Ladies and gentlemen, good day and welcome to the Alkem Lab Q1 FY 2026 earnings conference call hosted by Motilal Oswal. 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 then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Tushar Manudhane from Motilal Oswal. Thank you, and over to you, sir. Thanks, Ishaka. Good evening and warm welcome to our first quarter FY 2026 earnings call of Alkem Labs Limited. From the management side, we have Dr. Vikas Gupta, CEO, Mr. Nitin Agrawal, and Ms. Purvi Shah, Head of [Investor Relations]. Over to you, Purvi. Thank you, Kusha. Good evening, everyone. We appreciate you joining us for our Q1 FY 2026 results call. Earlier today, we've released our financial results and results presentation. All of these are available on our website and have also been filed with the stock exchange. We hope you have had a chance to review them before we begin. Please note that the call is being recorded and the process will be made available on our website shortly after the call completes. As per today's discussion, it may include certain forward-looking statements. It should be viewed in the context of the risks and uncertainties associated with our business. With that, I now hand over the call to our CEO, Dr. Vikas, for his opening remarks. Over to you. Thank you Purvi and thank you Tushar. Good evening everyone and thank you for joining us for our Q1 FY 2026 earnings call. Q1 FY 2026 marked a strong start to the year with healthy growth across both our domestic as well as international markets. Our performance was driven by strong top line growth and an improved gross margin, which resulted in a better EBITDA profile. These results reflect the disciplined execution of our strategy, focused investments, and a deliberate pivot towards value-related products and markets w ith a sharper focus on EBITDA. We are strategically accelerating our focus on the non-U.S. business segment by strengthening our presence in high potential non-U.S. markets as well and capturing new opportunities that align with our long-term growth ambitions. I will now present the key highlights of Q1 performance. The total revenue from operations stood at INR 33,711 million with YoY growth of 11.2%. India sales at INR 32,656 million with a YoY growth of 12%. Business grew by 8.8% YoY to INR 6,982 million. Non-U.S. business revenue grew by 9.1% YoY to INR 3,556 million. EBITDA grew by 21.4% YoY to INR 7,391 million, resulting in an EBITDA margin of 21.9%. Net profit after minority interest was INR 6,603 million with a YoY growth of 21.8%. RMC expenses for the quarter were INR 1,184 million. That is 3.5% of total revenue from operations. Our domestic revenue contributed 58.3% to the total sales in Q1 of FY 2026, down from 67.6% in Q1 FY 2025 according to IQVIA data. HSE data for Q1 FY 2026, the company registered a growth of 9.7% YoY compared to the IPM, outperforming the IPM by 120 basis points, which grew to 8.5%. We have outperformed the IPM across seven key therapies, namely GI which grew 1.6x, vitamins and minerals at 2.3x, pain due at 1.4x of the restricted market, antibiotics at 1.4x, [neuro CNS] at 1.2x, and respiratory 1.48x of the market. We achieved strong overall volume growth of 2.9%, outperforming the IPM volume growth of 1.5% by almost 40 basis points this quarter. [Audio distortion] initiative that we have started and we are really confident of scaling up this business. I want to take this opportunity to sincerely thank our team for their unwavering dedication and commitment to excellence. Their efforts continue to be the driving force behind our progress and resilience. With a strong foundation in place, we are well poised to capitalize on the opportunities that lie ahead. I remain confident in our strategy and optimistic about what the future holds for us. With that, let us now open the floor for questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and 1 on their telephone. If you wish to remove yourself from the question queue, you may press STAR and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue is assembled. The first question is from the line of Kunal Dhamesha from Macquarie. Please go ahead. I can hear you. Yeah, hi. Kunal, we can hear you. Hi. Yeah, hi. Good evening and congratulations on the strong set of numbers. With the [human dice rock] given that we have done the aggress in terms of revenue growth and margins, would you like to provide update our FY 2026 tight end? Okay, so [this start] has been, you know, very good to the year. I would say, you know, at this, you know it is, it is just one quarter of [audio distortion]. I find it a little too early to revise the guidance approach. I can clearly tell you, you know, if the year progresses the way, you know we are, we are seeing for some more time then definitely, you know, we would overachieve on the, on the guidance that we have given. At this stage, you know, I will say with the guidance that we have issued primarily because it has been just one quarter that we have done though there are no one offs in this. These do not see any reasons for, you know, the performance to slow down. Still, you know, since it is just one quarter of the year, you know, that has