Ladies and gentlemen, good day and welcome to Q2 and FY 2026 earning conference call of Alembic Pharmaceuticals Limited. We have with us today Mr. Pranav Amin, Managing Director; Mr. Shaunak Amin, Managing Director; Mr. R. K. Baheti, Executive Director; Mr. G. Krishnan, Chief Financial Officer; Mr. Ajay Kumar Desai, Senior VP Finance. As a reminder, all participant line 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 zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Krishnan for his opening remarks. Thank you, and over to you, Mr. Krishnan. Thank you, and good evening, everyone. Thank you for joining the second quarter results conference call. Let me briefly take you through the numbers for the quarter before handing it over to Shaunak. Moving on, we continued the good start for the year into the second quarter. Revenue for the second quarter grew at 16% year-on-year to INR 1,910 crores. Growth was across the business, driven by higher volumes and new product launches, and expansion in ex-U.S. markets despite continued pricing pressure in U.S. generics and API. Gross margin was at 73% for the quarter, remaining almost flat compared to the previous year. EBITDA before R&D expenses was at INR 503 crores for the quarter, representing 26% of EBITDA margin compared to the previous year of 23%, reflecting better operating leverage, resulting in year-on-year EBITDA growth of 32%. R&D expenses increased by 41% year-on-year to INR 187 crores for the quarter. These figures are in line with the guidance that we had given for the full year at about INR 600 crores-INR 650 crores earlier. During the quarter, we also completed the acquisition of UTILITY Therapeutics, marking our entry into the U.S. branded drugs market with PIVYA, a product targeted for urinary tract infections and granting marketing exclusivity in the U.S. The transaction includes an upfront payment of about $4 million, milestone payments of $4 million each linked to the U.S. launch of PIVYA and achievement of certain specified revenue milestones, along with profit-sharing arrangements with the sellers. The net working capital stood at INR 2,921 crores compared to INR 2,734 crores as of March 2025. This increase is a factor of increased operating intensity driven by new launches and the new facilities that we opened in the last few years and volume-driven growth. Net debt as of 30th September was INR 1,280 crores compared to INR 967 crores in June 2025. The increase in net debt was a reflection of borrowing to fund working capital and the acquisition of UTILITY Therapeutics, and correspondingly, the interest cost increased from INR 71 crores to INR 76 crores for the quarter. We expect the net debt levels, excluding PIVYA launch, to gradually reduce in FY 2027, considering the successful launch of new products and growth from new facilities in our core business. The profit before tax for the quarter, before exceptional items, grew by 34% year-on-year to INR 225 crores. Profit after tax, but before exceptional items, grew by about 30% year-on-year to INR 185 crores. Adjusted for the exceptional item pertaining to insurance claims received in the previous financial year, that is, in the quarter two of FY 2025, the profit after tax growth was at 20%. Moving to the half-yearly results, revenue grew at 13% year-on-year to INR 3,621 crores, reflecting growth across businesses. EBITDA before R&D spend for the period was at INR 927 crores, resulting in an EBITDA margin of 26% and year-on-year growth of 28%. Again, the EBITDA growth is a reflection of strong revenue growth and improved capacity utilization across facilities. EBITDA post-R&D expenses was at INR 613 crore, which is about 17% of revenue. Profit before exceptional items for the first half grew by about 22% to INR 339 crore, and profit after tax, adjusted for the insurance claim I just mentioned, was at about 18%. With this, I have given a broad overview of the financials for the quarter and the first half, and I now request Shaunak to take you through the India branded business. Over to you, Shaunak. Thank you, Krishnan. For the India branded business, we delivered revenue of INR 639 crore for the quarter with a 5% year-on-year growth. Within this performance, gynecology, ophthalmology, and animal health have demonstrated an accelerated performance. The cough and cold segments grew in line with markets with robust operational execution. We introduced two new products in this quarter. With the implementation of GST 2.0 to ensure benefits of lower GST rate get passed on to the end users, the billing was paused for a few days to facilitate this migration of the channel to the new GST regime. This led to a compression of the billing cycle, especially in the east zone due to festive seasons, resulting in a marginal impact on growth of the quarter for India business. I will hand over the discussions to Pranav for his presentation on international business. Thank you, Shaunak. I am happy to present the Q2 performance for the international business. Q2 performance reflects the continued momentum as we strengthen our presence across