 kiloliters, saw its utilization at approximately 50% for the quarter. Unit 3 (Neo Anthem) is ramping up, reaching 30-35% utilization from 15% in FY26. The company is actively constructing Unit 4, a large-scale expansion project with a total capex of Rs. 1,200 crores for Phase 1, split roughly 50-50 between FY27 and FY28. Unit 4 is expected to be ready by the end of FY28 and will add 365 kiloliters of custom synthesis and 100 kiloliters of fermentation capacity.

Management expressed strong confidence in achieving its full-year growth targets, despite the Q1 softness. The company maintains a 60% order book visibility for the full year's required deliveries, primarily driven by the CRDMO business. They anticipate a recovery in Q2, Q3, and Q4, expecting full-year growth to align with their historical double-digit performance. The underlying demand remains strong, with a higher concentration of scheduled deliveries expected in the latter half of the year.

Anthem Biosciences successfully onboarded one new Big Pharma customer, which is expected to contribute significantly in the later quarters of FY27. The company also noted that one of its large biotech customers was acquired by a Big Pharma, which could open new avenues for engagement. The late-phase pipeline includes 10 molecules, with commercialization anticipated within 18-24 months, adding to the existing 14 commercial molecules.

The company is actively working towards commercial supply of Semaglutide API for domestic players. They have completed necessary trials and scale-up activities and are currently awaiting approval from CDSCO, which is expected this year. Management views GLP-1 as a robust long-term opportunity, with initial focus on securing domestic regulatory clearance before exploring other markets.

Anthem's disciplined focus on cost efficiencies, yield optimization, and employee productivity continues to support its industry-leading margin profile. The company expects to sustain its strong margins throughout the year. The full-year tax rate is projected to normalize to 25-25.5%, partly due to Unit 3 expected to break even. ESOP costs are anticipated to decline from Rs. 16 crores in FY26 to Rs. 9 crores in FY27 and further to Rs. 5 crores in FY28.

Management emphasized its strategy of driving business through technology and innovation, including the use of new technologies like flow chemistry and biocatalysis, to reduce cost of goods. This approach allows Anthem to engage with customers at a higher level, contributing to innovation and technology development. Combined with a strong track record in regulatory compliance and high-quality manufacturing, this strategy helps Anthem differentiate itself and maintain its competitive edge.