happened, I say with the guidance, I would say the probability of us, you know, whatever guidance has given, you know, getting there is much higher. You know, sagged on a strong start on the C1. That, that's my take on, on the overall guidance at this stage. Okay, thank you. Just a slightly more specific. We had cited for our R&D expenses to be around I think 5% of the revenue versus that year than 3.5%. Is it more lumpy lumpiness of the expenses or? Yeah, I think it's. It's more about, you know, phasing of the expenses. Our overall annual guidance has been within the range of 4.5%- 5% and I stay, you know, put with that and that is why I'm saying some of the coming quarters, you know, we will. We may have a higher expense in R&D because if you see our filings trend as well, I think it's loaded more towards, you know, in Q4 we do the maximum filings. That is the cycle which has been following as far as R&D spend is concerned. We stay put with that guidance. Sure. Last thing from my side, is there any FOREX gain which has been offset further expenses in this quarter? At overall level there was FOREX gain so we reported under other income. If there is a loss then that is reported in the [other expense]. In this quarter there was FOREX gain at the consolidated level. It is reported in the other. Sure. Thank you and all the best. Thank you. Thanks. Thank you. The next question is from the line of Amlan Jyoti Das from Nomura. Please go ahead. Yeah. Hi sir. Am I audible? Yeah, yeah, you're audible. Yes sir. My question is regarding the India business. I just wanted to understand what is the contribution from the new medtech businesses and your revenue for this quarter. The medtech business just started. Our first quarter revenue is around INR 2.5 crore, which is very minimal. We are pretty confident with the way we started that business. In the initial months itself, the response of customers has been quite positive. We are bullish about that strategy and hope to scale it in the coming quarters. In terms of the overall contributions to the India business, it's way too small at this stage. You can see annual learning that you see for the business in the coming quarters. Yes. Scale it up, quarter -by- quarter. I think FY 2026 maybe we'll achieve around INR 20 crore, which would mean that by the time we exit the year the annual run rate would be much higher. On an ARR basis, I think the end of the year they should be around INR 40-50 crore on an annual run rate basis. That is what it is. We are pretty bullish about these, these start that we brought in that business. [Audio distortion] It has declined because of the lower R&D expense or any other one-off in this project. Right. It's mostly because of that [audio distortion]. For one, we had to take max for our U.S. market, which was around INR 35 - 40 crore. That significant case had completed last year itself. It's not the reason that there is a lower R&D, which is reflected in lower other assembly as compared in terms of percentage of sales. Okay. [That was my last question. Thank you.] Thank you. The next question is from the line of Sidharth Negandhi from CWC. Please go ahead. Congrats on this quarter's numbers. Wanted to understand on the India business what does the growth in the branded formulation business versus generic business. Sidharth, thanks for your compliment. We've never given these kind of breakups earlier. If you look at IQVIA data, we are all co-founding in our branded generic business. If that is any reflection of our growth, then IQVIA is reflecting a 9.7% growth, again for market growth of [8.5%]. What I can tell you is our majority business is branded generic business only. If you look at the India business, the major part of our revenue is from the branded generic business. If overall business has grown strong, then that has contributed to the overall growth of the system. Would it be fair to say t hat primary section largely remains in line on an as-is basis? Of course, no. You know this is. This has always been the case in their business. You know, you can never. There are no such substantial new products which will lead to pipeline filling there for which there will be a gap in transaction resale. I said [audio distortion] business which we are running for. I think this is all. Yeah, I've been referring to more the recent [style]. Sure. Accordingly, the remainder of the group will be. Thank you very much. Thank you. Thank you. The next question is from the line of Neha Manpuria from Bank of America. Please go ahead. Yeah, thanks for taking my question. My first question is on gross margins. You know, given that U.S. revenue has picked up, finally we still see an improvement in gross margin. I think the sense was that because U.S. business was low, that was helping gross margins. What drove this gross margin improvement? If I was to look at the entire last year versus fourth quarter and from a sustainable basis, what should be the margin that we should, gross margin that we should look at for the full year? Yeah, first of all, I think there was a positive impact on account of lower API prices. It was around 3.8%, 3.9%, and the mix has improved because our domestic contribution