key markets and achieving growth in both formulations and API. The performance was driven by a 31% growth in the rest of the world markets, which reflects our strategic geographic expansion and focused execution. Despite continuing pricing challenges, our U.S. business grew 21%, supported by higher volumes, whereas the API business grew by 15%. We continue to maintain sharp focus on profitability and operational excellence. We filed two ANDAs during the quarter, and cumulative ANDA files were at 269. We also received six approvals and one tentative approval. We launched three products in the U.S. We cumulatively have 226 ANDA approvals, including 21 tentative, and we expect to launch four to five products in Q3 and another four to five in Q4 of this year. Our R&D investment this quarter at around 10% of revenue reflects our commitment to building a strong pipeline for future growth. We continue to focus on complex and high-value areas such as injectables, peptides, oral solids, and drug discovery, with an emphasis on early entry opportunities like first-to-file day one and NCE-1. Our annual R&D guidance was given at INR 600 crores-INR 650 crores at the start of the year. We continue to have the same number in mind. We will invest towards marketing and approval in the product launch of PIVYA, which will mark our foray into the branded segment in the U.S. market. We expect to start this late Q4 of FY 2026. PIVYA would target the stable 50 million prescriptions in urinary tract infections, which has had little product introduction for more than a decade. This will have an impact on near-term profitability, but we are confident of the medium to long-term market opportunity that the product will help us capture. With this, I throw the floor open for Q&A. Thank you. Thank you very much. We'll now begin with 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 headset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question comes from the line of Damayanti Kerai from HSBC Bank. Please go ahead. Hi. Thank you for the opportunity. My first question is, I just want to understand the R&D bumper better. So Pranav, if you can help us understand, although you are maintaining the full-year guidance, where the majority of spend went during the quarter that led to a sharp increase in the R&D? Which segment of product categories, if you can elaborate? Yeah. As I said, if you see on an H1 basis, if I'm saying a guidance of INR 600 crores-INR 650 crores, then on an H1 basis, we're within that amount that we had said. It's okay. I think we're not too far off. We're just, in the quarter-wise, we're 10%, but I think for the rest of the year, at the end of the year, we will be around that 8% kind of levels. In terms of where it went, I think predominantly most of it is on the formulation development, but a lot of it being on the injectables and complex injectables also, which, as we gradually increase our injectables and complex injectable filing, that is also kicking in for us. Is semaglutide or any other peptide also part of this expense? We have set up a peptide lab, and we do have a bunch of products and GLP-1s under development, semaglutide being one of them. Having said that, we are not there in the first phase of launch for semaglutide in the Canadian market, and even in the U.S. market, we won't be there in the first phase of semaglutide. However, we are working on tirzepatide Mounjaro, and we believe we will be in the first phase of that in many of the markets. Okay. My second question is on your branded foray in the U.S. market. You mentioned some investment will go towards that portfolio. Very broadly, how much or what kind of investment are planned for that category? I think, yeah. No, this is a little bit more of a mid to long-term play because as we build out a field force, in the start, it'll be like an umbrella shape in terms of the revenue that will be generated. Initially, we will have a field force which will be promoting the product, and it'll take a couple of quarters for it to ramp up. We may see a couple of quarters that we may have a little bit of a profitability hit because of this. As we go along, as I said, it's like an umbrella curve, and you will see a significant ramp up as we start generating prescriptions in this area. Okay. That's helpful. My last question is, if you can comment on what has led to very strong growth in ROW market and API, especially API. I understand demand had been muted for, I guess, not only you, but across the market for the last couple of quarters. I think your performance is very exceptional. If you can help us understanding that. No, no. Good question. Thanks, Damayanti. See, okay, so two things. One is the ROW generics. For us, that was part of the business. If you see over the last 10 years or so, seven to 10 years, we've grown by a CAGR of almost 20%. That has been a very good growth market for us. You have to take this. I think this year also, we'll end up growing by about 15%-20%. This quarter, 30% growth is a little exceptional because last year, H1 had a low base compared to H1. H2 has a much higher base last year because last year, during H1, we had some supply difficulties. H2 will be there. We will grow in H2 as well, but it won't be as high. At the year end, we'll be about 15%-20% in ROW generics. As regards to API, yes, it is still not as rosy. If you see the last eight quarters, even we've been a little sluggish in terms of growth for API. I think just at a lower base, this quarter, we ended up having some more development quantities in some areas. API is still challenging. I think for the year, we will grow at about 10%. Yeah, this was a good quarter. It was an exceptional quarter. Okay. Fully around 10% growth is something more visible. Okay. Yeah. That's helpful. Yeah. Thank you for your response. Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch-tone telephone. Our next question comes from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity. Sir, again, on this UTILITY Therapeutics, if you could sort of elaborate in terms of number of PMAs or field force you would want to set up. In addition to this, what kind of portfolio you intend to build up? Is that going to restrict only to urinary tract infections? If you could throw some light in terms of these aspects. Yeah. What we will do with UTILITY is we will gradually ramp up the field force. We will start with some of the high prescription areas. This is in women's health, right? We will target the women's health area. We will start with a smaller field force to initially see how the ramp-up happens. We'll go with high-prescribing doctors, and we've already identified the territories. We will start with that field force. As we move along, as we start generating sales, we will increase the field force to go for more doctors as well. In this same area, we will look at in-licensing and more products as well. First, we want to stabilize these products, stabilize PIVYA, get the sales going off the ground. Actively, we're scouting around for other opportunities as well. I believe this can be a good de-risk from the generic business and the pricing challenges that we have in the generic business, and we can build a good franchise in women's health. That's something that we're going to aim to do. At least for, let's say, over the next 12 months-18 months or 12 months-24 months, how much sort of an additional operational cost one should factor before we start seeing meaningful traction in the revenue? I think it'll take a couple of quarters at least. Let's say if we start end of, I think Q1 FY 2027 will be the first full quarter of launch as per the schedule that we have currently, as per our plans. I think first, fully, I think it'll take a couple of quarters at least to get it going. I think then, believe the revenue will ramp up. As I mentioned to Damayanti, it'll be like a little bit like an umbrella curve, J curve. We'll go up much faster as we start generating prescriptions. Got it. So considering this aspect and subsequently. Reasonably good traction in, say, non-U.S. as well as U.S. market and API, any guidance you would like to give for Q2 FY 2026 or second half of FY 2026, EBITDA margin? EBITDA margin, I think the only guidance I've given in the past, and I continue to stay by it, is that if you see fundamentally what will happen over the next couple of years, we will see an improvement in EBITDA margin moving forward. It could be the quarter-on-quarter, you may see a variation. Next year, next to next year, we'd like to go to the 18%-19% kind of levels in the next couple of years, get to a 20% EBITDA level. That'll happen with growth across all the sectors. I think with India business, we'll come back to growth. Animal healthcare is already doing well. Gynec ophthalmology are doing well. Once the main business also starts getting back on growth, the other aspect is the U.S. growing. We have some facilities like the injectable and the oncofacilities, which are not as fully utilized. As that utilization goes up, that'll help push up their margins as well. I'm pretty confident that in the next couple of years, we will bump up towards closer to the 20% kind of levels. Okay. Thank you. Thank you, sir. Our next question comes from the line of Bharat Celly from Equirus Securities Private Limited. Please go ahead. Hi. Thanks for the opportunity. I just wanted to understand on the U.S. specialty side, what sort of investments or levels we are looking to earmark towards this business? What sort of losses we can see maximum when we get into this business? Bharat, what'll happen is these will be all in terms of upfront costs. As you know, we've acquired this for milestones. We've got a few milestones. Total milestones will be $12 million paid over a period of time. The operational cost is just the onboarding of the field force. That's what's going to be an operational cost. We're going to try minimizing that. As I said earlier to Tushar, we will gradually start the ramp-up of the field force. As we start getting some momentum, then we will build up the field force a little more. I think let's wait till Q1 to see how the ramp-up starts, and I think we'll get a much