Cohance Lifesciences Limited — Q4 FY26 earnings call

Call held 12 May 2026

Management summary

Cohance Lifesciences reported a challenging FY26 with a 13% YoY revenue decline to INR 2,268 crores and an EBITDA margin of 21%, primarily due to destocking and customer inventory adjustments. Management expects Q1 FY27 to be weak, with recovery anticipated from H2 FY27, driven by execution on existing programs and new commercial launches. The company remains focused on strengthening its differentiated capabilities in ADCs and oligonucleotides and improving operational rigor.

Highlights

  • Gross margin remained strong at 70.8% for FY26, supported by product mix, backward integration, and cost actions.

  • New business conversion with innovator pharma and biotech customers remains healthy.

  • The Phase 3 pipeline has expanded to 10 programs, with two molecules moving into commercialization.

  • API+ business saw sequential improvement in H2 FY26 with stabilized supply execution and strengthened customer engagement.

  • Cohance is well-positioned with differentiated capabilities in ADCs and oligonucleotides, which are hard to replicate.

Concerns

  • FY26 revenue declined by 13% YoY to INR 2,268 crores, primarily due to destocking impact in two large commercial molecules, customer inventory adjustments, and shipment delays.

  • EBITDA margin stood at 21%, impacted by lower volumes, continued investment, and weak performance by subsidiaries.

  • Q1 FY27 is expected to be low on both revenue and EBITDA due to revenue schedules skewed towards H2 and potential 100-150 bps impact on gross margins from Middle East geopolitical situation.

  • API+ business declined 8% YoY in FY26, and Specialty Chemicals declined 2.1% YoY, both impacted by product-specific factors and program phasing.

Key financials

  1. Revenue ₹2,268 Cr -13%YoY
  2. Adjusted EBITDA ₹477 Cr
  3. EBITDA Margin 21%
  4. Standalone EBITDA Margin 24.6%
  5. Gross Margin 70.8%
  6. Capex ₹215 Cr
  7. Free Cash Generated ₹173 Cr

What they filed

Q1 FY27: revenue down 25.6%, net profit down 97.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue594 653 769 484 498 −16%482 −26%568 −26%360 −26%
EBITDA204 233 223 104 131 −36%103 −56%117 −48%26 −75%
Net profit139 154 123 53 94 −32%47 −69%35 −72%1 −97%
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

Share of Revenue
₹2,268.3 Cr Total
  • API+ ₹1,088 Cr 48.0%
  • Pharma CDMO ₹889 Cr 39.2%
  • Specialty Chemical ₹291.3 Cr 12.8%

Capital allocation

high confidence
  • Capex ₹215 Cr
    • ADC, oligonucleotides, manufacturing infrastructure, and quality systems
    • NJ Bio US facility expansion for scale-up, Phase 2 requirements, and validation readiness $10 Mn
    Capex during the year was INR2.15 billion. This was focused on ADC, oligonucleotides, manufacturing infrastructure, and our quality systems. We expect capex spend of nearly INR3 billion in FY27. Free cash generated in FY26 stood at INR1.73 billion.
  • Liquidity Liquidity disclosed Free cash generated in FY26 stood at INR1.73 billion.
    Free cash generated in FY26 stood at INR1.73 billion.

Guidance & targets

Capex

  • Capex Spend Capex · FY27 · High confidence INR 3 billion
    We expect capex spend of nearly INR3 billion in FY27.

    — Himanshu Agarwal

Revenue Growth

  • Overall Growth Revenue Growth · FY27 · Medium confidence return from second half
    In FY27, growth will return from second half of FY27 onwards.

    — Himanshu Agarwal

Profitability

  • EBITDA Improvement Profitability · FY27 · Medium confidence become visible in the second half
    Improvement in EBITDA should become visible in the second half as the volumes recover, order conversion improves, and product mix normalize.

    — Himanshu Agarwal

Gross Margin

  • Gross Margin Impact Gross Margin · Q1 FY27 · High confidence 100 to 150 bps impact
    Q1 will experience impact of nearly 100 to 150 bps on our FY26 gross margin levels, largely on account of API Plus business.

