IPCA Laboratories Limited — Q4 FY25 earnings call

Call held 30 May 2025

Management summary

Ipca Labs reported strong Q4 and FY25 results, with domestic business growing 11-12% and overall Ipca growth outpacing the market at 13.2%. Consolidated FY25 EBITDA margin reached 18.94%, exceeding guidance. The company is investing significantly in future growth with 4 new manufacturing facilities set to begin trial production in FY26. However, the API business saw muted growth, and the South African generic business experienced a significant decline due to lost tenders.

Highlights

  • Domestic business delivered 11% growth in Q4 FY25 and 12% for the full year FY25.

  • Ipca's overall growth (IQVIA) was 13.2%, significantly higher than the market growth of 8%.

  • Consolidated FY25 EBITDA margin reached 18.94%, surpassing the company's guidance of ~18%.

  • Unichem's business grew 18% to INR2,211 crores in FY25, with EBITDA margin improving from 4.87% to 12.55%.

  • Four new manufacturing facilities (monoclonal antibody, API, formulation, US injectable/oral liquid) will start trial production in FY26.

Concerns

  • Generic business in South Africa declined approximately 74% (from INR113 crores to INR39 crores) due to the loss of certain tenders.

  • API business growth was muted at 2% for Q4 FY25 and 1% for the full year FY25.

  • Unichem's gross margin declined from 64% in Q3 to 55% in Q4 FY25, attributed to product mix change and higher contract manufacturing.

Key financials

  1. Consolidated EBITDA Margin 18.9% +2.2%YoY
  2. Consolidated EBITDA ₹1,693 Cr +31.4%YoY
  3. Ipca Domestic Business Growth 12%
  4. Ipca Overall Growth (IQVIA) 13.2%
  5. Unichem Business Growth 18%
  6. Unichem EBITDA Margin 12.6% +157.7%YoY

What they filed

Q1 FY27: revenue up 21.3%, net profit up 42.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,811 1,663 1,638 1,747 1,930 +7%1,845 +11%1,814 +11%2,119 +21%
EBITDA402 411 359 407 465 +16%477 +16%431 +20%578 +42%
Net profit244 268 -65 262 305 +25%303 +13%262 +503%373 +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

SegmentGrowth Q4 FY25Growth FY25
Ipca Domestic Business11%12%
Ipca Export Formulation (Branded)3%10.4%
Ipca Generic Business (Export)15%7%
Ipca API Business2%1%
Unichem——

Capital allocation

high confidence
  • Capex ₹1,000 Cr
    • Injectable and oral liquid facility (North Carolina, US) ₹250 Cr
    • Formulation facility (Dewas) ₹250 Cr
    • API and intermediate facility (Nagpur) ₹250 Cr
    • Monoclonal antibody facility (Pithampur) ₹250 Cr
    • Routine maintenance capex ₹250 Cr
    So around $20 million is for the injectable and oral liquid facility that is coming up at North Carolina, U.S. around INR250 crores for a formulation facility for domestic market coming up at Dewas, another INR200 crores, INR250 crores for API and intermediate facility coming up at Nagpur, plus monoclonal antibody facility another around INR250 crores. These are the major capexs, which will get capitalized in the current financial year, and all those facility will start trial production. In this financial year, that is FY '26. ... Routine maintenance capex, which will be around INR250 crores, INR300 crores level.

Guidance & targets

Revenue

  • Overall Revenue Growth Revenue · FY26 · High confidence 8% to 10%
    The guidance for next financial year current financial year is that we'll continue to grow around 8% to 10% in the FY '25 and we expect our EBITDA margins to further improve by around 1% consolidated basis for the -- from 18.94% to around 20% for the current financial year.

    — Ajit Kumar

  • Export Formulation Business Growth Revenue · FY26 · High confidence 10% to 11%
    And let's say, overall export formulation business will continue to have a growth of around 10% to 11% for us.

    — Ajit Kumar

  • CIS Business Growth Revenue · FY26 · High confidence around 10%

    Previously around 2% → around 10%

    And for the current financial year, we are guiding a growth of around 10% from the CIS business.