is higher. If you look at the overall, whenever the domestic business will contribute more to the total sales, that gross margin will improve. There was a negative impact on account of price drop in the U.S. We still see 3% - 4% price drop in the U.S. in quarter one a lso. The growth end margin because of mix has been offset by the drop in price in U.S. markets. In which case, s hould this gross margin level be broadly sustainable, and obviously factoring in the seasonal change, should I be able to maintain the 65% gross margins through the year? We have given a guidance of around 64%. We would maintain our guidance of [60%] because generally quarter one, quarter two, the contribution of the medtech business is higher as compared to quarter three and quarter four, or at a basis we still maintain guidance of 64%. Okay, understood. My second question is on the medtech business. What is the roughly you the cost associated with this business? I just want to understand at what point does the medtech business possibly start contributing to the [audio distortion]. Let's say when you have to break even in FY 2028. For the full year of FY 2026, there can be an estimate, say, the plot is around INR 40 - 50 krore. For the next year also, it will be in the same range because we'll be spending on marketing and outdoor, the operating liquidity to get reflected in the numbers. In FY 2028, the plaque would be even an estate. For FY 2026, FY 2027, there may be losses of INR 40 - 60 krore. Just to add, you know, these are newer businesses, Neha, so if they scale up faster, you know, we may have a break-even even earlier. At this stage, you know, we are maintaining that guidance. I think we'll see how it grows. Here the focus is to scale up, you know, the business rather than just looking at percentage bottom lines. Understood. My last question is, you know, on the margins, while I understand there is, you know, some phasing in R&D cost, usually our second and third quarter margins, I think second and third quarter margins tend to be much better than the first quarter margins. Even if I were to adjust the R&D spends, is there any other reason which keeps us, you know, is sort of stopping us from increasing the margin guidance versus, you know, flattish margins? Historically, if I were to look at your numbers, the second and third quarter tends to be much higher than the first quarter, you know, hence the question. Yeah, so see, Q1 has been good for us. We are waiting for, you know, let's let Q2 also, you know, get over. We will have more clarity on, you know, if there are any headwinds, you know, that we are, we are foreseeing in the near term, you know, which might affect our business at this stage. You know, we do not have that visibility and that's why we are staying put with the, with the margin guidance that we have given. As I mentioned, you know, we are pretty bullish about our business, about our growth story. If these trends continue, then definitely, you know, next quarter we will look at revising it further. Second point on these trends, you know, that might come in Q3 and Q4, one is on the R&D spends, you know, which are higher at, you know, during that time. Second, as we mentioned, the, you know, newer, you know, initiatives that we have started, strictly the U.S. plant, you know, on the biotech side, we may have some of the OpEx, you know, that will come up, you know, in Q4 because that plant will get fully operational by Q3. We will start, you know, getting operational from Q3 and may get fully operational by, by Q4. In the light of those expenses that we foresee in Q3 or Q4, you know, because of that our margins may look, you know, and that's why we are staying put with the guidance, you know, for the overall year. As earlier also, if you, if you do that then on a, you know, operational protection net basis, you know, we are, we're continuously improving, you know, with every passing quarter in terms of our, you know, overall EBITDA profile. It's because of these expenses that we foresee, you know, may come in Q3 and Q4 that we are staying put, you know, at least. This is just Q1, so we are staying put in our guide. That's it. This last question on the CDMO revenue that starts coming through as well f rom the second half, or it would t ake some time for that, the CDMO revenue to start flowing through the P&L and all. It has started on a very small scale as of now also. That's just the lab level work that your team is doing. Hello, sir. Hello? Your voice is not audible. Hello, hello, hello. Call you back. Ladies and gentlemen, the line for the management is disconnected. Please hold while we reconnect them. Ladies and gentlemen, thank you for being on hold. The line for the management is reconnected now. Thank you. Over to you, sir. Thank you. I do not know where you guys missed me. I think Neha had a question on the CDMO revenue and I was commenting on that. See, the CDMO revenue, as I mentioned, the facility will get operational by Q3 and by Q4 we should have the full operations and full revenue going in. We do get some marginal revenue even now, but that's a very small scale that happens in that sense. Right? Looking at actual sales, how a fully