Cohance Lifesciences Q1 FY27 earnings call

Cohance Lifesciences reported a challenging Q1 FY27, with consolidated revenue from operations declining 23% year-on-year to INR4,223 million. The consolidated adjusted EBITDA was INR92 million, representing a margin of 2.2%. This performance was attributed to customer shipment phasing^📎, lower formulation revenue, and significant losses from NJ Bio. Management reiterated that Q1 was the lowest quarter and expects sequential improvement in Q2FY27, with a return to year-on-year growth in the second half of FY27, driven by scheduled commercial program deliveries and restocking orders.

The Pharma CDMO segment experienced a 38.7% year-on-year revenue decline in Q1FY27, primarily due to certain deliveries shifting from Q1 to Q2. Despite this, the underlying portfolio progressed, with two molecules moving into commercial supply and six intermediates scheduled for delivery across Q2FY27 and Q3FY27. The company secured restocking orders for a commercial molecule that faced destocking last year, providing meaningful delivery visibility for Q4 FY27 and FY28. Operational delivery remained strong with 100% commercial OTIF, and customer audits were completed without critical findings.

The API+ business demonstrated resilience in Q1FY27, performing slightly ahead of internal expectations due to favorable pricing and an improved product mix. However, the formulation business was impacted by an API production delay, lower demand for a mature product, and a customer-led change in pack configuration. Management confirmed a robust API order book and plans for seven new API filings in FY27, along with two product launches in Q2FY27 and around 10 for the fiscal year. Remediation and operational stabilization at the Nacharam facility remain a priority, with product supplies resuming.

The Specialty Chemicals segment saw a 34.7% year-on-year decline in Q1FY27, primarily due to the H2-dominated phasing^📎 of products in AgChem CDMO. The company is focusing on strengthening existing revenue and developing innovator-led programs across AgChem CDMO and Performance materials. A confirmed active ingredient program entered the registration process in Q1FY27, and the medium-term objective is to qualify approximately two new products each year. Management expects this segment to support double-digit growth from FY28 onwards.

The nucleic acid business, anchored by Sapala, reported strong performance with 2.5x year-on-year revenue growth to INR274 million in Q1FY27, driven by supply commencement for specialized nucleic acid building blocks. Conversely, NJ Bio reported revenue of INR350 million but incurred an adjusted EBITDA loss of INR328 million, significantly impacting consolidated profitability. Management is aligning R&D, business development, manufacturing, and commercial execution across the combined nucleic acid business, with Dr. P.Y. Reddy leading this segment through FY30.

Cohance Lifesciences is strengthening its safety and quality systems through enhanced process safety reviews, automation, and independent site audits. The company successfully completed multiple audits by large innovator partners across the pharma CDMO platform without critical findings. The USFDA completed an inspection of the Pashamylaram facility from July 27 to August 5, 2026, resulting in five observations, none related to data integrity. The company is reviewing these observations and will respond to the agency within stipulated timelines.

Capital expenditure during Q1FY27 was approximately INR598 million, reflecting ongoing investments in capabilities for future growth. The company maintains a resilient balance sheet with consolidated net cash of approximately INR2,512 million as of June 30, 2026. This liquidity position supports continued investment and operational stability.