    — Harish Kamath

  • Unichem Revenue Growth (Long-term) Revenue · Medium confidence 10% to 12%
    Around 10% to 12%.

    — Harish Kamath

  • Ipca US Business (Internal Budget) Revenue · FY26 · High confidence around INR100 crores
    So I think overall, the current year, I think overall U.S. business should contribute around INR100 crores for us in the current financial year. That is what is our internal budgets are there for U.S. business for final sales in U.S. market.

    — Ajit Kumar

  • Ipca Institutional Business Growth Revenue · FY26 · Medium confidence 8% to 10%
    Having said this, we are hoping we should grow that institutional business in the current financial year also. That is FY '26. ... From that level also, we see this year also we should grow that business maybe around 8% to 10%.

    — Harish Kamath

  • API Segment Growth Revenue · FY26 · High confidence 6% to 7%

    Previously 1% → 6% to 7%

    Okay. And sir, in the API segment, what is the growth guidance for FY '26, sir? Harish Kamath: Around 6%, 7%, Rashmi, not beyond that.

    — Harish Kamath

  • Overall Group Top Line Growth (Post-synergy) Revenue · next couple of years · Medium confidence 12% to 13%

    Previously 8% to 10% → 12% to 13%

    Around -- That time, the top line should grow around 12% -- 12%, 13%.

    — Harish Kamath

Profitability

  • Consolidated EBITDA Margin Profitability · FY26 · High confidence around 20%

    Previously 18.94% → around 20%

    The guidance for next financial year current financial year is that we'll continue to grow around 8% to 10% in the FY '25 and we expect our EBITDA margins to further improve by around 1% consolidated basis for the -- from 18.94% to around 20% for the current financial year.

    — Ajit Kumar

  • Unichem EBITDA Margin (Long-term) Profitability · Medium confidence around 18% to 20%

    From 12.55% today

    See, ideally, our intention, the margin should grow to around 18%, 18% to 20%. That is the maximum what we can achieve because they are into only generic business, and API business. I'm talking about Unichem.

    — Harish Kamath

  • Unichem EBITDA Margin Improvement Profitability · FY26 · High confidence 1%
    Hopefully, current year also, this should improve their EBITDA margin by about 1% and about 8% to 10% growth in the top line.

    — Harish Kamath

R&D

  • R&D Spend as % of Revenue (Standalone) R&D · FY26 · High confidence around 4%

    Previously around 3.25% → around 4%

    And this also includes the biotech, and this expenditure is likely to be around 4% in the current financial year.

    — Ajit Kumar

Product Pipeline

  • Ipca US Product Filings Product Pipeline · FY26 · High confidence around 6 to 7 products
    And I think in current year, we should file almost around 6 to 7 products.

    — Ajit Kumar

  • Ipca Products Development Capacity Product Pipeline · Medium confidence around 20 products
    And overall, we have capacity to develop almost around 20 products, so which globally for India, ROW and all these other developed markets.

    — Ajit Kumar

  • Unichem Product Filings Product Pipeline · FY26 · High confidence around 3 to 4 products
    And I think they will also be filing around 3 to 4 products in current year.

    — Ajit Kumar

Capacity

  • New Plants Trial Production Capacity · FY26 · High confidence start trial production
    Four of the manufacturing new manufacturing greenfield plant will start trial production in the current financial year...

    — Harish Kamath

  • New Plants Scale Up Capacity · FY27 and FY28 onwards · High confidence scale up
    That is right. FY '27 and '28 onwards, you will see some scale up in the business.

    — Harish Kamath

Market Share

  • Ipca Domestic Market Share Growth Market Share · next 3 to 4 years · High confidence 1.5x market growth
    Next 3 to 4 years, we will beat the market growth, and we should grow 1.5x market growth.

    — Harish Kamath

Productivity

  • Per Man Productivity (PCPM) Productivity · in 4 to 5 years · Medium confidence 5 lakhs, 5.5 lakhs

    From 4 lakhs, 4.3 lakhs today

    So currently, it is around 4 lakh and 4.3 lakhs. It should grow around 8%, maybe compounding next 3 to 4 years. With the addition of around 400, 500 people. ... Sure, but there's still scope to increase at to get it to maybe 5 lakhs, 5.5 lakhs in 4 to 5 years?