better idea as we move along. Surely. What gives us confidence that it can be a successful product? We have seen multiple companies getting into specialty side and then rolling it back later on, considering the losses that are mounting there. What gives us the confidence over here? Yeah. What gives us confidence is in this segment, right, in women's health and UTIs, infection, there haven't been too many new molecules that have come out. This is a tried and tested product which has been launched in Europe, and it's been commercialized in Europe for many years. It's tried and tested. Number two, it works well in women who are pregnant. I think it's quite a safe alternative. That gives an additional bonus. Since there haven't been too many new introductions, we believe there's a niche that we can go to. We've done some surveys with doctors in the U.S., and we believe that there is an opportunity. In fact, once some of the medical professionals have heard about this, they have already started approaching us as to when we're launching the product. That gives us some excitement. I believe it'll be an interesting area as a first foray into the branded segment in the U.S. As we move along, we'd like to add more products to this as well. Okay. Sure. And last one, what sort of losses will we have from the new injectable plants which we have commercialized over the last two and a half years? We don't have losses per se. I think we do have unabsorbed overheads. I think as we go along, the first half of this year, we've already seen a much better utilization of these facilities, which has also led to the margins going up. As we move along with the launches that we have in the pipeline for H2 and FY 2027, this will further impact the top line, which will continue growing in the U.S. and the rest of the world markets, as well as the margin improvement. Surely. Since we are investing into the new specialty side, there could be some margin pressure for at least FY 2026, FY 2027, right? I think, let's see. I think, as I said, Q1 and Q2 is where we've seen it. I believe Q3, Q4 onwards, it will start getting normalized. Any budgeted amount which you would have thought of to invest in the first quarters? No, we haven't disclosed that, or we haven't gone to those numbers yet. Got it. Thanks a lot. I will get back to the team. Thank you. Thank you. Thank you, sir. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch-tone telephone. Our next question comes from the line of Bino Pathirparampil from Elara Capital. Please go ahead. Hi. Good afternoon. Just a follow-up question on ROW markets. Are these mostly Europe? Most of these sales coming from Europe? Europe is a big market for us. I think for us, our ROW business is broadly centered around four or five territories, which are Europe, Canada, Australia, Chile, and South Africa and Brazil. Okay. Of which. Europe, Canada, Australia, I mean, the regulated markets would be roughly what? Half or 70% with roughly? 85%. 85% is regulated. Okay. Got it. Yeah. Yeah. Yeah. Yeah. Thank you. Thank you very much. Thank you, sir. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch-tone telephone. Our next question comes from the line of Yash Singhee from Renaissance Investment Managers. Please go ahead. Hi. Thank you for the opportunity. Yeah. Am I audible? Yes. Yeah. Just a couple of questions. Firstly, on the Indian business. I wanted to understand how is the Azithral sales trending. As in, is that still trending downward, and the rest of the pickup is due to mostly due to animal health? Sorry, could you repeat the question? I couldn't hear. Sorry. Just to understand, how are the Azithral sales trending? Just to understand, the way going in the future, is it animal health and gynec which is picking up and Azithral still being kind of a driver for the growth? Yeah. So Azithral, I think we feel the base is stabilizing, and we're starting to see an upward movement of Azithral going forward at this point. Animal health continues to outperform. Gynec, I think, also will continue to outperform the markets in the future. We can expect a better-than-IPM growth as Entresto starts trending upwards as well. Yes. Hopefully, yes, soon. Got it. On the US business, just trying to understand. Despite a good U.S. growth in this quarter, there was a few softness in gross margins. Anything that you can update on that? I think in terms of gross margins, we've always guided there will be 70% + gross margins. I think Q1, Q2 would be just a matter of either product mix or something or the other. I think at the end of the year, I believe the gross margins will be at the same similar levels that we've been guiding at. What range would you see? It will be in the similar range of 70%-75% that we've been guiding in the past year. Understood. Thank you. Thank you. Thank you, sir. Our next question comes from the line of Rahul Jeewani from IIFL Securities Limited. Please go ahead. Yeah. Thank you, sir, for taking my question. This 5% growth which we saw in the India business during the quarter, you indicated that there were GST disruptions as well in