operational facility would contribute, that would be around Q4. Depreciation and all the operating costs will also be in the second half of the revenue facility that will be up and running. Right. OpEx is complete, but most of the capitalization will happen in the beginning of [the second half]. Thank you so much. Thank you. A reminder to the participants, please press star and one to ask a question. The next question is from the line of Chirag from DSP Mutual Fund. Please go ahead. Thank you for the opportunity. This higher R&D that you're talking about, this is, I mean, typically last five, six years you've on average done INR 500, 550 odd crore kind of, you know, R&D spend. Is there something higher that you're budgeting for and what are they on account of that higher budget? You are asking about these a bstracted costs of R&D or? Yes. Yeah. Like I mentioned, we are a lso focusing on growing our non U.S. business. There are a lot of filings that we are doing in the non U.S. markets as well. The kind of prospect in our R&D, I think it's just mixed and sum total of all, even in India, we have to do certain clinical trials on certain products that we are undertaking. This is why, on an overall absolute basis, the cost may be looking higher, but if you look at percentage wise, it will be still within 4.5% - 5% for overall driven. Understood. The second question, sir, was on capital allocation. Given we're sitting on INR 5,000 crores of cash, business today is fairly cyclical. Given the large business which we have, fairly seasonal, I would say not cyclical. Just given that you're sitting on fire and there is such a large white space in chronic, how do we solve for the business? This is something actively on your mind. How are you thinking about reducing the seasonality of the business and [audio distortion] just give us w ide space in chronic segment. Chirag, I think we had two aspects to your question. One is on the seasonality. We've been running this business since long, so I don't think seasonality bothers me more. I think the bigger opportunities are on the chronic side, and as I mentioned earlier, it's good to have cash reserve and we are waiting for the right opportunity as and when we see. We are pretty open to look at any acquisition target, more from electronic space. If it comes to the table, we would definitely look at getting it at the right, of course, at the right price. We are open to that. More than that, I would say there's no such opportunity that has come our way as yet. Where we, you would have seen in t he last quarter, we had announced that in the derma space there was one opportunity and we had capitalized on that. Wherever there will be an opportunity for us to acquire and grow our chronic business, we would do that. Even otherwise, the growth from our chronic business is also very encouraging, which is the organic part of the story. Organically, we are, even if you look at diabetes, it is the bigger segment. Neurology is another big segment that we are in. Chronic respiratory is another segment that we are in. Dermatology, or if you look at all these segments, we have been growing much faster than the market and internal growths are increasing. While we continue that journey organically, we are open to any assets that might come on the economic side, especially to acquire. Understood. Is there a ticket size in your mind or a size of business in your mind which is an easy one for you? How should you know, just w hat are your thoughts around, you know, because there can be multiple things that you might have looked at. Is there a ticket size in your mind or a size of business in your mind that you know, that has [iq]? No, I don't think we are limiting ourselves to, you know, ticket size. More to say we have good amount of cash on the balance sheet and if there is a need to leverage, provided we feel that we can add so we can create value, you know, both strategically as well as [audio distortion] to our overall business. I don't think, you know, the ticket size would be a limiting factor for us. We lost rather than looking at ticket size. I think the way we look at any opportunity that comes our way is what value, you know, we can add to that business, that business grow in our hands strategically, you know, is it of importance, you know, to us? I think those are the bigger, you know, evaluation points rather than the ticket size. Understood. Just the last question that if I may, if you look at the full year of FY 2026 and would you say that the, what would be the, you know, what would b e the India contribution to the overall EBITDA for the business? Are you, you know, there's sales n umber that we have, but what is the EBITDA contribution of the India business for you in the overall network? EBITDA contribution from India business you mean? Yes sir. I don't think we give country level, you know, EBITDA breakup. I can talk about the growth numbers from India market and I think if human trends have to be believed, I've always said that we will continue to grow at least 100, 250 basis points faster than how the market is doing and I maintain that as a trajectory. I think at an EBITDA level to break it up from country and