IOL Chemicals and Pharmaceuticals Q1 FY27 earnings call

IOL Chemicals and Pharmaceuticals Limited commenced FY27 with a robust performance, reporting a 37% year-on-year growth in revenue from operations to ₹756 crores. This strong top-line growth translated into significant profitability improvements, with EBITDA increasing by 60.7% to ₹111 crores and PAT surging by 89.9% to ₹64.5 crores. Consequently, EBITDA margin expanded to 14.6% from 12.4% in Q1 FY26, and PAT margin improved to 8.4% from 6.1%.

The company's diversification strategy is yielding positive results, with non-ibuprofen products emerging as a key growth driver. These products contributed 43% of pharmaceutical revenue in Q1 FY27, a notable increase from 36% in Q1 FY26, and their revenue grew by 67% year-on-year. Key products driving this growth include paracetamol, clopidogrel, pantoprazole, metformin, fenofibrate, and levetiracetam. Management aims for non-ibuprofen products to contribute around 50% to pharma revenue in the near term and 50-55% to the API segment by FY29.

The improvement in profitability was attributed to higher operating leverage, better capacity utilization, improved product mix, and a continued focus on operational efficiencies. Most assets, excluding paracetamol (currently at 55% utilization, targeting 70% by year-end), are operating at 80-95% capacity. While input prices increased, the company was largely able to pass on these costs to customers due to healthy demand, contributing to the sustained margin performance.

IOLCP's international business strengthened, with exports increasing to 28.5% of total revenue in Q1 FY27, up from 24.4% in the corresponding quarter of the previous year. The company is targeting an export contribution of 25-30% for FY27. Regulatory achievements include CEP approvals for all products, US FDA approvals for five products, and NMPA approval for clopidogrel in China, further expanding market opportunities in regulated markets.

The company plans an annual capex of approximately ₹200 crores, with 60% allocated to expansion and new products, and 40% to infrastructure and efficiency improvements. A new greenfield site is in the process of obtaining statutory permissions, with product development ongoing in R&D, though commercial operations are not expected in the current fiscal year. The newly commissioned Triacetin plant, which started production in May, has an annual revenue potential of approximately ₹120 crores and is expected to gradually increase capacity and market penetration.

For FY27, management is confident of delivering 15-20% revenue growth with an EBITDA margin in the range of 14-15%. Looking further ahead to FY28, the company plans for 15-20% top-line growth and an EBITDA margin of 15-17%. This guidance is based on the current scenario, assuming continued healthy demand and operational efficiencies.