terms of your booking of sales during the quarter. Can you quantify the impact which GST would have had in terms of domestic business growth for Q2? As far as GST disruptions were concerned, we did pause the billing for a few days in the month. We expected the orders to come back. I think that flow into October, and we are yet to see how the October trajectory is looking like. What we got to believe is that the demand that switched over from September to October is something that should partially build the growth for Q3. I think there will be definitely some extent of primary sales that would not have come back. It is not straightforward to calculate what is the impact on the growth. One factual aspect is that in terms of the festival-related impact, last year we had that in October, but this year we had that in September. That would have a near-annual impact, especially for the Eastern zone. We will have to wait and see how the October numbers pick up and how the primary versus secondary stack up. We hope that the impact is not significant. Sure, sir. Sir, generally. Sorry. Generally, on the domestic business performance, while we have been outperforming market growth in, let's say, therapies like gynec, ophthal, and animal health, over the past couple of years, we seem to have underperformed IPM growth. When do you expect the domestic business growth to first catch up with IPM and the market growth as well? Yeah. I think we've maintained that in the past. There was a base effect post-COVID for a large part of our acute business. I think going forward, we should be able to catch up with—actually, let me re-answer it. I think our represented market growth will actually start catching up with market growth soon. I think when that happens, our internal growth also will start matching the market growth, which for the last few years, our represented market for acute business was underperforming compared to the overall market growth. Sure, sir. Any plans of adding on to the rep team in the India business? As of now, no plans. Okay. Sure, sir. Just one question I had with respect to the U.S. business and capital allocation. Pranav, we had, let's say, controlled our R&D spends over the past two-year period, where our R&D spends had moderated from 12%-13% to an 8% kind of a number. Yeah. Now, this quarter, obviously, we saw an increase in R&D spend, but you have maintained your guidance for the full year. Let's say from a two-year to three-year perspective, what kind of an R&D spend are you budgeting in? When do we actually start seeing some better productivity on this R&D? Because at least in terms of the new launches for the U.S. business, we haven't seen, let's say, limited competition. Approvals still coming in for us. Yeah. No, sir, it's a good question, Rahul. I think, to be honest, I don't think we will ever go back to the 12%, 13%, 14% kind of R&D spends that we were doing when margins and the returns in the U.S. were much higher than what they are right now. We will not go to those levels. I believe we will still be at that 8% kind of levels for R&D spend. I think one of the reasons in the bump-up is Q1 was a little lower, and it's just some. As we're filing injectables and some more peptides, I think you're seeing a little heavier kind of R&D spend that we're incurring. I still believe, I think for the guidance for the year will be at the INR 600 crore-INR 650 crore level. We won't exceed that. Moving forward, also, we'll be at that 8% level. Sure, sir. When do you start seeing some of these, let's say, differentiated and complex product approvals coming through for us as far as injectables and peptides are concerned? Yeah. So we have some peptides. We've got one peptide which we've got approval for, but the GLP-1s are still time for that. I think we've done batches of tirzepatide, the Mounjaro right now, which has caused a little bit of a bump-up in the R&D cost for this quarter. Apart from that, some of the complex injectables, we will see some approvals coming up in the next couple of months, hopefully, that will be a little more meaningful. It won't be as big as some of the others, but it'll be a little more meaningful with a little more limited competition. Sure, sir. I will join back the queue. Thank you. Thanks. Thank you, sir. Our next question comes from the line of Maulik V aria from B&K Securities. Please go ahead. Hi, sir. Thank you for the opportunity. I hope I'm audible. Just a few questions from my end. I just wanted to understand, I think in the last quarter, we talked about certain hiccups due to the UCPMP implementation across the domestic geography. Can you provide some update on that, if that's completed, or is it still impacting the business? I'm not able to recollect what you are mentioning about the UCPMP on the India business. I'm not sure. Maulik, we commented on that, on the impact. I think we, in fact, have been following the policy quite ahead of time. We don't see any challenges on that front. Okay. Okay, sir. Okay. Also, we launched a generic Entresto in the later end of the first quarter. How has that been