Ladies and gentlemen, good day and welcome to the JB Pharma's Q2 FY 2026 earnings conference call as of 12 th November 2025. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchstone phone. I now hand the conference over to Mr. Jason D'Souza, Executive Vice President at JB Pharma. Thank you, and over to you, sir. Thank you, Sagar. Welcome to the Q2 FY 2026 earnings call of JB Pharma. We have with us today Nikhil Chopra, CEO and Whole-Time Director; Kunal Khanna, President Operations; and Narayan Saraf, the CFO at JB Chemicals & Pharmaceuticals Limited. Before we begin, I would like to state that some of the statements in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available in the Q2 FY 2026 results presentation that has been sent to you earlier. I would like to hand over the floor to Mr. Nikhil Chopra to begin the proceedings of the call and for his opening remarks. Thank you, Jason, and welcome to all of you on today's call. JB Pharma delivered another quarter of a good performance, with the business growing ahead of the Indian pharma market. Quarter two saw overall revenues at INR 1,085 crores, which is 8% higher than the previous year. Operating EBITDA, excluding non-cash ESOP, came in at INR 319 crores, up 12%, and net profit was reported at INR 208 crores, which grew at 19% year-on-year. Our Q2 FY 2026 gross margins increased by 200 basis points, to 68.2% versus 66.2%. Cost optimization efforts, favorable product mix, and price growth positively impacted gross margins. Operating EBITDA margin came at 29.4%, up 100 basis points year-on-year, underscoring emphasis on improvement in profitability. Moving along, let me draw the discussion towards the domestic business. Our domestic business grew, showed a 9% improvement year-on-year to INR 644 crores. As per IQVIA September MAT data, JB Pharma is the fastest-growing company among the top 25 companies in IPM. Over the past several years, we have consistently remained one of the fastest-growing companies in the country. This is indeed a major achievement for our organization as a whole. Further, all our major brands gained ranks, with three of our brands now in the top 100 brands in IPM. We have now six brands in the top 300 in the IPM. The business continues to be driven by strong brands, with key franchises outperforming the market. As per IQVIA September 2023 data, the Rosuvastatin franchise, that is Rosuvastatin franchise, has crossed INR 100 crore in revenue. This is another achievement, considering that in just two years, the franchise has gone from sales of INR 66 crore in MAT September 2022 to INR 104 crore as per MAT September 2023 data. We now have six brands, franchises, each demonstrating healthy and sustained growth. Moving on, let me address our international operations. Q2 FY 2026 saw the business delivering 7% improvement year-on-year to an INR 441 crores. This was driven by strong trends in our CDMO segment. CDMO business reported 20% year-on-year growth to an INR 113 crores for the quarter. We have a robust pipeline of products lined up for our global partners, and our order book remains strong for H2 FY 2026. International formulations reported a revenue of INR 306 crores, up 2%. Russia market recorded strong growth for the quarter, whereas our other markets stayed subdued. We expect growth to return in H2 FY 2026. More of that, we'll talk in our Q&A. Friends, JB remains steadfast in advancing revenue growth while deepening its focus on the cost discipline and organization agility. Our continued emphasis on the domestic and CDMO segments will be instrumental in sustaining both top-line expansion and margin strength. With a resilient balance sheet and a culture rooted in execution excellence, we are poised to navigate the future with confidence and steer the company into its next phase of strategic growth. I would like now to request Mr. Narayan Saraf, our CFO, to continue with his views on the financial performance. Over to you, Narayan. Thank you. Thank you very much, Nikhil. Good afternoon, everyone, and welcome to JB Pharma's Q2 FY 2026 earnings call. Now, to take you through the financial updates for the second quarter, revenues for the quarter were at INR 1,085 crores, representing an increase of 8% year-on-year. The domestic business to international business mix was 61% to 39% for H1 FY 2026 versus H1 FY 2025. The domestic formulation business segment reported revenues of INR 644 crores, with a growth of 9% year-on-year. As per IQVIA March-September 2025 data within the IPM, the company maintained its outperformance with a growth of 12% versus the IPM growth of 8%. In international business, the segment reported a growth of 7% year-on-year at INR 441 crores. International formulations grew moderately by 2% year-on-year to