Sai Life — Q4 FY25 earnings call

Call held 14 May 2025

Management summary

Sai Life Sciences delivered a strong FY25 performance characterized by significant margin expansion and a doubling of net profit. The company is successfully transitioning its revenue mix toward higher-margin CRO services and deepening relationships with top global pharma clients. Management is signaling aggressive growth for the future with a massive ₹700 crore capex plan for FY26 to capture supply chain shifts away from China.

Highlights

  • Full-year FY25 revenue reached ₹1,695 crores, representing a 16% YoY growth.

  • EBITDA grew 42% YoY to ₹425 crores, with margins expanding 458 bps to 25%.

  • Profit After Tax (PAT) surged 105% YoY to ₹170 crores, driven by operating leverage.

  • CRO segment revenue grew 26% YoY, now contributing 37% of total revenue.

  • Completed ₹720 crores of debt repayment using IPO proceeds, significantly reducing leverage.

  • Announced a substantial FY26 capex plan of ~₹700 crores to expand capacity by 30%.

  • One-time provision of ₹34 crores taken in Q4 for bad debt/contract assets due to customer de-stocking.

Key financials

  1. Revenue ₹1,695 Cr +16%YoY
  2. EBITDA ₹425 Cr +42%YoY
  3. EBITDA Margin 25%
  4. PAT ₹170 Cr +105%YoY
  5. ROCE 12%

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

SegmentRevenue ContributionClient Mix (Large Pharma)
CDMO63%70%
CRO37%37%

Guidance & targets

Revenue

  • Average Revenue Growth Revenue · next 3-5 years · Medium confidence 15-20%
    We are saying on a 3 to 5-year period, our average growth taker on revenue will be between 15% and 20%.

    — Siva Chittor, CFO

Margin

  • EBITDA Margin Margin · next 2-3 years · High confidence 28-30%
    Our long-term guidance... is that we expect to get to a EBITDA margin of 28% to 30% in the next couple of years.

    — Siva Chittor, CFO

Capex

  • Total Capex Capex · FY26 · High confidence ₹700 crores
    we are broadly looking at a capex of close to INR700 crores for the next year.

    — Siva Chittor, CFO

Capacity

  • Manufacturing Capacity Increase Capacity · FY26 · High confidence 30%
    we feel that that would increase the capacity by close to about 30% for the year.

    — Krishna Kanumuri, CEO

Headcount

  • FTE Growth Headcount · FY26 · Medium confidence 12-15%
    We expect at least 12% to 15% growth from last year to – from fiscal 2025 to 2026.

    — Siva Chittor, CFO

Risks & concerns

  • Biotech Funding Environment

    medium

    Management notes the funding situation is 'wait and watch' and expects a leveling off in biotech revenue over the next 2 years.

    Both acknowledged

  • Lumpiness of CDMO Business

    medium

    Revenue and margins can swing significantly between H1 and H2 due to delivery schedules and fixed cost structures.

    Management acknowledged

  • Geopolitical/Tariff Uncertainty

    low

    Management believes it's too early to assess impacts of new tariffs or MFN orders, viewing them as long-term fluid situations.

    Analyst downplayed

Areas of evasion (2)

  • Specific revenue contribution from individual manufacturing units (Unit 3 vs Unit 4).
  • Geographical revenue split details.

Q&A highlights

2 direct
Q4 EBITDA Lagging Revenue and Expense Jump Direct
there was a prudent provision that we had taken on bad debt and contract assets... The number is close to around INR34 crores.

Explains the one-time margin hit in Q4 and clarifies it was a non-recurring accounting provision related to customer de-stocking.

Asked by Binay, Morgan Stanley

Seasonality and Low Q1 Margins Direct
this is primarily some bit of seasonality on the CDMO side... deliveries kind of ramp up in Q3 and Q4.

Confirms that the business has a back-ended heavy H2, which is critical for analysts modeling quarterly earnings.

Asked by Bino Pathiparampil, Elara Capital

Asset Turnover and Capital Efficiency Partial
I think we have given a guide in the next three, four years of a 1.2 to 1.4 net fixed asset.

Addresses concerns about low current asset turns (1x) by promising improvement as new capacities mature.

Asked by Deepak, Carnelian Capital

2 min read 5 chapters

Detailed narrative

Aggressive Capacity Expansion to Capture China-Plus-One

Sai Life is significantly stepping up its investment cycle, planning a ₹700 crore capex for FY26, a sharp increase from the ₹408 crore spent in FY25. This investment is aimed at adding 30% manufacturing capacity and building out capabilities in new modalities like Peptides, ADCs, and Oligonucleotides. Management believes this front-loading of capex is necessary to win long-term diversification contracts from global pharma companies looking for alternatives to Chinese suppliers.

Margin Expansion Trajectory and Operating Leverage

The company achieved a 25% EBITDA margin in FY25, up from 20% in FY24, driven by better capacity utilization and a shift toward higher-value CRO services. Management reiterated its long-term guidance to reach 28-30% margins within the next 2-3 years. While Q4 margins were slightly dampened by a ₹34 crore one-time provision, the underlying operating leverage remains strong as the business scales.

Strategic Shift Toward Large Pharma and Integrated Services

Sai Life is successfully deepening its penetration into 'Big Pharma,' with 18 of the top 25 global companies now as customers. The revenue mix in the CRO segment from large pharma has increased from 30% to 37% over the past year. This shift provides more stability compared to the volatile biotech sector, which management expects to remain flat or 'level off' for the next two years.

Financial De-leveraging Post-IPO

A key highlight of the fiscal year was the repayment of ₹720 crores in debt using IPO proceeds. This move has significantly strengthened the balance sheet and is expected to result in lower interest costs starting in FY26. Despite the aggressive ₹700 crore capex plan for next year, the company intends to fund it through a mix of internal accruals, remaining IPO funds, and modest debt, maintaining a disciplined capital structure.

Emerging Modalities: Peptides and ADCs

The launch of a dedicated Peptide Research Center in Hyderabad marks a pivot toward complex therapeutics. Management noted that 80-90% of current customer pipelines involve conjugation products like ADCs and peptides. By investing ₹50-60 crores specifically in these new modalities, Sai Life is positioning itself to follow the 'molecule' from discovery through to commercial manufacturing in the next generation of drug development.

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