Lincoln Pharma.

Lincoln Pharmaceuticals delivered a robust performance in Q3 FY26, with revenue reaching INR 166.32 crores, marking a 13.49% increase year-on-year from INR 146.55 crores in Q3 FY25. EBITDA grew by 18.73% to INR 38.74 crores, leading to an EBITDA margin of 23.29%, an expansion of 102 basis points. Net Profit saw a significant jump of 37.60% to INR 28.60 crores, and EPS for the quarter stood at INR 14.28, up 37.70% from INR 10.37 in the prior year period. The 9-month EPS for FY26 is INR 38.07, indicating strong year-to-date performance.

The company is targeting a growth pace of 12% to 18% and remains committed to its long-term revenue target of INR 1,000 crores, though it might take an additional 5-6 months beyond the initial timeline. Growth is expected from existing facilities, new product launches, and the Cepha block, which is projected to contribute INR 45 crores this year and aims for INR 90-100 crores by next year, eventually reaching INR 150 crores. The existing manufacturing base, excluding the Cepha block, has a potential to generate INR 750-800 crores in revenue, with an additional 20% growth capacity.

Lincoln Pharma is actively expanding its international footprint, with exports contributing significantly to revenue. The geographical breakdown of exports includes approximately 40% from Africa, 25% from Latin America and Southeast Asia combined, and 15% from UNICEF, UN, and other tender businesses, with the remainder from Canada. The Canadian business is currently generating $4-5 million from 15-17 commercialized products and is targeted to grow to $10-15 million. The company is also pursuing TGA approval, expected to take another year, and anticipates EU reinspection in mid-May or June, which is crucial for market entry.

The company is increasing its focus on R&D and product development, with current R&D expenses at 1.8% to 2% of revenue, targeted to increase to 3% to 3.25%. A new dedicated R&D center is expected to be operational within 2-2.5 months. Annually, Lincoln Pharmaceuticals plans to spend INR 5-7 crores on registrations and BE studies, aiming to expand its portfolio in niche therapeutic areas for both domestic and international regulated markets.

Management aims to maintain EBITDA margins between 15% and 18%, considering 15% as an ideal baseline. The current Q3 FY26 EBITDA margin stands at 23.29%. The company's business model, primarily B2B in exports and direct sales in domestic markets, helps in managing outstanding payments and currency variations. While acknowledging that some peers have higher margins, management attributes their current levels to product mix, seasonal aspects, and ongoing branding investments.

Lincoln Pharmaceuticals maintains a debt-free status and possesses substantial cash flow, which is strategically deployed in ICDs (earning 10-12% returns), mutual funds, and fixed deposits. The company is exploring inorganic growth opportunities to utilize these funds for exponential growth rather than higher dividend payouts. While a consistent dividend is paid, management is internally discussing whether to revise the payout. There are no plans for share buybacks, and promoter shareholding is expected to increase gradually as opportunities arise.