stuff like that, I don't think I'll be able to give that guidance and be safe. Let me ask you other way around. Is the U.S. business margin in line with the company average today just given the scale? No, no, it is, it is lesser. You know we all know U.S. markets has in its whole own pricing pressure. So U.S. margins are lesser than, you know, the company average. There are certain, sometimes there are certain opportunities which are, you know, high margin opportunities as well especially in certain [U.S. segments]. Overall international business, if you see, you know, rather than looking at U.S. business, if you look at the overall international business there we have decent margins, you know, especially on the non-U.S. side, you know, the margins are much higher. If you look at, I think that is the, so exports as a bucket total. Will it, will it be in line with company average margin into U.S. and non-U.S.? [In terms of] exports? I would say within the range of company margins, you know, not way off but lower. Yeah, it depends on country mix and, you know, this thing. If U.S. contribution is higher then marginally lower. If U.S. contribution is lesser and has more and more. Thank you. Thank you. The next question is from the line of Rashmi from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. You know, this quarter has been good in the U.S. case. What is really driving this, and have you launched in the U.S.? Will this be the new date now i n the subsequent quarters also, or you still maintain your missing digits U.S. growth [for full year]? I think key three points that you had asked on the second world Saturn. We have launched, we've launched with everyone else. As far as the U.S. business is concerned. Your other part was on the growth from the U.S. market. U.S. market, like I said, has grown, you know the trends, the pricing trends continue over there. What did happen is, like I said, we were battling with our supply chains and stock positions. At least, you know, we are doing a lot better as far as that is concerned. Overall, I think our guidance was about mid single digit kind of, you know, growth from U.S. markets. I will maintain at least that growth. Looking at the trends, you know, if everything remains favorable, we may even surpass that. It is too early. It has been, like I said, it's just one quarter. I'm not commenting on what's going to happen, especially with the geopolitical scenario and the tariff discussions that are happening. I'm not too sure about how U.S. market will play. If these trends continue the way we have seen it, we will have mid single digit to a higher single digit kind of growth from U.S. market. In case of tariffs, what will b e your strategy going forward in case of like will you be ready to complete safe text in the U.S., you know, for the facility, or you know you would just focus on the non other U.S. market? I think tariff is a very hypothetical question we all are waiting for, you know, what shape it takes. Anything that I comment will be very speculative, we will deal with it as and when it comes. My sense is that some part of that will get laid, we will be passing on to the consumer and wherever we will try and get more efficient in terms of getting backward integrated or we will look at the other options that might be there in front of us. I think all of that would depend on what kind of tariff when it comes, on whether it is product specification, whether it is. There are a lot of issues to be seen. Once that tariff comes, I think we'll be more clear with what strategic interventions we will have to take. Irrespective, our focus on non-U.S. business has gone up, irrespective of that, our intent to grow the non-U.S. business remains very strong. We have started that work even in our overall growth, it is helping us. We are piling in a lot more products in the non-U.S. markets than we were doing in the past. I think our focus on non-U.S. markets would continue strong. It risks both whether tariffs come or they don't come. Okay, and one more question on India business, given the base was low in your second quarter and third quarter also because last year the season did not pick up, and this year we are seeing the good recovery i s it fair to assume that, y ou know, probably for the full year, you know we would be able to achieve 11%- 12% growth, assuming that the overall IPM growth will be in the range of 8%- 9%. I think if the IPM growth remains within 8%- 9% we will be surpassing the IPM growth by at least 100, 250 basis points. For us to grow at 11%- 12%, maybe I'll expect the market to grow at, you know, 10%- 10.5%. More than a percentage here or there, I would say our focus on India business is stronger than ever. If it takes to put more investments in India business behind opportunities that we can grow continuously, we have been looking at that, evaluating that, doing that. India business is our core. India business is something which we do very well. I think our focus over there is not deviating. That will be our highest focus, which we will continue in times to come. You mean 100 - 150 basis points, right? Yeah. Thank you, that's all from me. Thank you. The next question is from the