    — Himanshu Agarwal

Segmental Performance

  • API+ Business Recovery Segmental Performance · coming quarters · Medium confidence further normalization over the coming quarters
    We expect further normalization over the coming quarters as execution stabilizes and the order book progressively converts into shipments.

    — Gunjan Singh

  • Specialty Chemical Growth Segmental Performance · FY28 · Medium confidence return in FY28
    For FY27, the focus is on converting customer qualifications, RFQs, and confirm orders into revenue. FY27 will be a qualification and readiness year for parts of the portfolio, with supplies expected to build as customer programs progress, growth to return in FY28.

    — Amrit

New Product Launches

  • New Commercial Molecules New Product Launches · next 12-18 months · Medium confidence two others to launch
    two have launched and we expect the two others to launch, of course, depending on the clinical performance and we expect these to be known within the next 12-18 months.

    — Yann D'Herve

NJ Bio Profitability

  • NJ Bio Profitability NJ Bio Profitability · more than two years · Low confidence get back to this level
    So, give us here a little bit more than two years to get back to this level.

    — Yann D'Herve

What to watch in Q1 FY27

Q1 FY27 Revenue and EBITDA Performance

next quarter
Current Expected to be low
Target Actual reported Q1 FY27 figures

Why it matters

To assess the extent of the anticipated weakness and confirm the bottoming out phase.

Quarter 1 FY27 is to be low on both revenue and EBITDA, largely on account of revenue schedules skewed towards second half.

Risks & concerns

  • Destocking and customer inventory adjustments

    high

    Impacted Pharma CDMO revenue in FY26, particularly in two large commercial molecules.

    Management acknowledged

  • Middle East geopolitical situation and raw material inflation

    medium

    Expected to impact Q1 FY27 gross margins by 100-150 bps, mainly in API+ business.

    Management acknowledged

  • Temporary disruption at Nacharam formulation site

    medium

    Contributed to API+ business decline in FY26, though remediation actions are underway and performance improved in H2.

    Management acknowledged

  • Customer program phasing, regulatory timing, and generic pressure

    medium

    Impacted Specialty Chemical business revenue in FY26.

    Management acknowledged

  • Historical customer concentration

    medium

    Led to revenue dip when a few molecules faced issues, but efforts are underway to diversify customer base.

    Management acknowledged

  • Corporate governance and information flow

    medium

    Analyst raised concerns about past selective information flow, which the new CEO committed to address.

    Analyst acknowledged

Q&A highlights

4 direct, 1 evasive
Contribution of large molecules and new commercial products to FY27 revenue Partial
Yes, so from a return, we are in active discussion with both the customers and we expect there would be a return in both these molecules. However, you will have to allow us to have meaningful conversations crystallize into orders before which we communicate to you on the actual amount. On the new products... With regard to the two new products that have been approved, as indicated in my speech, we have received four commercial orders for four key starting materials with regard to one of the commercial drugs, right? So that is revenue that will appear mostly in Q2 FY27 and in Q3 FY27.

Analysts sought specific quantification for revenue recovery from previously impacted products and new launches, but management provided only qualitative and directional timelines.

Asked by Karthi

Breakup of one-time expenses (INR109 crore) over last two years Direct
Yes. So I will tell you about this year. I think this year, on a one-time expenses, there are two large elements. One is that we have taken a one-off inventory provision, which is around 195 million. And we have also provided for certain customer adjustments, that is in the range of around 126 million.

Management clarified the components of significant one-time expenses, providing transparency on non-recurring items impacting profitability.

Asked by Karthi

Umang Vohra's vision and strategic priorities for Cohance Direct
I can think of two things or maybe three. Let me put out three things here. One is the operational rigor. When we have the green light to go, we cannot be short of capacities, we cannot be short of product robustness, and the quality systems have to be strong. The second point is customer relationships have to deepen. ... And I think the third is just the science engine.

The new Group CEO outlined his immediate strategic focus areas, emphasizing operational rigor, customer relationships, and strengthening the science engine, which are critical for future growth.

Asked by Shyam Srinivasan

Program and customer concentration in revenue for each segment and AI implementation Partial
We do not give this level of details. Nevertheless, I can answer some of the question on customer concentration, right? And you can see that in our results, right? So we have had by the past reliance on a few molecules, right, historically. And that is the reason why we are in the situation we are in today, especially on the small molecule side of the business of the CDMO business. This concentration is changing positively year-on-year, meaning that there is less concentration in FY26 than there was in FY25 and there will be less concentration in FY27 as we continue to develop our customer project pipeline.

