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Concord Biotech Ltd

| Q2 & H1 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤14th Nov 25

Summary : Concord Biotech experienced temporary Q2 revenue setbacks due to regulatory delays and market uncertainties, but management anticipates a stronger H2 driven by new facility ramp-ups, strategic market expansion, and CDMO opportunities.

Management Perspective positive : We believe that this is just a timing difference & postponement of sales & not loss of business. Based on early discussions and forecasts, we anticipate a stronger performance in H2. We remain confident on our long-term strategies to grow.

Concall Report Analysis & Insights

Business Overview

  1. Concord Biotech is a leading supplier of fermentation-based API products.
  2. The company has deep expertise in complex fermentation processes and R&D capabilities.
  3. It boasts a diversified portfolio across therapeutic areas and robust regulatory approvals.
  4. Concord is expanding into injectables, CDMO, and advanced therapies like CAR-T cells.
  5. New subsidiaries, Stellon Biotech Inc. and Concord Lifegen, target US and domestic markets.

Future Growth Prospects

  1. Anticipates stronger H2 performance, recovering deferred Q2 sales.
  2. New injectables facility at Valthera expected to contribute positively to margins.
  3. USFDA approval for Teriflunomide Tablets adds to the product portfolio.
  4. Stellon Biotech Inc. will drive direct commercial footprint and market access in the U.S.
  5. Concord Lifegen Limited will strengthen domestic marketing and sales capabilities.

Management Insights

  1. Q2FY26 revenues were Rs. 247 crores, H1FY26 at Rs. 451 crores, a subdued performance.
  2. Performance dip is primarily due to timing differences and postponement of sales, not business loss.
  3. Excluding initial injectables facility costs, EBITDA margin stood at 41%.
  4. Successful regulatory inspections across all facilities strengthen global market access.
  5. Actively pursuing second-source opportunities and engaging with CDMO clients.

Signs of Skepticism

  1. Management could not quantify the exact timing or magnitude of deferred revenue recovery.
  2. The full-year growth guidance remains qualitative, with specific H2 growth magnitude unclear.
  3. CDSCO approval delays were attributed to the cough syrup issue, an external factor.

Risk Factors

  1. Delay in Written Confirmations from CDSCO impacted EU sales in Q2.
  2. Deferment of a government tender in the Middle East due to regional uncertainties.
  3. Temporary shift in procurement patterns from US customers due to tariff uncertainties.
  4. Initial start-up costs of the new injectables facility temporarily impacted EBITDA margins.
  5. Exact timing and quantum of deferred revenue recovery are difficult to specify.

Good To Know

  1. Q2FY26 revenue grew 21% Q-o-Q but dipped ~20% Y-o-Y.
  2. H1FY26 API revenue was Rs. 345 crores, formulations Rs. 106 crores.
  3. H1FY26 domestic revenue was Rs. 247 crores, exports Rs. 204 crores.
  4. Immunosuppressants contributed ~76% of H1 revenue, aiming to reduce below 70%.
  5. Dholka facility utilization was 76%, Valthera 24%, and Limbasi 52% in H1FY26.

Key Drivers

  1. Injectables facility revenue ramp-up.
  2. CDMO project finalization.
  3. US market expansion via Stellon.
  4. New product launches like Nystatin.

Key Analyst Discussions

Competitive Environment

  1. Asked if EU customers switched suppliers due to delays, management cited API stickiness.
  2. Discussed market penetration of new anti-infective product Nystatin.
  3. Addressed potential conflict from expanding into formulation business (no concerns seen).

Market Trends & Consumer Behavior

  1. Clarified the impact of US tariffs on procurement patterns and order inflows.
  2. Discussed the broader industry impact of global conflicts and market volatility.

Financial Highlights

  1. Quantification of Q2 revenue loss: ~INR 20-25 crores from EU, ~INR 20 crores from Middle East.
  2. Inquired about the extent of expected YoY growth in the second half of FY26.
  3. Questioned how long the injectable facility's start-up costs will impact EBITDA.
  4. Asked for the split of US and ex-US revenue in exports (7% US, 38% ex-US).

Product Composition

  1. Inquired about the growth rate and proportion of non-immunosuppressant products.
  2. Asked about the current percentage of revenue from immunosuppressants.
  3. Discussed the development stage and market scope of CAR-T cell therapy investment.

Strategic Considerations

  1. Asked for updates on CDMO project progress and future revenue opportunities.
  2. Inquired about the nature (early/late stage, commercial) of molecules for CDMO clients.
  3. Questioned the strategy for the new injectable facility, targeting India first, then emerging markets.