Supriya Lifescience Q1 FY27 earnings call

Supriya Lifescience reported a 31% year-on-year revenue growth, reaching ₹190 crores in Q1 FY27. Despite strong demand, the company faced temporary challenges, including water shortages that deferred approximately ₹35 crores in sales. EBITDA for the quarter stood at ₹47 crores, an 8.1% decline year-on-year, resulting in an EBITDA margin of 25%. This margin compression was primarily due to the deferred sales and an ₹8 crore impact from increased fuel and power costs caused by a change in solar power policy, which management clarified as a one-time^📎 retrospective payment.

The company is actively pursuing multiple growth avenues, including new product launches and capacity expansion. Two new anesthetic liquid inhalation products have been launched from the Ambernath facility, with expectations for scale-up in coming quarters. Additionally, two ADHD products are in the pipeline, and contrast media products are slated for launch in H2 FY27. The core strategy of backward integration continues to progress, with 72% of total revenues now fully integrated, supporting a robust product pipeline across key therapeutic segments.

Progress on the Patalganga greenfield project is underway, with boundary wall construction already started, marking the breaking of ground. Phase-1 of this project, involving an investment of ₹200 crores, will include two API blocks and two formulation blocks, with API blocks being the initial focus. The Ambernath facility is also advancing, with an EU audit scheduled for the second half of November, which is expected to open up ramp-up opportunities for products in regulated markets. The company is also close to signing a term sheet for a large anesthetic CDMO contract, with an announcement anticipated next quarter.

In response to the Q1 challenges, management has made operational adjustments. The previously planned annual maintenance shutdown for Blocks A to D in August has been revisited and will now be undertaken in a phased manner to avoid any major impact on Q2 FY27 production. Due to the initial plan for a complete shutdown, inventory levels increased to ₹230-240 crores, which will now be liquidated over the next three to four quarters. Management also stated that cost increases, including those from raw materials and operational expenses, will be passed on to customers.

Supriya Lifescience remains confident in achieving its FY27 revenue target of ₹1,000 crores and maintaining EBITDA margins in the 33-35% range. Beyond FY27, the company anticipates a CAGR of around 20%, with potential for higher growth driven by new products, verticals, and CMO/CDMO opportunities. Capital expenditure for Q1 FY27 was ₹16.58 crores, primarily for maintenance and the Isambe project. The company holds cash reserves of approximately ₹150 crores in FDs and mutual funds and has not utilized working capital limits, except for LCs and bank guarantees, indicating a strong liquidity position.