line of Kunal Dhamesha from Macquarie. Please go ahead. Hi. Thank you for the opportunity again. Few quick clarifications. The U.S. price reduction of 3%- 4%, is it on a year-on-year basis or quarter basis? Why is this? Was there any contribution from [Hydroid] in this quarter? Yeah. [Hy droid] has been a small company, so there was around INR 15 crore overall that we recorded from [Hydroid], which is in line with our plan when we had occupied that, and that's domestic, and it got closed in quarter one only of quarter two. He completed the operation in quarter one late for somewhere around here. What would be a CapEx outlook f or FY 2026 and 2027? Around INR 750 crore. This is what we have said before also. INR 750 crore for FY 2026. Is it just for FY 2026? FY 2026, yes. Perfect. One more, I would say, drawn as question, when I see the company now versus, let's say, three years back, we now have, I would say, four distinct engines of growth on the branded generally called the domestic market business or the pharma business. Then we have biosimilar business, which is basically going to [spike] maybe in the [coming year], then biologic CDMO business. How is the management language being adopted to these businesses in terms of [audio distortion]? I guess the branded business, you know, is our highest, you know, contributor. The maximum type, you know, goes over there. Mr. Kunal, may I request you to mute yourself while the management is speaking, because there is some voice coming from your line. Definitely. Thank you. Yeah. From a management bandwidth point of time, of course you know the branded business takes the maximum time and for the right reasons because that is our biggest contributor. I would say the CDMO business and the biosimilar business, you know, that takes even the other chunk of the business of the management bandwidth. For the medtech business, we have one of the leaders who manages the medtech business. I think he dedicates maximum time over there. From an overall management bandwidth point of view. Because it's the smallest business, it takes whatever time is due to it, the management gives it. You have a dedicated person who looks at scaling up that business. I think that's how we have devised things. [Audio distortion] responsibility enough. On the capital allocation question between these four businesses, how do you view the [fact that order there CapEx that we have on the balance sheet]? Where do you want to deploy more? Again, t he largest capital is put behind the grande business, but it's not a very capital intensive business. There's no, in terms of if your question is more about the CapEx, etc., leaving behind the biotech and the CDMO opportunity because that business needs that kind of capital. That doesn't mean that we reduce investments in our core business, which is our largest generic business, whenever there is a need for capital to be deployed on that part of the business. That remains our biggest priority, and we continue to do that whenever there is a requirement to be done for the largest landed business. At this stage, the maximum capital is getting deployed behind this future opportunity of CDMO in the coming years. This is a plan that we are setting up, so it needed that kind of support. That's why we are going w ith that size. For the last one from my side, b etween these four levels, where do you s ee the maximum capital import or ROI? I'm sorry, it's a branded business. Right. Let's say between the three others, where do you see? If you see our ROCE profile, our ROCE has also improved over a period of time in the last two to three years. Whatever capital is, [for ROCE] I think overall it is in line with the overall ROCE that we have as an organization. Of course, the branded business is a much higher ROCE business, but there I guess we have an engine running full steam. There is no major requirement in terms of putting up specific capital, so to say. That's why the ROCE is much higher over there. I think all the other areas, wherever we are putting up capital, we have the ROCE expectation in line with whatever we do from whatever we have at a corporate level. I think it is in line with that. That's how I'll put it. Sure sir. Thank you and all the best. Yeah, thank you. Thank you. The next question is from the line of [Rahul Jivan from II Securities Limited]. Thank you. Thank you for taking that question, sir. This 12% growth which we saw in the India portfolio this quarter, can you call out what was the organic growth in the business given that we had some assets to acquisition? You called out [Hydroid] contributed INR 50 crore. There was Bombay also as well. If you can just call out this organic, inorganic theme for being their business. I think those are the only two inorganic numbers which are small, which is not. I think 0.4% -0. 