Cohance Lifesciences Limited Q3 FY26 Earnings Call Summary

Summary

Cohance Lifesciences Limited - Q3 FY 2026 Earnings Call Summary Thursday, February 12, 2026 5:30 PM IST

Event Participants

Executives 5 Amrit Singh (Business Head Specialty Chemical), Gunjan Singh (Business Head API +), Himanshu Agarwal (Whole-time Director and CFO), Vivek Sharma (Executive Chairman), Yann D’Herve (CEO Pharma CDMO)

Analysts 4 Amlan Das (JPMorgan), Foram Parekh (BOB Capital Markets), Kunal Damesha (Macquarie), Shyam Srinivasan (Goldman Sachs)

Financials & KPIs

Geographic & Segment Commentary

• Pharma CDMO: Revenue declined 27% YoY in Q3 (7% growth if adjusted for destocking) due to inventory normalization in two large molecules and patent expiry of one molecule. Management reports a robust pipeline with 9 Phase 3 programs, 4 of which are expected to commercialize in FY27. Strategic focus remains on advanced platforms like ADC and Oligonucleotides, with a $10 million cGMP expansion underway in the US.
• API Plus (Generic API & Formulations): 9M FY26 revenue declined 8% YoY to ₹815 crores, shaped by regulatory hurdles at the Nacharam site (Warning Letter/OAI) and customer approval delays. Production for non-US markets has resumed at Nacharam; US exposure at this site is limited to <2% of consolidated sales. The pipeline remains active with 8 DMF/CEP filings completed and 5 partner ANDAs filed during the year.
• Specialty Chemicals: 9M FY26 revenue grew 32% YoY to ₹190 crores despite generic pressure from China. The segment is diversifying into Japanese and European agrochemical innovators, with commercial qualification for a major Japanese project planned for H2 FY27. Strategic expansion includes applications for semiconductor chip processing chemicals within the Performance Chemicals sub-segment.

Company-Specific & Strategic Commentary

• Advanced Technology Platforms: Filed one new ADC payload DMF with three more planned for FY27; onboarded two senior business development professionals in the UK and Boston to drive Oligonucleotide growth.
• Customer Engagement: RFQ intensity increased >2x year-to-date, with 16 audits/visits from mid-to-large pharma innovators in the last 4 months.
• Operating Structure: FY26 is the first full year of NJ Bio consolidation; higher cost base is reflected in P&L while revenue lags due to biotech funding constraints.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Commercialization Pipeline

• Question: What is the market size and conversion potential of the four molecules going commercial next year? (Amlan Das)
• Answer: One ADHD molecule could reach triple-digit metric tons; others are in oncology and anti-diabetic segments. Typical RFQ conversion is ~20%, but commercial RFQs take 2-3 quarters to convert as customers often seek to de-risk supply chains (Yann D’Herve).

Nacharam Facility Impact

• Question: Is the ₹55 crore impact from the Warning Letter the peak of the disruption? (Amlan Das)
• Answer: The loss includes both US and non-US supply during the voluntary shutdown. While non-US production has resumed, US resumption will be gradual. Total US exposure from this site is <2% of consolidated revenue (Himanshu Agarwal).

Margin Recovery

• Question: Are we moving to a structurally lower margin trajectory given the current 21-24% levels? (Shyam Srinivasan)
• Answer: No. Current margins are impacted by a lower mix of high-margin commercial products and operating deleverage from subsidiary consolidation. Management expects to return to 30%+ margins as the product mix normalizes (Himanshu Agarwal).

Destocking Predictability

• Question: Can we expect further surprises in the remaining seven commercial molecules? (Kunal Damesha)
• Answer: Unpredictability is highest at the “ends” of a product life cycle (fresh launch or patent expiry). Cohance has a binodal portfolio heavy on these ends, but the new commercial additions are expected to provide growth for the next decade (Yann D’Herve).

Key Takeaway

Cohance Lifesciences reported a challenging Q3 FY26, with 9M revenue declining 6.7% to ₹1,650 crores and Adjusted EBITDA margins contracting to 21%. The performance was primarily dragged down by ₹260 crores in destocking and patent-related resets for two mature molecules, alongside a ₹55 crore impact from regulatory issues at the Nacharam facility. Despite these headwinds, the company is doubling its RFQ funnel and supporting 9 Phase 3 programs, with 4 expected to move to commercial supply in FY27. Management categorized FY26 as a transition year, maintaining a long-term $1 billion revenue target for FY30 while expecting a return to growth in FY27. The strategic pivot toward high-complexity platforms like ADCs and Oligonucleotides continues with a $10 million US expansion, though near-term margins remain sensitive to the timing of innovator launch sequencing and global biotech funding cycles.