INR 306 crores, and the CDMO category grew strongly, recording an increase of 20% year-on-year at INR 113 crores due to good sales momentum. Revenue from the API category was at INR 22 crores, as against INR 19 crores in the previous year. Operating EBITDA, which is excluding non-cash ESOP, grew by 12% to INR 319 crores for Q2 FY 2026. Operating EBITDA margins increased by 100 basis points to 29.4% for Q2 FY 2026. For H1 FY 2026, operating EBITDA, excluding one-off impact in Q1 of INR 15 crores due to merger scheme, grew by 13% to INR 649 crores. Operating EBITDA margins were 29.8%, an increase of 110 basis points as compared to H1 FY 2025. Gross profit margin grew to 68.2% compared to 66.2% in Q2 FY 2025. Cost optimization efforts, favorable product mix, and price growth aided the margins' improvement by 200 basis points. Overheads including employee costs were contained, which also aided operating margins. Finally, net profit increased by 19% to INR 208 crores for Q2 FY 2026 and increased by 17% to INR 410 crores for H1 FY 2026. Excluding one-off impact due to merger scheme, net profit for H1 grew by 20% to INR 421 crores, an improvement of 180 basis points. The operating cash flow in H1 FY 2026 was at INR 363 crores. Cash tax increased to INR 116 crores. The company's gross debt as of 30 September 2025 was at INR 7 crores versus INR 14 crores as of 31 March 2025. Net cash and cash equivalents, including investments in mutual funds, were at INR 939 crores as of 30 September 2025. The net capex addition for H1 FY 2026 was INR 46 crores versus INR 49 crores in H1 FY25. We remain confident on a positive outlook through opportunities for the company and providing value to our stakeholders. That brings to my end of my opening remarks. I now request the moderator to open the forum for the Q&A session. Thank you very much. Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and then one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then one. Our first question comes from the line of Tausif Shaikh from BNP. Please go ahead. Thanks for the opportunity. My first business on the domestic business. Just want to check whether our domestic business was impacted by the new GST rates, and can you help us provide the growth of acute and chronic growth for this quarter to help this thing better? With respect to GST, the business was not impacted at all. Whatever numbers you see are without any significant impact on channel as far as GST implications go. Overall, our growth has again outpaced the market. If you really look at Q2 numbers, the volume growth for the market was in the range of 0.5%-0.7%, whereas our volume growth was close to 2%. We have always kind of maintained that the reason why we will be able to grow above the market is because we will grow at at least 3 percentage points above the market with respect to volume growth, and that trend continues to maintain. Acute season was slightly muted, which has impacted our overall domestic growth for Q2, mainly impacting products like Metrogyl and Rantac. Beyond that, our chronic growth has been significant. In fact, our chronic portfolio has grown at over 20%. Some of our key brands like Cilacar, Cilacar T, Cilacar Plain have grown at almost 14%. Cilacar T continues to grow at 26%. Our Sporlac franchise has grown at 15%. Azmarda is growing at 23%. All our big franchises on the chronic segment are actually growing at 20% plus. That's helpful. Second question on the export formulation. I think this is the second consecutive quarter we have seen muted growth. Which are the markets which are leading this track to this kind of growth? Can you help us understand? If you look at overall our performance in the international market, two of the—let me first talk about which markets got us a growth. CDMO grew at a pace of 20% for the quarter, and equally, Russia business demonstrated a good growth of 20%, close to high teens for the quarter and H1. The rest of the world and South Africa, they showed the muted growth. What we would like to state here is that we have a good order book for the rest of the world, and we should see high single-digit growth in H2 in the rest of the world market, and South Africa also will bounce back, supported by the growth that will continue to happen in CDMO and Russia. That's helpful. I'll get back to you. Thank you. Our next question comes from the line of Alok Dalal from Jefferies India Private Limited. Please go ahead. Yes. Good afternoon, sir. Just two questions. First is, for the quarter, we've seen India growth of 9%. This is slightly slower than previous quarters. Is it largely because of seasonality? Yes. As we maintained earlier, largely because of acute season slightly being muted. Last year, Metrogyl, the overall acute season was