Ladies and gentlemen, good day and welcome to Q2 and H1 FY 2027 earnings conference call of Aarti Drugs Limited. 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance, and it may involve risk and uncertainties that are difficult to predict. I now hand the conference over to Mr. Adhish Patil, Managing Director of Aarti Drugs Limited. Thank you, and over to you, sir. Thank you. Good morning, everyone, and thank you for joining us for Aarti Drugs Limited earnings conference call for the second quarter and first half of FY 2027. With me today are Mr. Harshit Savla, our Joint Managing Director, Mr. Harit Shah, Whole-Time Director, Mr. Vishwa Savla, Managing Director of Pinnacle Life Science Private Limited, and our investor relations advisor, SGA. Our results and investor presentation for the quarter ended September 30, 2026 have been filed with the stock exchanges and are also available on our website. I hope you have had a chance to go through them. I am pleased to report that Q2 FY 2027 has been a milestone quarter for Aarti Drugs Limited. For the first time ever, our total consolidated revenue was at INR 829 crore in a single quarter, 27% higher than a year ago. Operating environment remained supportive throughout the quarter. Developments in West Asia kept API prices firm across the industry, while customers increasingly prioritized reliable and uninterrupted supply of APIs. Aarti Drugs was well-placed to benefit from this, delivering a 16% improvement in realizations year-on-year, alongside a volume growth of 5%. Just as important as the recovery in our margins, EBITDA grew 63% to INR 138 crore, the highest quarterly EBITDA we have ever reported, with our EBITDA margin for the quarter reaching 16.6%, up 370 basis points year-on-year basis, and the highest we have achieved in nearly six years. Profit after tax rose 83% to INR 82.8 crore. Our focus remains firmly on what is within our control, that is growing volumes, improving our product mix and market mix, and lowering our cost through backward integration, process improvement, and energy optimization. Our API business, which remains our largest segment, grew 17% to INR 605 crore compared with INR 516 crore in Q2 FY 2026. Our Specialty Chemical business continued to scale up with the support of our Sayakha facility and grew 92% to INR 72 crore from INR 37 crore a year ago. Our formulations business also had an excellent quarter, growing 58% from INR 82 crore in Q2 FY 2026 to INR 130 crore in Q2 FY 2027, led by exports, which rose 73% year on year. Let's talk about some projects. Let me begin with our methylamines facility at Sayakha. During the quarter, the plant operated at around 72% utilization, and captive consumption of our anti-diabetic portfolio rose to around 85%. These gains in product mix, backward integration, and cost efficiency are structural, and they will stay with us even as the pricing environment normalizes over time. I would like to highlight how quickly this facility has come together. We commissioned it in September last year, and within roughly a year, a large share of our key intermediates for metformin, which we earlier bought from outside, is now being made in-house. This gives us better control over the cost, quality, and availability of inputs for one of our most important products, and it strengthens our position as a dependable, integrated supplier for our customers. We are now working to improve utilization of the other products at the site as well. At the Tarapur facility, the improvements we spoke earlier are now underway, and we have started producing technical-grade methyl salicylate as well. We have manufactured roughly around 85 tons so far in the last quarter. We are also expanding our US FDA approved block at Tarapur by building an adjacent block, which will more than double its capacity. This expansion includes three new multipurpose plants, which will give us the flexibility to make a wider range of products for regulated markets. We expect the project to take around 18-20 months, with commercial production targeted towards the end of FY 2029. At Sarigam, we are increasing our metformin capacity from 1,400 tons per month to 1,700 tons per month, with commercialization planned in early FY 2028. Alongside this, we are adding a dedicated 500 tons per month US FDA compliant block by the end of FY 2028. Our US FDA DMF for metformin is under preparation. At our facility in Baddi, in Himachal Pradesh, we are executing a brownfield expansion which involves utilizing an adjacent plot to nearly double the current oral solid dosage manufacturing capacity and support a long-term formulations revenue target. With a stronger, more integrated platform and capacity additions lined up at Tarapur, Sarigam, and Baddi, we enter the second half of the year with confidence. Once this block is approved, it is expected to open the door to many of the U.S. and EU market customers. I would also like to share an update regarding our sustainability initiatives. CRISIL has assigned Aarti Drugs an ESG rating of 61 for FY 2026, which places us in the strong category. We see this as recognition of the steady work our teams