Sai Life — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

Sai Life Sciences delivered a robust performance in its first earnings call as a public company, characterized by strong double-digit revenue growth and significant margin expansion. The company is aggressively utilizing IPO proceeds to deleverage its balance sheet while simultaneously investing in capacity expansion (200 KL total addition) and land acquisition for future growth. Management emphasized a shift toward long-term value creation, targeting a 28-30% EBITDA margin steady state within 2-3 years.

Highlights

  • Revenue from operations grew 15% YoY to ₹440 crores in Q3 FY25.

  • EBITDA margin expanded to 28% in Q3 FY25, up from 27% in the previous year.

  • Profit After Tax (PAT) increased by 36% YoY to ₹54 crores.

  • 9M FY25 EBITDA margin showed a massive 700 bps improvement, rising to 24% from 17% YoY.

  • Company repaid ₹585 crores of debt using IPO proceeds as of December 2024, with the remainder cleared in January.

  • Capacity utilization stood at 65% for 9M FY25, with 100 KL added in November and another 100 KL planned for Q1 FY26.

  • Management set a long-term revenue CAGR aspiration of 15-20% over the next 3-5 years.

Key financials

2 periods

Headline

  • Revenue
    ₹440 Cr
    YoY +15%
  • EBITDA Margin
    28%
  • PAT
    ₹54 Cr
    YoY +36%
  • EPS
    ₹2.9
    YoY +32%

9M

  • Revenue
    ₹1,142 Cr
    YoY +9%
  • EBITDA Margin
    24%

What they filed

Q1 FY27: revenue up 13.3%, net profit up 22.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue382 429 567 483 527 +38%549 +28%594 +5%547 +13%
EBITDA101 111 154 113 140 +39%179 +61%168 +9%140 +24%
Net profit44 51 90 58 83 +89%98 +92%103 +14%71 +22%
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

  • CDMO
    60% Revenue Contribution
  • CRO
    40% Revenue Contribution

Guidance & targets

Revenue

  • Revenue CAGR Revenue · next 3-5 years · Medium confidence 15-20%
    the long-term aspirations will go up to CAGR 15-20% when you consider 3 to 5 year blocks

    — Krishna Kanumuri, MD & CEO

Margin

  • EBITDA Margin Range Margin · next 2-3 years · High confidence 28-30%
    I think the 28-30% steady state that we are saying, we will get there in the next 2 to 3 years.

    — Siva Chittor, CFO

Capex

  • Q4 FY25 Capex Capex · Q4 FY25 · High confidence ₹100-125 crores
    We probably expect to add another 100 to 125 crores in this current quarter.

    — Siva Chittor, CFO

Capacity

  • Manufacturing Capacity Addition Capacity · Q1 FY26 · High confidence 100 KL
    expects to add another 100 KL in Q1 FY '26.

    — Siva Chittor, CFO

Other

  • ROCE Other · next 3-4 years · Medium confidence mid to high teens
    I think our aspiration on the ROCE side... is probably a mid to high teens over a 3-4 year period.

    — Siva Chittor, CFO

Risks & concerns

  • Business Lumpiness

    medium

    CRDMO business is inherently lumpy due to product development cycles and clinical trial phases, leading to quarterly swings.

    Management acknowledged

  • Asset Underutilization

    medium

    New assets take 18-24 months to become productive, leading to temporary margin pressure during expansion phases.

    Both acknowledged

  • Aggressive Chinese Pricing

    low

    Management admits China has been more aggressive in pricing but states they have not dropped their own prices and continue to see 2-3% annual increases.

    Analyst acknowledged

Areas of evasion (1)

  • Specific number of scientists dedicated to the Schrodinger project (cited confidentiality).

Q&A highlights

3 direct
Biotech Funding Environment in the US Direct
A lot of money is coming into biotech, but it's going into later phase programs. A number of new Company startups have not really started yet.

Clarifies that while funding is available, it is concentrated in mature assets, delaying the 'discovery' tailwind for CROs.

Asked by Binay Singh, Morgan Stanley

Asset Turns and Capital Efficiency Direct
CRO does not necessarily mean lower expenditure... biology, the MPK, automations all call for huge expansion with respect to equipments.

Explains why the asset turn (approx 1.2x) remains relatively low despite a high mix of CRO business, which investors typically expect to be asset-light.

Asked by Nikhil Mathur, HDFC Mutual Fund

Commercial Molecule Count Discrepancy Direct
Alankar, it's 38 products going to 31 molecules. So, those couple might have two intermediates in there.

Resolves a potential red flag regarding a perceived drop in commercial molecules from 38 to 31 by clarifying the intermediate vs. final product distinction.

Asked by Alankar Garude, Kotak Institutional Equities

2 min read 5 chapters

Detailed narrative

Deleveraging and IPO Proceeds Utilization

Sai Life has moved swiftly to strengthen its balance sheet following its IPO. As of December 2024, the company repaid ₹585 crores of debt from the planned ₹720 crores of IPO proceeds. The remaining debt was cleared in January 2025, which management expects will lead to a significant reduction in interest costs starting in the current quarter. This proactive financial management supports their long-term goal of operational flexibility and improved capital efficiency.

Aggressive Capacity Expansion Roadmap

The company is in a significant investment phase to meet growing demand. They added 100 KL to manufacturing capacity in November 2024 and expect to add another 100 KL in Q1 FY26. Beyond immediate capacity, Sai Life has doubled its land area for the Hyderabad research center and acquired additional land in Bidar and a new site in Hyderabad for manufacturing. This infrastructure build-out is designed to support a healthier pipeline of molecules moving from Phase 1 to Phase 3.

Shift in Global Supply Chain Dynamics

Management highlighted a clear trend of global pharma innovators diversifying supply chains away from China. Sai Life has already tech-transferred over 15 products from other geographies as part of this diversification. While the Biosecure Act has accelerated discussions, management believes the shift is a long-term strategic decision by pharma companies that began post-COVID. They are seeing a 'big pipeline' of compounds coming to India much earlier in the development cycle (Phase 1 and 2) than previously seen.

Margin Expansion and Operational Efficiency

A key highlight of the call was the 700 bps improvement in 9M EBITDA margins, reaching 24%. Management aspires to reach a steady-state margin of 28-30% within the next 2-3 years. This improvement is expected to be driven by operating leverage as new capacities are utilized, a reduction in employee costs as a percentage of revenue, and a positive change in the profitability of overseas sites in Boston and Manchester, which are no longer a drag on the bottom line.

Strategic Focus on Niche Modalities

Sai Life is expanding its technological capabilities into high-growth areas including Peptides, Amidites (for oligonucleotides), and Antibody-Drug Conjugates (ADCs). They are already seeing reasonable traction in Peptides and are part of several commercial products involving Amidites. While they are evaluating which areas to prioritize based on immediate customer needs, they confirmed they have the requisite capabilities to scale in these segments as demand situations evolve.

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