quite positive for us, and Metrogyl as a franchise had also grown. It is an impact of a slightly higher base for some of these key legacy products. It is just a seasonal variation. If you compare overall volume growth and if you see the chronic trends, we continue to outpace the market. Alok, we'll continue to grow, and Alok, Nikhil will continue to outpace like what Kunal told. We'll continue to outpace the market, and as compared to IPM, we'll continue to grow by 300 to 400 basis points better. Sure. Can you split the growth between volume, price, and new introductions? Sure. If you really look at it from a Q2 perspective, as reflected externally and also in line with our internal trends, overall volume growth is for Q2 4% and price is 6%. Overall H1 volume is 5% and the price is 7%. Some part of volume includes our NI, but that's not significant. Got it. The last question is on Fieldforce. What is the current Fieldforce trend as of September? Currently, the MRs are close to 2,400 active MRs operating on the ground. No significant additions over the last four to six months. Our productivity is closer to INR 7,500,000. All right. Okay. Yeah. Sir, if I look at the March presentation, so the Fieldforce trend was about 2,800. So has there been some attrition, about 300-400 MRs? No, no. I think that is including the managers, Alok. Okay. This is on the ground, feet on the ground. All right. Okay. Thank you for taking my questions. Thank you. Our next question comes from the line of Rashmmi Shetty from Dolat Capital. Please go ahead. Yeah. Thanks for the opportunity. Again, a follow-up from the export market. You mentioned that South Africa and U.S., we have seen some sort of struggle over there. While Russia, which had seen a slowdown in the first quarter, has seen a good season this quarter, and that is why it has picked up. What exactly in the U.S. and South Africa, the struggle is? Is it related to any sort of pricing pressure or delayed product launches or anything? If you can give a bit in detail, though I understand that in the second half, we will be recovering. What is the temporary issue over here? Yeah. Yeah. If you look at South Africa, we have been, over a period of time, diminishing our overall participation in the public market tendering. That is the reason, and it takes time in South Africa as a market where we have been highly relying upon public tendering. Still, this public tendering participation and the contribution to business a couple of years ago was 65%. Today, it has come down to 35%, and private has gone up. We are looking at how you propel up the growth in the private market. That will come. We are confident. U.S., no pricing pressure. We do not take any price reduction in the U.S., U.S. has been a quarter where our last year base was high because some supply would have been on the higher side, but it has been a trend. We do around $10 million-$12 million business every quarter. I think that growth will bounce back in quarter three and quarter four for U.S. business. Not a worry. Okay. In domestic business, what kind of price hikes have we taken? I mean, the blended price hike for this year. Have we already taken it or will we be taking it now? It happens product to product based on when the price hikes are due for a particular set of brands. If you really look at our H1 trending, price growth is 7% for our domestic business. For Q2 specifically, it was 6%. We continue to maintain our guidance of 12%-14% for the domestic market, expecting that the H2 will pick up due to the chronic segment. Absolutely. As we have always maintained, we will continue to outpace the market. Even if you really look at the volume growth figures compared to the IPM, we continue to be 3% higher than the market volume growth figures, and we'll continue to maintain that. We will be looking at 12%-14% growth for our domestic business. Okay. Last quarter, you mentioned that gross margin guidance would be in the range of 67%. You still hold that because we are running at 68% now. Similarly, if you can guide on the EBITDA margin, whether you're retaining your guidance of around 27%-29%? Yes. On gross margin, we continue to maintain that we would be in the range of 67%-69%. EBITDA also, very clearly, we would be in the range of the earlier guidance which we had given. We continue to see that we are tuned to achieve those guidances. Okay. Just two more questions. Soft charges will get over by which year? In case our optical portfolio gets consolidated, that is from FY 2028, what kind of gross margin improvement or margin can we see? Our base business itself is now at around 29% EBITDA margin. How much expansion can we expect from there? On the optical side, and Narayan can take the ESOP question later. On the optical