    — Harish Kamath

Headcount

  • MRs to be added Headcount · FY26 · High confidence Around 400
    Around 400.

    — Harish Kamath

What to watch in Q1 FY26

New Plants Trial Production

FY26
Current Under construction
Target Trial production commenced

Why it matters

Key for future capacity expansion and revenue generation from new product lines.

Four of the manufacturing new manufacturing greenfield plant will start trial production in the current financial year, that include monoclonal antibody facility, which is coming up at Pithampur, Madhya Pradesh. So one intermediate API manufacturing facility is coming at Wardha near Nagpur. One new formulation facility for domestic market is coming up at Dewas. So these are the 3 manufacturing facilities that are coming up in India, and 1 more greenfield manufacturing facilities being set up by Pisgah which is our step-down subsidiary in North Carolina. So that facility will also start trial production in the current financial year. It will be injectable and oral liquids.

Risks & concerns

  • Loss of tenders in South Africa

    high

    Generic business in South Africa declined ~74% (from INR113 crores to INR39 crores) due to loss of certain tenders.

    Management acknowledged

  • API pricing volatility

    medium

    API pricing had a consistent downward trend post-COVID, impacting value growth despite volume improvement, though stability is now expected.

    Management acknowledged

  • Currency fluctuation in CIS market

    medium

    CIS market growth was muted at 2% due to currency fluctuation (dollar vs ruble), despite healthy volume growth.

    Management acknowledged

  • Competition pressure in US generic market

    medium

    Competition makes it difficult to push products, leading to gradual progress in the US generic business.

    Management acknowledged

Q&A highlights

7 direct
US Business Contribution and Product Pipeline Direct
So I think overall, the current year, I think overall U.S. business should contribute around INR100 crores for us in the current financial year. That is what is our internal budgets are there for U.S. business for final sales in U.S. market.

Clarifies Ipca's direct US revenue contribution and future growth expectations for its own products, distinct from Unichem's US business.

Asked by Surya Narayan Patra

R&D Spend and Unichem Integration Direct
And I think in current year, we should file almost around 6 to 7 products. And overall, we have capacity to develop almost around 20 products, so which globally for India, ROW and all these other developed markets. So overall, that's the kind of development will happen. As far as R&D expenditures are concerned, we are at almost around currently around 3.25% as far as the Ipca concerned. And the stand-alone I'm talking.

Provides insight into Ipca's R&D strategy, filing pipeline, and clarifies the independent nature of Unichem's R&D post-acquisition.

Asked by Surya Narayan Patra

Export Growth and Challenges Direct
The lower growth for the financial year in generic business is mainly due to decline in business in South Africa from INR113 crores to around INR39 crores, a decline of almost around 74%, that's mainly on account of the loss of certain tenders in South African market.

Explains the reasons behind muted export growth, particularly the significant decline in South Africa, and outlines future growth expectations.

Asked by Surya Narayan Patra

New Manufacturing Projects and Timelines Direct
Four of the manufacturing new manufacturing greenfield plant will start trial production in the current financial year, that include monoclonal antibody facility, which is coming up at Pithampur, Madhya Pradesh. So one intermediate API manufacturing facility is coming at Wardha near Nagpur. ... That is right. FY '27 and '28 onwards, you will see some scale up in the business.

Details the significant capex projects underway and provides a timeline for their trial production and subsequent scale-up, indicating future capacity expansion.

Asked by Damayanti Kerai

Unichem Gross Margin Decline and Future Trajectory Direct
No, no, it is majorly because of the product mix change. ... In fact, fourth quarter, the contract manufacturing has gone up from INR58 crores to INR90 crores. So there, the margins are lower yes because material cost is higher there. There is no marketing and other costs involved.

Addresses the reason for Unichem's Q4 gross margin contraction and provides context on the impact of product mix and contract manufacturing on profitability.

