Piramal Pharma Q1 FY27 earnings call

Piramal Pharma Limited commenced FY27 with robust performance, achieving a 17% year-on-year revenue growth to INR 2,270 crores. This was accompanied by a significant 72% increase in EBITDA to INR 285 crores, leading to an approximate 400 basis points expansion in EBITDA margins to 12.5%. All three core businesses—CDMO, Complex Hospital Generics, and Consumer Healthcare—contributed to this growth with mid-to-high teen revenue increases, driven by strong execution and improved demand conditions.

The CDMO segment reported a strong 19% year-on-year revenue growth, benefiting from broad-based contributions across Indian and overseas sites. Strategic investments in commercial capabilities, coupled with improved demand conditions, led to healthy RFP activity and robust order inflows. The company also inaugurated a new commercial-scale payload-linker development and manufacturing site at its Riverview facility and confirmed that the sterile injectable capacity expansion at Lexington is on track, both part of a USD 90 million expansion program.

The complex hospital generics business delivered a resilient 17% year-on-year revenue growth, reaching INR 743 crores. The company maintained its leadership in key therapies such as US Sevoflurane (48% market share) and Intrathecal Baclofen, while also seeing encouraging traction in ex-US inhalation anesthesia markets. Kenalog supplies, identified as a key growth driver for FY27, are anticipated to commence from Q2 FY27, despite ongoing Chinese competition.

Piramal Pharma's consumer healthcare business continued its strong momentum with mid-teen revenue growth. This was primarily fueled by Power Brands, which grew 23% year-on-year and contributed 53% of segment sales, and robust e-commerce growth of 40% year-on-year, accounting for 28% of sales. The company also launched 'i-choose', a new master brand for women's intimate care, and allocated approximately 12% of sales to media and trade promotion, supported by judicious pricing actions and cost optimization.

The significant EBITDA margin expansion of 400 basis points to 12.5% was attributed to all-round revenue growth, higher capacity utilization, operating leverage, and pricing discipline. Management reiterated its target of achieving 25% EBITDA margins by FY30, primarily driven by the CDMO business as overseas facilities scale up. However, the effective tax rate is expected to remain elevated for FY27, normalizing to 24-25% only when these overseas operations reach full scale, partly due to lower PBT in non-scaled overseas facilities.

Piramal Pharma is actively strengthening its differentiated CDMO capabilities, particularly in the ADC space, through investments like the Riverview payload-linker facility (a <$5 million investment with single to low double-digit revenue potential). The company also announced a strategic collaboration with Ajinomoto Bio-Pharma Services, combining their AJICAP technology with PPL's ADC expertise, and a manufacturing and supply agreement with Botanix for Sofdra, enhancing its integrated ADC platform and market reach.

The company highlighted its strong Net Promoter Score (NPS) of approximately 60% in CDMO, which is significantly above the industry average and contributes to customer referrals and new client acquisitions. Its global manufacturing network, spanning multiple geographies, is seen as a key competitive advantage, enabling the company to capture emerging opportunities driven by supply chain resilience and diversification efforts in the pharmaceutical industry, with RFP activity increasing across most sites.