side, the perpetual license gets triggered in December 2026. From calendar year 2027, we will see a significant improvement on the overall gross margin profile. We do not want to significantly peg any number or give any guidance, but just to give you a sense that even our optical portfolio, the overall margin profile will be probably higher than our standalone domestic business current margin profile as well. That gives you an indication of what the margin boost will look like. Okay. And. On the ESOP charge, we see that the balance charge which is left is approximately INR 47 crore, and the year till which it will be charged is FY 2025. However, very clearly, we see INR 10 crore getting charged in quarter three as per quarter two. Okay. INR 47 crores for this year, you are saying? INR 47 crore s is the total remaining charge. Okay. In FY 2027, how much will you charge it? In FY 2026, we see clearly around INR 20 crores, and balance INR 27 crores will be in FY 2027. Okay. One last question on the inventory days. In the presentation, you mentioned that the inventory levels have been increased. Will it get normalized at the end of March quarter, or will it remain elevated only to build your optical inventory and also just to mitigate the risk of high API costs? More or less, we will continue with the same levels of inventory. Given our optical portfolio currently is imported, there are certain times in the year when you see a slightly increased level of finished goods inventory, but no real major concern of inventory levels going further high from the current levels. It will be range-bound from what we have seen in Q1 and Q2. Okay. So more or less, it would remain at the similar level of H1, FY 2026? Yeah. Yeah. Okay. Okay. Thank you. That's it from my side. Thank you. Before we take the next question, a reminder to all the participants. You may press star and then one to ask a question. Our next question comes from the line of Gourav Bhama from JM Financial. Please go ahead. Hi, good afternoon, sir. Am I audible? Yes, yes. To begin with, sir, congratulations on a good set of numbers, and thank you for offering me the opportunity to ask questions. I just wanted to understand the high single-digit growth expected in the second half. Is it for the overall international business or just for the international formulation? Overall business. Overall international formulation business, right, sir? Yes. That's all from my side. International formulation business. Hello. Thanks. Yeah. We'll take a look, sir. Sure. Participants, you may press star and then one to ask a question. Our next question comes from the line of Abdul Kader Puranwala from ICICI Securities. Please go ahead. Hi, sir. Thank you for the opportunity. The first question is pertaining to the ESOP charge. So clarity as to what is this charge pertaining currently, there has been some buyout already. To what price is this ESOP being issued? Narayan, you want to take it? Basically, the charge which we see in quarter two is around INR 10 crore. As I mentioned earlier, we continue to see that charge of INR 10 crore even in quarter three. The ESOPs which have been issued have been issued as per the rates which were governed at the SPA, not as per the agreement which has been signed by each of the employees. I think it is at different rates for different employees. Some of our key leaders have been given ESOPs at different rates. It is as per the agreement with the employees. It is different for different employees. I hope I was able to answer your question. Yeah. Thanks for that. The second one is on the India business. On the acute side, I heard the comment about the season not being that favorable. Sir, I mean, could you just help us understand why there would be a dip in this portfolio in Q2? Sorry? Was there a dip in this portfolio? Because when you talk about a chronic growing at 20%, your overall growth was at 9%. Yeah. So what we maintained was that the key brands in chronic grew at 20% plus, right? And mainly because of the acute season being slightly muted, our key legacy brands, Rantac and Metrogyl, have shown slightly muted growth trends, and that is reflected in the overall number of 9%. Having said that, if you really look at the overall volume growth numbers for the IPM and for us, IPM volume growth for Q2 is just around 0.3%, which is again a reflection of the muted season. Whereas our volume growth internally is 4% and externally also is reflected at 3%. So whatever dip you are seeing, majorly in some of our two large brands of acute and overall reflected in the acute portfolio is a function of how the market has behaved. Got it. Thanks for that. Just one final one if I may. On the CDMO business, are we still holding on to our previous guidance