Summary
OneSource Specialty Pharma Limited - Q3 FY 2026 Earnings Call Summary Saturday, January 24, 2026 11:00 AM
Event Participants
Executives 4 Abhishek Singhal, Anurag Bhagania (CFO), Arun Kumar (Founder & Chairperson), Neeraj Sharma (CEO & MD)
Analysts 5 Abdulkader Puranwala, Abhishek Kumar Jain, Madhav, Mehul Panjwani, Nitin Agarwal, Rupesh Tatiya
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹290.3 crores | -26% YoY, -₹84 crores ($10M) QoQ; Driven by deferral of DDC commercial supplies due to Canadian regulatory delays. |
| EBITDA | ₹17.3 crores | Significant decline vs previous quarter; Impacted by negative operating leverage on a fixed cost base and lower MSA revenues. |
| Adjusted PAT | (₹47.2 crores) | Loss for the quarter; Excludes exceptional items related to scheme intangibles and Code of Wages provisions. |
| Interest Cost | <9.0% | -200 bps YoY; Benefited from four-notch credit rating upgrades; net debt temporarily higher due to capex funding. |
| Net Debt/EBITDA | <1.5x (Target) | Management maintains a medium-term leverage target of under 1.5x despite current capex intensity. |
| Customer Advances | ~₹250 crores | Absolute value; Represents pre-booking of capacities; acts as a buffer against working capital risks. |
| DDC Capacity | 40 million units | Headline capacity for cartridges/devices; currently being utilized for MSAs at lower efficiency vs commercial runs. |
Geographic & Segment Commentary
- Drug-Device Combinations (DDC): Segment impacted by delays in Canadian approval for semaglutide for anchor partners like Dr. Reddy’s. Management expects approvals between Feb-May 2026, with revenue shifting to H2 FY27. Strategic focus has pivoted from signing new MSAs to preparing for commercial scale-up (CSA).
- Biologics (CDMO): Business seeing strong tailwinds from the U.S. Biosecure Act and updated FDA biosimilar guidelines (waiving Phase III trials). RFPs have increased 4x YoY with a record funnel in microbial capacity. A new U.S.-based biosimilar major was onboarded during the quarter.
- Injectables & Soft Gelatin: Secured first oncology asset approval (NDA) partnered with a top 10 U.S. generic firm. The general injectables facility in Bangalore will undergo a four-month shutdown to install high-viscosity pre-filled syringe and lyophilization capacities.
Company-Specific & Strategic Commentary
- Capacity Prioritization: Management intentionally halted signing new DDC MSAs to reserve capacity for commercial launches (CSA). This strategic pivot caused near-term revenue softness but is expected to maximize H2 FY27 margins.
- Batch Size Optimization: Working with partners to increase batch sizes (e.g., from 200L to 500L) to improve commercial viability and factory output. This requires supplemental regulatory filings but significantly enhances cost-competitiveness for GLP-1 products.
- Capex Commitment: Committed $75 million of the planned $100 million flagship site investment. Workforce at the flagship site has doubled (300+ new FTEs) to support the anticipated H2 FY27 ramp-up.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY28 Revenue | $400 million | Reiterated organic target; assumes full commercialization of DDC and biologics portfolios. |
| FY28 EBITDA | $160 million | Reiterated; reflects 40% margin profile once commercial supplies (CSA) dominate the mix. |
| FY27 Outlook | H2 > H1 | FY27 will mark the start of material CSA revenue; Q4 FY27 exit rate expected to mirror FY28 targets. |
| Near-term | Soft H2 FY26 / H1 FY27 | Anticipated “transitory” period due to regulatory timelines and plant shutdowns for upgrades. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory Delay | Primary risk; Canadian semaglutide approvals for partners are 3-5 months behind original estimates, deferring high-margin revenue. |
| Operating Leverage | High fixed-cost base (300 new hires, capex) creates margin pressure when commercial supply dates shift. |
| Competitive Intensity | Management noted “severe” competitive intensity in the Indian GLP-1 market, leading to a strategic focus on higher-barrier markets like Canada. |
| Execution Risk | The four-month shutdown of the Bangalore facility for upgrades could impact general injectable volumes in the short term. |
Q&A Highlights
DDC Growth & Canada Approvals
- Question: What is the status of the Canadian semaglutide approval and its impact? (Abdulkader Puranwala)
- Answer: Dr. Reddy’s received a request for additional information; approval is now expected between Feb and May 2026. Other partners will follow shortly after. Supplies will begin almost immediately post-approval (Neeraj Sharma).
Take-or-Pay Agreements
- Question: Why are we renegotiating take-or-pay contracts? (Nitin Agarwal)
- Answer: Acting as partners rather than “mercenaries” by allowing flexibility for regulatory delays in exchange for extending contract tenures beyond 3 years. We still enforce these clauses for certain other customers (Neeraj Sharma/Arun Kumar).
Capacity & Batch Sizes
- Question: How does batch size increase affect capacity? (Rupesh Tatiya)
- Answer: Increasing a batch from 200L to 500L allows 2.5x output in the same production time. Commercial runs (CSA) are much more efficient, allowing 6 batches in 7 days versus only 2 batches for MSAs (Neeraj Sharma).
Biosecure Act & Biologics
- Question: How is the Biosecure Act affecting the funnel? (Nitin Agarwal)
- Answer: It is accelerating geographical diversification for U.S., Japanese, and European firms. Combined with new FDA biosimilar rules, our microbial capacity is seeing unprecedented demand (Neeraj Sharma).
Key Takeaway
OneSource Specialty Pharma reported a transitional Q3 FY26, with revenue declining 26% YoY to ₹290.3 crores due to delayed regulatory approvals for semaglutide in Canada. While the shortfall led to a quarterly loss of ₹47.2 crores, management emphasized that the underlying demand remains robust, with customer forecasts being revised upward. Strategically, the company has pivoted from short-term MSA contracts to prioritizing capacity for high-margin commercial supplies (CSA) and optimizing batch sizes to enhance competitiveness. The biologics segment is emerging as a significant growth lever, with RFPs increasing 4x YoY trailing the U.S. Biosecure Act. Despite near-term softness expected through H1 FY27, the company reiterated its FY28 guidance of $400 million revenue and $160 million EBITDA, banking on a significant commercial ramp-up in the second half of next year. Management remains focused on high-barrier specialty injectables and maintaining a stellar compliance record to capture the global GLP-1 and biosimilar opportunity.
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