Asked by Dharmil Shah

Capex Breakdown and FY26 Plan Direct
So around $20 million is for the injectable and oral liquid facility that is coming up at North Carolina, U.S. around INR250 crores for a formulation facility for domestic market coming up at Dewas, another INR200 crores, INR250 crores for API and intermediate facility coming up at Nagpur, plus monoclonal antibody facility another around INR250 crores. These are the major capexs, which will get capitalized in the current financial year, and all those facility will start trial production. In this financial year, that is FY '26.

Provides a detailed breakdown of the significant capex investments for new facilities and confirms their capitalization and trial production timelines.

Asked by Shiva

API Business Outlook and Pricing Stability Direct
API business and pricing was at peak during COVID time. From that time onwards, there is a consistent downward trend in the API pricing. ... But now there is a stability slowly, we feel it will start slightly improving from this level. So in the current financial year... That is correct. Yes. So FY '26, you will see volume growth as well as price growth when it comes to the API business.

Offers management's perspective on the API business, acknowledging past pricing pressures but projecting stability and growth in both volume and price for FY26.

Asked by Shiva

Overall Revenue Guidance Conservatism Partial
If you see our business segment and turnover, API grows by 6%, 7%, and all formulation business, excluding India business grew by around 10% and India grows by around 12%. The overall growth will be 8% to 10% only.

Analyst questions if the 8-10% FY26 revenue guidance is conservative, prompting management to break down the aggregate growth by segment.

Asked by Rahul Jeewani

2 min read 6 chapters

Detailed narrative

Strong Domestic Performance and Market Share Gains

Ipca's domestic business delivered robust growth of 11% in Q4 FY25 and 12% for the full year. The company outpaced the overall market, achieving 13.2% growth (IQVIA) against an 8% market growth. This performance led to an improvement in market share by approximately 9 basis points, reaching 2.07% by mid-March 2025. The company's focus on metro cities post-COVID has contributed to a 4.67% increase in market share from these regions.

EBITDA Margin Expansion Exceeds Guidance

Ipca demonstrated significant margin improvement in FY25. Consolidated EBITDA margin expanded by 2.22% to 18.94% for the full year, surpassing the company's guidance of around 18%. Standalone EBITDA margin also saw a substantial increase of 3.37% to 22.66% for FY25, with absolute EBITDA growing 27% to INR1,533 crores. For FY26, the company expects consolidated EBITDA margins to further improve by approximately 1% to around 20%.

Strategic Investments in New Manufacturing Facilities

The company is actively investing in future growth, with four new greenfield manufacturing plants scheduled to commence trial production in FY26. These include a monoclonal antibody facility in Pithampur, an intermediate API facility in Wardha, a new domestic formulation facility in Dewas, and an injectable/oral liquid facility in North Carolina, US. These facilities represent a significant capex outlay, with approximately INR600 crores already spent (cumulative up to FY25) and another INR400 crores planned for FY26, totaling INR1,000 crores for FY25-FY26.

Unichem Integration and Performance

Unichem Laboratories, now consolidated, reported an 18% growth in business to INR2,211 crores for FY25, with its EBITDA margin improving significantly from 4.87% to 12.55%. Management expects Unichem's EBITDA margin to further improve by about 1% in FY26, with revenue growth of 8-10%. Synergy benefits from the integration, particularly in expanding Unichem's product reach to new markets like Australia, New Zealand, and Europe, are anticipated to materialize a year after next.

Mixed Export and Muted API Business Performance

While branded export formulations grew 10% in FY25, the overall generic export business remained flat at INR981 crores. This was primarily due to a 74% decline in the South African market (from INR113 crores to INR39 crores) following the loss of certain tenders, and an 11% degrowth in Australia & New Zealand due to inventory rationalization. The API business also saw muted growth of only 1% for the full year FY25, though management expects stability and 6-7% growth in FY26, with volume and price growth anticipated.

US Market Entry and Pipeline Development

Ipca is making inroads into the US market with its own products, having shipped INR65 crores worth of goods in FY25 and targeting INR100 crores in sales for FY26. The company plans to file 6-7 new products in FY26, building on a capacity to develop around 20 products annually for global markets. While acknowledging competition pressure in the US generic market, Ipca's strategy is bolstered by its own API capabilities, with most filings backed by in-house APIs.

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