Concord Biotech Limited — Q3 FY25 earnings call

Call held 14 Feb 2025

Management summary

Concord Biotech reported a stable but muted Q3 FY25, characterized by revenue 'lumpiness' as global clients phased procurement into Q4. While quarterly growth was flat, the 9-month performance remains robust with 10% revenue growth and significant traction in the formulations business. Management is pivoting towards a medium-term CDMO strategy and preparing for the imminent launch of its injectable facility to drive future margins.

Highlights

  • Revenue from operations stood at ₹244 crores, a modest 1% YoY growth, impacted by customer procurement phasing.

  • EBITDA for the quarter was ₹98 crores with a healthy margin of 40.1%.

  • Profit After Tax (PAT) reached ₹76 crores with a 31.1% margin.

  • Formulation segment showed strong 9M FY25 growth of 42% YoY, reaching ₹192 crores.

  • API revenues (including interunit sales) grew by 9.6% YoY in Q3 FY25.

  • Injectable plant (Unit 4) is scheduled to begin commercial production in Q4 FY25.

  • Maintained long-term guidance of 25% CAGR growth over the next 5 years.

  • Company remains zero-debt with cash and equivalents of ₹250 crores as of December 31, 2024.

Key financials

2 periods

Headline

  • Revenue
    ₹244 Cr
    YoY +1.6%
  • EBITDA
    ₹98 Cr
    YoY -6.6%
  • EBITDA Margin
    40.1%
  • PAT
    ₹76 Cr
    YoY -2%

9M

  • Revenue
    ₹770 Cr
    YoY +10.3%

What they filed

Q1 FY27: revenue up 27.9%, net profit up 41.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue310 244 430 204 247 −20%278 +14%326 −24%261 +28%
EBITDA137 98 190 61 91 −34%102 +4%122 −36%87 +43%
Net profit99 74 142 43 63 −36%68 −8%90 −37%61 +42%
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
₹243.6 Cr Total
  • API ₹176 Cr 72.2%
  • Formulations ₹67.6 Cr 27.8%

Guidance & targets

Revenue

  • Long-term Revenue CAGR Revenue · next 5 years · High confidence 25%
    Our outlook remains positive, in line with our long-term guidance of achieving a 25% CAGR growth over the next 5 years.

    — Ankur Vaid, Joint Managing Director and CEO

Margin

  • Sustainable EBITDA Margin Margin · Long-term · High confidence 40% to 43%
    However, our long-term sustainable margin guidance is in the range of 40% to 43%.

    — Lalit Sethi, CFO

Other

  • New Product Introductions Other · next 3 years · Medium confidence 8 to 10
    we aim to introduce 8 to 10 additional products over the next 3 years, with a strong focus on oncology and anti-infectives.

    — Ankur Vaid, Joint Managing Director and CEO

Capex

  • Maintenance Capex Capex · per annum · High confidence ₹15-20 crores
    There will be only maintenance Capex with respect to all the units, which will be to the extent of around INR 15 crores to INR 20 crores per annum.

    — Lalit Sethi, CFO

Capacity

  • Injectable Plant Commercialization Capacity · current quarter · High confidence Q4 FY25
    The plant is scheduled to begin commercial production in the current quarter, with revenue generation expected to build up over the next financial year.

    — Ankur Vaid, Joint Managing Director and CEO

Risks & concerns

  • Quarterly Revenue Lumpiness

    medium

    Customer procurement patterns and calendar year closures lead to sales being pushed between quarters.

    Management acknowledged

  • Slow Customer Transition to New Sites

    medium

    External customers are taking longer than anticipated to qualify the Limbasi facility for their requirements.

    Analyst acknowledged

  • Initial Margin Drag from Injectables

    low

    The new injectable facility may act as a slight drag on margins during the initial ramp-up phase next year.

    Management acknowledged

Areas of evasion (2)

  • Molecule-wise revenue contribution
  • Specific volume percentage of API going to internal formulations

Q&A highlights

2 direct
Revenue Growth Guidance vs. Current Performance Direct
Given our order book position that we have and given that much of the phasing out has happened or the shift has happened to Quarter 4, we expect our Quarter 4 again to be on the higher side.

Clarifies that the current 10-12% growth is below the 18-20% target due to timing, but Q4 is expected to compensate.

Asked by Chintan Sheth, Girik Capital

Limbasi Facility Ramp-up and External API Sales Partial
Concord formulation unit was the first one to qualify Limbasi... much of our sales to the formulation actually happen through Unit 3... Unit 1 customers have not shifted, we'd like to cater to them through our Unit 1.

Explains why external API sales look weak; customers are slow to qualify the new site, while internal consumption is driving current utilization.

Asked by Alankar Garude, Kotak Institutional Equities

CDMO Strategy Shift Direct
We have made it into more of a medium-term strategy. And currently, we have filled out a lot of RFQs... the true impact of that would take at least 9 to 12 months.

Signals a strategic acceleration in the CDMO business from a long-term goal to a medium-term growth driver.

Asked by Huseain Bharuchwala, Carnelian Capital

2 min read 5 chapters

Detailed narrative

Muted Q3 Performance due to Phasing

Concord Biotech reported a flat Q3 FY25 with revenue of ₹244 crores, representing only 1% YoY growth. Management attributed this to 'lumpiness' in customer procurement, with several global clients pushing orders from Q3 into Q4 due to calendar year closures. Despite the muted quarter, the company maintains a strong order book and expects a significant ramp-up in Q4 FY25 to align with its annual growth targets.

Formulation Segment as a Growth Engine

The formulation business continues to be a standout performer, growing 42% YoY on a 9-month basis to reach ₹192 crores. While Q3 formulation revenue was slightly down at ₹67.6 crores due to tender timing, the company has built a robust sales team of over 200 members in India. Management expects this segment to continue its high-growth trajectory as it penetrates emerging markets and expands its product portfolio.

Capacity Utilization and Site Transfers

Capacity utilization remains varied across facilities: Unit 1 (Dholka) is at 78%, Unit 2 (Formulations) at 26%, and the new Unit 3 (Limbasi) at 35%. Management noted that while internal formulation units have qualified the Limbasi site, external API customers are taking longer than expected to complete site qualifications. This transition is critical for increasing the utilization of the 800m³ fermentation capacity at Limbasi.

Strategic Entry into Injectables

The company is on the verge of commercializing its injectable plant (Unit 4) in Q4 FY25. Concord has already invested ₹225 crores in this facility and plans to target the domestic market initially before filing for emerging markets. While the facility might cause a minor margin drag during its initial ramp-up, it is expected to contribute significantly to both revenue and profitability within 2-3 years.

Long-term Growth and Margin Sustainability

Management reiterated its long-term guidance of a 25% CAGR over the next five years, supported by a pipeline of 8-10 new products. EBITDA margins are expected to remain in the sustainable range of 40% to 43%. The company's zero-debt status and ₹250 crores cash reserve provide a strong cushion for maintenance capex and strategic investments, such as the recent $1 million investment in Palvella Therapeutics.

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