have put into environment, safety, and governance across our sites, and we will continue to build on it. With that, let me take you through our financial performance. First, we will talk about consolidated financial highlights for Q2 FY 2027. Revenue stood at INR 829 crore as compared to INR 653 crore in Q2 FY 2026, reflecting a growth of 27% YoY. EBITDA stood at INR 138 crore versus INR 84 crore in Q2 FY 2026, recording a growth of 63% YoY. EBITDA margin stood at 16.6%, an expansion of 370 basis points YoY basis. PAT stood at INR 83 crore as compared to INR 45 crore in Q2 FY 2026, a growth of 83% YoY. PAT margin stood at 10%, an expansion of 310 basis points YoY. Now, let's speak about standalone business for Q2 FY 2027. Revenue stood at INR 709 crore versus INR 579 crore in Q2 FY 2026, a growth of 22% year-on-year. Standalone business contributed 84.3% to the consolidated revenue. 68% of the standalone revenue came from the domestic market and 32% from the export market. Domestic revenue grew 43% YoY, while export revenue declined 5% YoY. Within the API segment, the antibiotic therapeutic category contributed 34.1%, anti-diabetic 18.2%, antiprotozoal 18.1%, anti-inflammatory 14.8%, antifungal 9.3%, and the rest contributed 5.6% to total API sales. Consolidated financial highlights, H1 FY 2027. Moving to the first half of the year, revenue stood at INR 1,532 crore as compared to INR 1,244 crore in H1 FY 2026, reflecting a growth of 23% YoY. EBITDA stood at INR 235 crore versus INR 158.8 crore in H1 FY 2026, recording a growth of 48% YoY. EBITDA margin stood at 15.3%, an expansion of 250 basis points YoY. PAT stood at INR 133 crore as compared to INR 99 crore in H1 FY 2026, a growth of 34% YoY. PAT margin at 8.7%, an expansion of 70 basis points YoY. Now, let's talk about our formulation segment. Finally, our formulation business, which we run through our subsidiary Pinnacle Life Science, recorded a revenue of INR 130 crore in Q2 FY 2027 compared to INR 83 crore in Q2 FY 2026, up by 58% YoY. Exports contributed 74% to this formulation revenue. For H1 FY 2027, formulation revenue stood at INR 212 crore compared to INR 163 crore in H1 FY 2026, up by 30%, with exports accounting for 63% of total formulation sales. With that, I would now like to open the floor for questions. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. 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, let's wait for a moment while the question queue assembles. I repeat, anyone who wishes to ask a question may press star and one on their touch-tone telephone. The first question is from the line of Candice Pereira from Dolat Capital. Please proceed. Yeah, thank you for taking my question. My first question is on the API business. We had a 17% growth this quarter. How much of it was from price and how much was it from volume growth? Sorry, Candice, can you please repeat the question? I missed it. Yeah. On the API business, how much is the growth from price and how much is from volume? Okay. Yeah. For the API business on year-on-year basis, we saw a price growth of almost around 17%-18%, and there was a volume growth, on a overall standalone basis I am talking about, and the overall volume growth was around 5% for both API and Spec Chem put together. Okay. And for H1, it was in the same range for the first half? For the first quarter, what I remember, the volume growth was somewhere around 3%, and rate growth was somewhere around 16%-17% for the first quarter, year-on-year basis. Okay. And the rate variance? The rate variance for H1 would be roughly in the range of 17%-18%. Okay, 17%-18%. Also in the formulations business, the growth was quite strong this quarter. Is there any one-off? Vishwa, would you like to answer this one? Yeah, sure. Basically, the growth has been fueled by increase in our export business, which is something that we have been working on since the last few years in opening up newer markets, and we have the products under registration in various regulated and emerging markets. Which is why now we have started commercializing products in newer territories, and that is what has led to the growth in the revenue as well as in the EBITDA margin. While this was an exceptional quarter, we believe that now with our entry into newer markets and newer products, we will be able to sustain a similar level of revenue. Okay, so this level of revenue is sustainable for the rest of the year, right? Right. Okay. Our margins currently, since this level of growth in formulations is sustainable, will our margins also be sustainable at 15% that it is now in the first half of the year? Are you asking about the consol margins? Overall company margins. Yeah. The overall company margins, we do feel that 15% should be sustainable, though for this particular quarter, we have achieved EBITDA margins of around 16.6%. Yeah. Okay. Even the gross margins? Gross margins, what has happened, is that gross margins, when the rates of APIs and Spec Chem goes up, there is a cost plus formula in this business. Typically what happens when the rates go a lot higher, though the gross contribution increases, but the gross contribution margin decreases because of the base effect. At the same time, the manufacturing overheads in percentage terms will go down. On an overall basis, the EBITDA margins should sustain. Okay. All right. Yeah. Okay, that is it from my side. Thank you so much. Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question is from the line of Ankur Kumar from Alpha Capital. Please proceed. Hello, sir. Thank you for taking my question. Sir, in terms of breakup between volume and pricing, you said 17%-18% is pricing growth. Am I clear, sir? Yes. What is our view in terms of in this current quarter and the next quarter, this kind of volume growth, this kind of pricing growth is sustaining, or how are we thinking? As of now, the pricing continues to remain stable because there were multiple factors. At the start of the war back in March month, the pricing growth was more related to gas-based products, natural gas-based products. Now the pricing growth will also be driven by the crude, whatever products are linked directly or indirectly to the crude prices. So what we feel the sales as of now is the pricing continues to remain the same. Got it, sir. And sir, in terms of this, you are saying 15% are sustainable margin, but this quarter is 16%. So, is there any inventory-related benefit in this quarter, or why are we expecting some moderation? Yeah. Look, we are just being conservative here. Now, the thing is, for the standalone company, if you look back last two quarters, we consistently hit above 14% in each quarter on the standalone basis. But on the formulation side, this particular quarter, we made exceptional EBITDA margins of roughly around 28%, due to good export orders. Frankly speaking, we do have a visibility of almost. We have export pending orders for almost four months more. For more than one quarter, we do have export orders. But we are just being conservative that even if, in a longer-term steady-state basis, even if the formulation margins come down to, let's say, 20%, even then, assuming that the formulation would now going forward be around 15%, 16% of the consol revenue, and standalone business would be roughly around 84%, 85% of the consol revenue at 14%, even then we will be able to achieve slightly upwards of 15% margin. But having said that, we do have scope of improving the EBITDA margins at the standalone level as well. Got it. And those formulation 28% margin, they will sustain for four months, and then we need more orders for that? Yeah. So, if the order keeps coming, then we should be able to sustain at least in early 20s. Right. We believe that apart from the four-month order book, now that we have entry into multiple markets with multiple products, we foresee that this kind of momentum and exports will continue on the formulation side. Got it, sir. Sir, on the API side, what kind of volume growth are we expecting going into the second half? Frankly speaking, when we started with the year, we were targeting roughly around 10% odd volume growth at the company level. Though first half, we just were able to achieve 3% and 5% respectively volume growth in the standalone segment. That is mainly because the prices of all the Specialty Chemical in APIs have gone up. Typically, the purchasing people at the formulation side, they try to refrain overstocking the product because the prices have suddenly gone up due to geopolitical reasons. So, there is a waiting game here. Once they start believing that this is a new normal, then the volume growth and the demand should start to come in. In that case, we can expect, let's say, in high single-digit volume growth. But as of now, even we are not that sure, so let's say we will assume somewhere between 5%-10% volume growth. Sure, sir. Thank you and all the best. Thank you. Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is from the line of Akash, an individual investor. Please go ahead. Yeah. Hi, sir. I want to know about what is the company's aspiration or the vision to move towards complex APIs and rather than the volume-driven APIs, let's say 2030 onwards. Is the management planning to move towards any complexity problem which are very complex APIs in the manufacturing? So, I want to know about your vision for the complexity of APIs. Yeah. Thank you for that. That is a very interesting question, actually. As you know that traditionally Aarti Drugs was always strong in bulk volume APIs because of our engineering and process improvement strength. Going forward, we are actually working on our business plan for the next, you can say, five to seven years, which includes introducing newer molecules bucket of molecules. Some of them would be similar to what we do, where our strength lies. Some of them would be a bit more niche molecules, natives. And we are also trying to develop competencies on a CDMO platform. For that, strengthening our R&D further and ability to carry out more complex reactions. We are thinking in those lines. Probably within four to five months, we will have a clearer picture of what will be the CapEx or capital allocation towards this kind of projects. But definitely, if you ask from three to five years horizon, we will be working in that direction. And apart from that, one more thing what we are parallelly doing is that we are trying to increase our regulatory presence, means basically trying to increase the presence in regulated markets for our existing molecules. In most of our existing molecules, though we might be cost leaders, but we are mainly catering ROW market and to some extent regulatory market. But we would like to increase that footprint in the regulated market so that it can increase our margins further, and it will make it stable as well. Okay, thank you for the answer. Thank you. Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is from the line of Resham Jain from VVD Asset Managers. Please go ahead. Yeah. Hi. Good morning, Adhish. Good morning. Also congratulations on your elevation as the Managing Director of the company. Thank you. I have a few questions. The first one is on the formulation business. We did mention in the previous calls about the oncology and the US FDA approval, and you mentioned that the US FDA-related dossier filing is also going on at the formulation facility. Has that also contributed in this quarter, or that is still to come? That is still to come. Yeah. Vishwa can clarify. Yeah, I'll mention. We have a small contribution in this quarter from the U.S. oncology product, but it is a very small amount as of now because it has just very recently been launched. We expect that in the coming three to six months, the U.S. revenue would increase with the one product that we have in the market. Then we have another ANDA, which is due for approval in the next few months. Then we have a filing plan of another four to five oncology products in the rolling 12 months. The U.S. business has initiated, but it is yet to be ramped up to a significant level. Understood. In your annual report, you mentioned about your aspiration to take the formulation business to INR 1,000 crore. With the traction you're seeing in Q2 and in Q3 probably, as you mentioned, with the order book, you think that INR 1,000 crore aspiration can happen much faster than that? Because this kind of traction we have not seen in the last few years. Right. Yeah, that is the belief that we think that we can achieve the INR 1,000 crore landmark earlier than what we have published. We are also building up our capacities. We were at a stage that our capacities were almost running at full scale. Like Adhish mentioned, we have a brownfield expansion going on, which by the mid of next year should double our capacities. That, clubbed with the higher utilization of our oncology facility, which is currently having only one or two products commercialized, once that comes up, which we see happening in the very near future, we'll definitely be able to achieve the INR 1,000 crore mark. The oncology would also have higher margin profile? Yeah, right. At the gross level, oncology should have slightly higher margins than our current business. Okay, got it. The second question is with respect to the salicylic acid. Has there been any update in terms of anti-dumping duty? Because that was something which was, in a way, a challenge for us. Harshit bhai, would you like to answer this question? Yes. We will be submitting with the September report. We have to additionally submit nine months data. After now the result is published, we will be submitting the anti-dumping duty now, for anti-dumping duty. They need more nine months data. Okay. So, when will DGTR or any- In our initial meeting, they put it by. They will initiate before the year-end, December. Okay. So, maybe it will take another six months or so, because after that, 90 days will be taken by the Ministry of Finance. Yes. First they will initiate, and then they will take another three to six-month period to get into it. Okay. Got it. The last question is for Adhish. The cash generation which we are now having, and most of the CapExes which we have undertaken in the last three, four years are almost over. What are the plans going forward? You did mention about the five, seven years vision which you are planning to lay out, but the yearly cash generation is significant now. From that context, what is the CapEx plan for 2027 and 2028? Yeah. For the first half, we barely managed to do around 92, roughly near about INR 90 crore of operating cash flow for both the companies, that is standalone as well as formulation. It was more or less equal in both the standalone business and the formulation business. Going forward, for the standalone business, as we said that we will be going in for the expansion of US FDA block with three more lines. It can have a revenue potential anywhere between INR 180 crore to INR 200 crore on a full-scale basis. It will be a multipurpose facility. Plus, we are expanding our metformin capacities, and we are making it US FDA compliant as well. Both these projects are aimed towards regulatory markets, and mainly, we foresee enough business from our existing molecules as such. We already know the chemistry. But having said that, we will be also introducing newer products, more niche products into our multipurpose US FDA block. Few months down the line, we will be ready with few more plans for CapEx. One is creating a CDMO block for intermediates and Spec Chem. Also, we plan to invest quite heavily in R&D in the formulation division as well. Okay, got it. Okay, thank you. All the best and congratulations once again on very strong second quarter. Thank you. Thanks. Thank you. Thank you. The next question is from the line of Jay Jain from JJ Capital. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, congratulations on a great set of results. Sir, in your speech, you mentioned about realization gain, and we know that some API and KSM prices jumped sharply when the conflict began. Sir, how rapidly are we able to pass on these price increases? Also, if you can quantify how much of your Q2 realization gain comes from contracts signed at peak prices, and how much of it resets if the crude price lowers in H2 of 2026? Yeah, I will give you a general sense of our order books. Typically, in exports, we generally have pending orders of roughly around two and a half to three months, whereas in the domestic market, it is slightly less than one month, or you can say on an average one month. That is the prices which are fixed going forward. But whenever there are price hikes in the input cost, in the input raw materials, in intermediates, that time, all the newer contracts get renegotiated at the higher rates. In terms of passing on the prices, it happens pretty quickly for the new orders which we take from that point onwards. Only for the pending orders, we have to supply those materials at a lower rate. At the same time, we also hold RM inventory of roughly around 40, 50 days. Some bit of it is, that risk is mitigated because of our inventories. But I am not able to exactly quantify it for you because since we operate in so many products, it is difficult for me to quantify the Got it, sir. Just one more, since you spoke about raw materials. Going forward, are we looking to stock up more inventory or raw materials? No. Ideally speaking, we should not because the prices are high. I think we should operate in a way that our raw material booking matches with our sales booking, and not take call. Because if we take a call and if the market turns the other way, then there can be issues as well. Good. Sir, just last question. If you can help us understand how much of the EBITDA margin contribution has come from product mix change versus operational efficiency versus pricing benefit? Okay. If we talk about our standalone business, which is like 84% to the total consol revenues. In that, the major, some bit of gains have come from operational, energy optimizations. We have undertaken few projects. In fact, few more projects will be upcoming, like our solar projects. They will also start contributing in this quarter, in the December quarter, that is. The gross contribution level has also increased, no doubt about that. I would say, let's say around 50 basis points might be because of the increase in the overall gross contribution, and rest is because of the lowering of manufacturing cost. Whereas formulations are concerned, it is mainly to do with the gross contribution. Got it, sir. Thank you. All the best. Thank you. Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touchtone telephone. I repeat, anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is from the line of Rohit from SK Security and Services. Please proceed. Hi, good morning, sir. Thank you for the opportunity, and congratulations on good set of numbers. I have only one question. On oncology segment, could you please provide more details like product molecules that we are targeting and the client profiles we aim to work with, and maybe which geographies, timelines, and what could be the contribution to our revenue by FY 2029 or 2030? Contribution to revenue from the oncology at an FY 2030 level, we estimate it to be between late 30s to early 40 percentage maybe. Basically for us, the oncology portfolio consists of about 25 to 30 molecules that are at various stages of developments and filings. Many of them are the existing APIs that are being manufactured within our group companies. Basically these are the nib families and cyclic families of oncology oral solids. In some countries, we are doing our own filings, and in other markets, it is a B2B-driven model where we are working with most of the leading players in those markets. Got it, sir. Geographies? So, like we mentioned, we are basically looking at entire regulated market space from U.S., E.U., U.K., and Latin America, Middle East, Asian markets. It is a widespread global strategy. Got it, sir. That is it from my side. Thank you and all the best and happy Diwali. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you, sir. Thank you everyone for joining us today on this earnings call. We appreciate your interest and all the questions you asked regarding the financial results of Aarti Drugs and about our future. If you have any further queries, please contact SGA, our investor relations advisors. Thank you and wish you a happy Diwali. Thank you very much. On behalf of Aarti Drugs Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.