picked up? I think that's been picked up where we picked up there was a lot of competition on that product, and pricing was much lower than what I would have liked, I would have expected. Having said that, we have picked up a few meaningful accounts. We have a decent share on that. Okay, sir. We commented that the growth in the second quarter was due to volume. Would Entresto be a significant contributor to that? Yes. Entresto would be. Okay. Okay. And I mean, in other expenses, apart from R&D expenses being high, we've seen other expenses reduce for the quarter on a year-on-year comparison. What all aspects have been under control, or maybe we've cut down on that? See, the other expenses are predominantly fixed costs. While the year-on-year cost has increased, the growth is below the revenue growth, which is leading to a bit of operating leverage impact. That ties back to the improvement in capacity utilization that we have seen across business. I think we should see it in that front. It also goes back to the point which Pranav mentioned that as we see improvement in capacity utilization, we should see the margin expansion coming through, subject to the price impact that we have to see. Right? I think it's more of a controlled fixed cost increase that we have seen improve the margins. Okay. Okay. Sorry, I would have missed it, but can you please repeat how much was the plant utilization for the new plant? We do not go at plant-level utilization. I do not see that as a necessity for doing financial model at a plant level. Okay. Okay. Any broad-level color on the utilization number on a consolidated basis? See, broad level, the OSD plants are all running at optimal capacity utilization. F4 has got a little bit of headroom for future expansion. API is all running at optimal capacity. It's just three new plants which are a little lower than that. In that, certain lines are higher, certain lines are lower. It's the injectable and onco plants which are running a little lower than what we've anticipated. You'll see, it's like we've got a lot of back-ended products and launches that will come from these plants anyway. I think you'll see an impact of that in H2 itself. Okay. Once the product approvals start coming in, we will see improvement in the utilization. Yeah. Exactly. Okay. Okay. Thank you, sir. Thank you for the opportunity. Thank you. Thank you, sir. Our next question comes from the line of Rashmmi Shetty from Dolat Capital. Please go ahead. Yeah. Thanks for the opportunity. Just trying to understand more on the U.S. business. When you mentioned that this quarter we have benefited from the volumes, is it something that only new launches and the existing products have been benefited, or we have also benefited from any one-off opportunity like we did in our earlier quarters? No. I think just the new launches, as was earlier mentioned, I think Entresto was a new launch. Apart from that, we had about three, four other launches that we did and gradual ramp-up in some of the other products that we are supplying. We have not seen any shortages or one-time buy opportunities that we used to see earlier. The market is quite well supplied, and there is quite a bit of erosion. We are not seeing as many short-term supply-side opportunities. Okay. So this number, what we have done in quarter two, you feel that this is more sustainable in the subsequent quarters also? Yes. Unless there's more erosion in some of the larger launches like Entresto. We've already seen some erosion in Entresto since we launched. I believe that with the new launches, if we keep ramping up, we should be okay. Okay. On the India business, whatever explanation you have given, based on that, is it safe to assume that for this year, we will be underperforming the market growth? No. I think there's still half the year left. I think we're still—we are not making that statement at all. We should—I think we mentioned that we are looking at improved productivity that we are working through across the field force. That should help us bring back towards the market. I think the full impact of that will be seen some next financial year. I would like to—I would like to actually, if you look at the—purely from a modeling perspective, if you look at the growth for the second half of the financial year, you should consider the fact that last year's second half was on a higher base. While we will continue to—we expect growth to continue in the second half of the year. You need to factor the higher base of last year when you do the projection. Okay. Got it, sir. Thank you. That's it from my side. Thank you, ma'am. Is there no further question from the participant? I now hand the conference over to Mr. G. Krishnan for the closing comments. Thank you. And over to you, sir. Thank you for joining the call. In case you've got any follow-up questions, please feel free to reach out to Ajay Kumar Desai and the IR team for any further follow-up questions. Thank you so much. Thank you, sir. Ladies and gentlemen, on behalf of Alembic Pharmaceuticals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.