5% is something that would have come from that inorganic, otherwise, which is largely organic. Okay. Sure, sir. Thank you. In terms of, let's say, your comment that the focus is large on branded business in India and scaling up the non-U.S. exports piece. Given the focus on these businesses, what is the kind of EBITDA margin trajectory you envisage for the overall business three to four years down the line? Just some clarity there would be helpful. I think I've always maintained if you look at a pretty, you know, we would continue to improve at least say a 1% kind of improvement on the overall margin profile every year. Right. Till the time, at least we get into, say, mid-20s kind of levels. So far we are on track with that aspiration. I think you can run your numbers on the basis of this assumption that that is what we have maintained and that is what we are seeing also happening at least over the last two years. Sure, sir. This 100 basis point kind of an annual margin expansion, this should continue despite whatever initiatives we take in some of these newer businesses like the CDMO. Let me clarify. Like I said, this is keeping the new opportunities aside. Even if you look at our this year's guidance had been 19.5% within that range, 19% - 20%, that was because operationally we might improve by a percentage. There are certain OpEx that might be consumed by the various initiatives that you would take. I think full blown, once these initiatives also start contributing, you will start seeing it in the overall numbers as well. That's how I put it. This should then be from FY 2028 given that the drag from the businesses should not be there. FY 2028 only. Yeah. I think that's a fair assumption to make, yeah. Thank you. That's it. Thank you. Thank you. The next question is [audio distortion] Please go ahead. Yes, thank you for taking the question. Can you provide some insights on [audio distortion]. Sorry, Sandeep, your voice is not clear. Can you repeat, please, your q uestion? [Audio distortion] We have already filed the DLA. In the U.S., as far as denosumab is concerned, the expected time frame is somewhere middle of next year, when we are expecting the approval provided the regulatory part is compliant. We will be looking at commercializing it subsequent to that. The patent expiry is around May 2026, so we should, I mean, in that region depending on the litigation outcomes that the innovator has with other players. I think we should be commercializing basis back whenever that opportunity opens up. Thank you, sir. Thank you. The next question is from the line of [Gaurav] from Antique Stock Broking. Please go ahead. Yes, thank you. Good evening. The sequential improvement in the U.S. business trajectory saw this quarter, does that h ave any benefit of [audio distortion] month of July towards the last part of July, you know, that you will see in Q2? Is this improvement in base issues or some other new launches that happen in Q1? This is a blend of the base business, some new launches, as well as a small portion from CDMO revenue as well. This would see a bump up with the new launch in Q4 over f or list would that be? Yes, we should be, you know, we should see the tax getting a revenue getting recognized in Q2, which you add overall. Of course, in U.S. business you keep losing contract, you keep getting contracts. I think in this business, whatever trends are continuing of erosion that may continue. There are some new products that may get added. That's a part and parcel of the game. Perfect. No, thank you. Staying on the U.S. for deno, we would have filed for both [Trolly and Ishiva] r ight? We would be investing in the assets and this front end commercialization. We will choose the go to market, you know, closer to our approvals. Once we have that approval, we are evaluating is it better to go on our own or should we find the right partner. I think we'll update you closer to the marketing. We would apply for both the also indication as well as the on call. We will just get back on this specific. You know, just divert to you on that. Okay sir. Thank you. Just on the staff, because this quarter we saw almost a 15% year-on-year increase. Would this be the new rather than one-off? I would give [a deno hike] team expansion set right on this. Yeah, it's a question of, you know, one, you know, the annual increment that we have booked here. Second, you know, since the performance in India business is also very good, there is a higher incentive payout, you know, that is there. If, rather than looking at just percentage growth, you know, if you look at the percentage to revenue, you know, I think that is fairly, I would say, similar to what it was in the previous years. In a good quarter, there is a higher incentive payout, you know, to the team. That adds to the overall, you know, increase in manpower. Overall, the manpower growth which you saw in quarter one. In balance, there will be more growth as compared to quarter. Thank you and all the best. Thank you participants. To ask a question please press star and one. The next question is from the line of Mr. Tushar Manudhane from Motilal Oswal. Please go ahead. To the additional operation cost with respect to the CDMO, probably from future onwards, what content should be considered? On an average, once the facility will be up and running, the estimate is around INR 50 crore per quarter in terms of the U.S. CDMO opportunity. How much is the effect probably in this quarter or approximately how much is sort of stabilize? Once it will standardize, the OpEx will be in the range