Management acknowledged historical customer concentration as a challenge but indicated positive trends towards diversification, which is key for de-risking the business model.

Asked by Siddharth Negandhi

Timeline for consolidated margins to return to historical benchmark of 30% Evasive
I think we are not providing that color right now. But as we reassess the strategy, maybe a few months later we could consider that. But at this point, we are not providing that color.

Management declined to provide a timeline for margin recovery to historical levels, indicating uncertainty or ongoing strategic reassessment regarding profitability targets.

Asked by Ashish

Corporate governance and information flow Direct
No, certainly. I think as part of this role, the governance requirement is paramount and I will be spending time on that as well in the next few months. But thank you for raising this.

An analyst raised concerns about corporate governance and information flow, prompting the new CEO to acknowledge its paramount importance and commit to addressing it, signaling potential improvements in transparency.

Asked by Chirag Shah

Impact of one-time customer settlement and brand building expenses on FY27 Direct
Sidharth, on your first point, the customer settlement is purely commercial and therefore given the nature of the settlement, we do not see any impact on the revenue or on the relationship with the customer. On the second question, yes, we would see a reduction in the marketing expenses given that a part of the brand building has already been done.

Management clarified that a one-time customer settlement would not impact future revenue or relationships, and indicated a reduction in brand-building expenses for FY27, implying potential cost savings.

Asked by Siddharth Negandhi

2 min read 6 chapters

Detailed narrative

FY26 Financial Performance Overview

Cohance Lifesciences reported a total revenue of INR 2,268 crores for FY26, marking a 13% year-on-year decline. Adjusted EBITDA stood at INR 477 crores, resulting in an EBITDA margin of 21%, while standalone adjusted EBITDA margin was 24.6%. Despite the revenue decline, gross margin remained robust at 70.8%, supported by product mix and backward integration. The company generated INR 173 crores in free cash during FY26.

Segmental Performance and Challenges

The Pharma CDMO business recorded revenues of INR 889 crores for FY26, experiencing an underlying early single-digit growth after adjusting for destocking impacts in two large commercial molecules. The API+ business saw an 8% YoY decline in revenue to INR 1,088 crores, affected by product-specific factors and temporary disruption at the Nacharam site. Specialty Chemicals reported a marginal 2.1% YoY decline to INR 291.3 crores, influenced by customer program phasing and regulatory timing.

Outlook and Guidance for FY27

Management anticipates Q1 FY27 to be weak in both revenue and EBITDA, with revenue schedules skewed towards the second half of the fiscal year. A potential impact of 100-150 bps on gross margins is expected in Q1 FY27 due to Middle East geopolitical uncertainties and raw material inflation. Growth and EBITDA improvement are projected to become visible from H2 FY27, driven by volume recovery, improved order conversion, and product mix normalization. The company plans a capex of nearly INR 300 crores for FY27.

Strategic Priorities and New Leadership Vision

Mr. Umang Vohra, the new Executive Chairman and Group CEO, emphasized Cohance's strong foundation in science and differentiated capabilities in ADCs and oligonucleotides. His immediate priorities include focusing on operational rigor, deepening customer relationships, and strengthening the science engine. The long-term vision involves creating a strategic blueprint for sustainable value creation, focusing on predictability of delivery, strong quality systems, and a deep talent pool.

Pipeline Development and Commercialization

Cohance's total Phase 3 pipeline now comprises 10 programs, with two molecules having recently moved into commercialization. Orders for four intermediates related to one new commercial drug are expected to contribute revenue in Q2 and Q3 FY27. The company continues to expand its ADC capabilities, including a $10 million capex at the NJ Bio US facility for scale-up and validation readiness, though NJ Bio's profitability is expected to take over two years.

Operational Improvements and Risk Mitigation

The company is actively managing supply chain continuity through alternate site strategies and closer customer coordination. Remediation actions at the Nacharam formulation site are strengthening quality and operating systems, leading to improved utilization. Efforts are also underway to diversify the customer base and reduce concentration risk, with a strong funnel of new projects in small molecules.

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