Summary
Anthem Biosciences Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 02:30 PM
Event Participants
Executives Ajay Bhardwaj (MD & CEO), Gawir Baig (CFO)
Analysts Amey Chalke (JM Financial), Bansi Desai (J.P. Morgan), Jash Gandhi (Dalal & Broacha), Kartik Bane (Bajaj Life Insurance), Neha Manpuria (Bank of America), Saion Mukherjee (Nomura), Sanjay Kumar (ithoughts PMS), Vivek Agrawal (Citigroup), Vivek Gautam (GS Investment)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations (9M) | ₹1,513 crores | +11-12% YoY; Growth led by CRDMO (₹1,260 cr) and Specialty Ingredients (₹254 cr). |
| Revenue from Operations (Q3) | ₹423 crores | Declined YoY due to a high base effect and client destocking; CRDMO contributed ₹333 cr. |
| EBITDA (9M) | ₹671 crores | +23% YoY; Margins expanded to 41.5% due to backward integration and cost control. |
| EBITDA Margin (Q3) | 41.8% | Improved despite lower revenue, driven by structural shifts in manufacturing. |
| PAT (9M) | ₹402 crores | +8.9% YoY from ₹369 cr; impacted by a ₹25.4 cr one-time labor code exceptional item. |
| PAT Margin (Q3) | 20.3% | Impacted by exceptional items; management targets 20%+ PAT margins for FY26. |
| Other Income (9M) | ₹105 crores | Increase from ₹72 cr YoY, primarily due to forex gains and RoDTEP incentives. |
Geographic & Segment Commentary
- CRDMO: Contributed ~83% of 9M revenue (₹1,260 cr); segment is experiencing global destocking and funding uncertainty among biotech clients, though underlying demand remains robust. Management noted 4 new product approvals this year, with a focus on supply of advanced intermediates for large pharma.
- Specialty Ingredients: Contributed ~17% of 9M revenue (₹254 cr); business is primarily domestic (90%). Future growth is tied to import substitution in probiotics, biosimilars for the US market, and generic GLP-1 (Semaglutide) API.
Company-Specific & Strategic Commentary
- Backward Integration: Management successfully discontinued China-sourced intermediates for a major product, shifting to in-house manufacturing; this significantly boosted material margins and is a permanent structural improvement.
- Peptide Strategy: Developed full-spectrum capabilities from fermentation to synthesis; the 16 KL Neo Anthem facility is now commercial. Anthem claims to be the most backward-integrated Indian player for Semaglutide.
- Biosimilars: Developing a microbial-based biosimilar for a US customer to shift production from the US to India for cost advantages; management is also planning a dedicated CHO-based mammalian facility.
- Capacity Expansion: Commissioned a 76 KL block (CP7) in Unit-2; Unit-4 civil work is underway on a 30-acre plot with a ₹1,000 crore Phase 1 CAPEX planned through March 2027.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 15% - 16% (Mid-teens) | Adjusted downward for FY26 from 20% due to Q3 slowdown and client destocking. |
| EBITDA/PAT Growth | 20%+ | Structural margin improvements ensure profit growth outpaces revenue growth. |
| Asset Turnover | 1.4x - 1.5x | Target for Unit-3 (Neo Anthem) within 3 years as it ramps up utilization. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical/Trade | Management noted client anxiety regarding potential US-India trade tensions, though recent diplomatic cooling is viewed as a positive reversal. |
| Inventory Destocking | High safety stocks held by clients globally are being rationalized, leading to temporary volume pressure in Q3. |
| Clinical Failure | 130-140 molecules in early phases are subject to trial risks; one Phase-3 molecule recently returned for additional FDA work. |
Q&A Highlights
Margin Sustainability
- Question: How much of the margin expansion is structural versus temporary? (Vivek Agrawal)
- Answer: It is structural. By replacing China-sourced intermediates with in-house production, material margins have permanently shifted. Other costs are largely fixed, providing operating leverage as revenue grows (Gawir Baig).
GLP-1 Competitive Positioning
- Question: How can Anthem compete with China on Semaglutide pricing? (Bansi Desai, Sanjay Kumar)
- Answer: Anthem is uniquely backward integrated, manufacturing both the fermentation fragment and the synthetic side. Even if API prices drop to $100/gram, the company can maintain historical EBITDA margins (Ajay Bhardwaj).
Pipeline Ramping
- Question: When will the four newly approved molecules impact the P&L? (Jash Gandhi)
- Answer: Small batches were delivered in 9M FY26. Full-blown commercial impact is expected toward the end of the calendar year as clients navigate launches and potential M&A activity (Gawir Baig/Ajay Bhardwaj).
Capacity Utilization
- Question: What is the current utilization across units? (Amey Chalke)
- Answer: Unit-1 is at 75%; Unit-2 is at 75% excluding the new CP7 block; Unit-3 (Neo Anthem) remains underutilized as it is in early-stage ramp-up; Fermentation is at ~47% (Gawir Baig).
Key Takeaway
Anthem Biosciences delivered a steady 9M FY26 performance with ₹1,513 crores in revenue, characterized by significant structural margin expansion despite a seasonally soft Q3. The company successfully executed a strategic shift toward full backward integration, particularly by eliminating intermediate imports from China, which pushed EBITDA margins to 41.5%. While full-year revenue guidance was moderated to 15-16% due to global client destocking and biotech funding volatility, management remains committed to 20%+ growth in EBITDA and PAT. Strategic focus remains on high-value segments including peptides (specifically Semaglutide), microbial biosimilars, and large-scale fermentation at the new Unit-4. Looking ahead, the ramp-up of four recently approved commercial molecules and a robust pipeline of 140+ early-stage projects position the company for a strong FY27, provided global biotech funding and trade environments stabilize.
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