of, you can say, per quarter it will be around INR 25 - 30 crore. What is trigger? You know, additional s egmentation. Sorry, I just missed the last. Is your question w ould we need more OpEx? You know. As a business grow, we need it that, let's say, for the foreseeable future, for next two to three years. When I say INR 50 crore for engine CDMO facility and say INR 25 crore for our next day, this is considering and stressing utilization of our current capacity which we have built t o move this facility. This is for corporate? Yes. That's it for me. Thank you. The next question is from the line of Gagan Thareja from ASK Investment Manager. P lease go ahead. Yeah, good evening. Hi. I hope I'm audible. Yes. Yes, go ahead. Yes, please. Okay, the first question is, you know, if one split your risk in NLEM and non-NLEM, given that WPI price increase in NLEM was around 1.8%, is it a reasonable inference that the non-NLEM piece could have grown by 15% +? We are. I do not have the data handy. You can check it from the IQVIA data, but we have never given product level or segment specific. What I can tell you is R&D percentage. The portfolio that we have is around 30% right. There is volume growth. Price growth is just one piece. Even if you look at the volume growth, we are growing much faster in terms of volume even on this portfolio as compared to market. I think that's the way we look at it. If you do the math and take a 5% increase and the NP which is 1/3 of your portfolio, arithmetically the balance of your portfolios could go away from? Where did you get this 5% number? 1.8% WCI volume is b asically this. Volume growth is pretty, you know, product specific and this thing. I think you know what we are trying to get at. I'm sure you know, of course, the [non-LLM] portfolio in general, even in the market, is seeing a higher growth. Similar trends, you know, we would have internally. Okay, is it possible to give some idea of how the [engine] revenues at, you know, profits would have worked for the first quarter in Europe? In the first quarter, total [investment] was around INR 90 crores. This is including CDMO business in Europe, and EBITDA, I think, the five quarters back, we including both, [businesses including] the cooling image and the [audio distortion]. What were the corresponding figures for last year? You need to c heck. [We'll get back on you on that]. Okay. All right. What was the effective statistics for year B and going ahead, how would it evolve? We agree the same range as we saw in quarter one today. Will launch material change. I think in the beginning of the year we have given a guidance of 13%- 15%. [Audio distortion] within o ur guidance, the 13%-15% o f tax rate. Alright. Final one from my section. You mentioned that business operating balance will improve by 100 basis points charges. It will obviously to a certain extent be offset by the OpEx from the new businesses. On balance, that would still lead to a certain amount of operating. It's open till the time the base business breaks even. Is it possible to give some broadband of perhaps, you know, basis point number over which we believe the net operating margin improvement could come in? I think like I mentioned sometime last, it is really, we will look at improving, you know, within the range of 100 basis points. Now, you know, depends on, you know, how our new initiatives get scaled up, you know, sometimes. I think whatever gets offset, our estimate is like that will get for this year will get offset by these operational expenditures on both sides. That's why our guidance of around 19.5% initially, you know, which was there, which as of now I'm actually saying for, and will wait for, you know, one or two more quarters to really revise it upwards, if at all. I think irrespective, rather than chasing a number over there, we are pretty confident of the initiatives that we are, we have taken internally. The kind of focus that we have brought in on our, you know, core businesses and their growth will continue to add to, you know, the overall margin expansion as well. I would refrain from putting a number to it, but this is the guidance that I'll [define the best]. All right, thank you. Wish you all the best. Thank you. Thanks. Thank you. Thank you. The next question is from the line of [Dr. Neha Kalodia] from [Hab Assets]. Go ahead. Yeah, hi. Thanks for the opportunity and congratulations on these set of numbers. I have two questions. One is [audio distortion] Hello, Neha, your voice is not audible. Hello. Can you unmute yourself and speak? I request you to join back the queue. The line from the participant has been drawn. Ladies and gentlemen, as there are no further questions, I now hand the conference over to the management for closing comments. Hello. Ms. Purvi? Your voice. Yes. Is it better now? Yes, ma'am. You can hear us now. Thank you all for joining today's call and your questions from the engagement. If you have any follow-up queries or need any clarification, please feel free to reach out to us directly. Thank you, ladies and gentlemen, on behalf of Motilal Oswal and Alkem Labs. That concludes this conference. Thank you for joining us and you may now disconnect your lines.