of 12%-14% growth this year? Yes. We should be able to maintain that growth momentum. If you look at the quarter growth, as Nikhil mentioned earlier, we grew at 20%. Our H1 growth also currently is looking at 14%. We continue to see the momentum being driven forward also. We should end the year with close to 12%-14% growth for CDMO. Sure, sir. Thank you. We have just two, thanks, thanks, Abdul. We have two questions which have come in on the wall. One is on the optical segment. How do we see the performance of the optical segment in the first half of this year? On the optical portfolio, the overall momentum which we were able to drive because of prescriber expansion, we continue to see good results coming as a result of that. If you look at the overall MAT numbers for the optical portfolio in our covered markets, we have grown at almost 16%, whereas the market has grown at close to 8%. We have already hit a monthly blended of close to INR 17 crores-INR 18 crores, and we will continue to drive that going forward as well. Optical, a couple of new launches also we have done organically in the area of dry eyes, which also is showing a good traction. Our coverage overall also has improved in the world of ophthalmology with the doctor community, which also is helping us to improve the prescriber base. Right. The second question that we have is, what is going to be CapEx for the entire year? CapEx for the entire year, as mentioned earlier, also will be close to INR 100 crore. We have always maintained that our maintenance CapEx is in the range of INR 60crore-INR 65 crore. There is Greenfield CapEx, and this year, Greenfield CapEx was largely attributed to the new IV line, which is also going to get commissioned within the next two months. A major part of our Greenfield CapEx also has been absorbed this year. The last question which has come in, you've seen some growth in the API business. Any views on that? We want to maintain a quarterly run rate of INR 25 crore on the API side. H1 has been good so far. As we have always maintained, it's not a function of any new launches. As far as our API business goes, we want to maximize the market with our current portfolio only and rather actually focus on API units serving the captive requirements. That will continue to be the focus going ahead as well. Yes, we can go back to the queue. Thank you. Thank you. A reminder to all the participants, if you wish to register for a question, please press star and then one. Our next question comes from the line of Neelam Punjabi from Perpetuity. Please go ahead. Yeah. Thanks for the opportunity. My first question is on the MR productivity. You mentioned it's at INR 6.7 lakhs. What's the target for this productivity level over the next couple of years? At what level would we then evaluate the add to our fieldforce? Neelam, just to correct you, the productivity trending this year is 7.5 lakhs, not 6.7. All right. My bad. Sorry. Yeah. That is what we had guided also. We have taken an internal aspiration that we would like to at least touch INR 800,000 productivity, which would be a good productivity for the portfolio mix that we have got. By that time, we will think in terms of if you want to add the field boots on the ground. That we had guided earlier. Got it. Okay. My second question is on the international formulation business. Could you provide a breakout for the first half in Brazil, South Africa, and U.S.? What's the revenue split between these three? We don't provide the breakup of geographies, Neelam. Just to give you a broad sense, in our key markets, Russia, CIS continues to perform well. South Africa and U.S. were slightly muted, but given the order of the situation, we see then the trajectory changing there in H2. APAC is on a good track as well, and that will continue to be parts of our key markets, and that's how the trending will happen. Got it. That's it from mine. Thank you. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Nikhil Chopra for closing comments. Thank you all for coming for the investment conference for JB. We continue to outperform the market, particularly what is happening in the Indian pharma market, growing at 300-400 basis points better than the market. A lot of market projects are on in the world of CDMO, which will help us to drive mid-teens growth for CDMO business. As I mentioned, right now, our India plus CDMO contribution is close to 70%, which will only go up to 75%-80% in the coming time. That will help us to drive better EBITDA margins and continue to guide the street in terms of any revision that we want to do in terms of our gross margins as well as EBITDA margins. Thank you all once again. Thank you. Thank you. On behalf of JB Pharma, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.