Summary
Sai Life Sciences Limited - Q3 FY 2026 Earnings Call Summary Friday, February 06, 2026 4:00 PM
Event Participants
Executives 2 Krishna Kanumuri (MD & CEO), Siva Chittor (WTD & CFO)
Analysts 7 Alankar Garude, Ameya Chalke, Binay Singh, Dhawal Khut, Karthik Bane, Manish Poddar, Nirvana Laha, Rahul Jeewani
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Revenue | ₹556 crores | +27% YoY; Broad-based growth led by CDMO (+31%) and CRO (+19%) segments. |
| CDMO Revenue | ₹361.4 crores | ~65% of total revenue; Driven by a robust commercial pipeline and 7 molecule additions in 9M FY26. |
| CRO Revenue | ₹194.6 crores | ~35% of total revenue; Growth supported by sustained momentum in discovery and large pharma engagements. |
| EBITDA | ₹191 crores | +54% YoY; Significant margin expansion due to operating leverage on employee costs. |
| EBITDA Margin | 34% | +600 bps YoY; Benefited from a ₹16 crore provision reversal and operating efficiencies. |
| Profit After Tax (PAT) | ₹100 crores | +86% YoY; Driven by strong operational performance and margin accretion. |
| 9M FY26 Revenue | ₹1,590 crores | +43% YoY; Strong nine-month performance outpacing broader industry trends. |
| 9M FY26 EBITDA Margin | 30% | +600 bps YoY; Achievement of the 28%-30% target range ahead of schedule. |
| Capital Expenditure | ₹405 crores | Q1-Q3 FY26 spend; Investments aligned with long-term customer requirements and R&D expansion. |
| Capacity Utilization | 60% | Current status; Provides adequate headroom for growth prior to new capacity commissioning. |
Geographic & Segment Commentary
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CDMO Segment: Contributes 65% of revenue with 90% coming from large pharma innovators. The segment added 7 late-phase and commercial molecules in 9M FY26, bringing the total to 3 commercial and 4 Phase III molecules. Management is focusing on a “technology-first” capacity addition approach to mitigate long-term redundancy risks.
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CRO Segment: Represents 35% of revenue with 19% YoY growth. Momentum is driven by global innovators shifting R&D FTEs and development activities to India. The segment is increasingly focusing on integrated programs (Biology, DMPK) alongside discovery chemistry to deepen large pharma partnerships.
Company-Specific & Strategic Commentary
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Specialized Capabilities: Significant investment in ADCs (OEB labs for process development) and Peptides (pilot facility) scheduled for October 2026. The company is positioning itself for high-complexity modalities where revenue potential is high despite potentially lower volumes.
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Asset Quality & Diversity: Strategy focused on broadening the portfolio to mitigate “destocking” risks. Management noted the top customer accounts for ~12% of revenue, ensuring no over-concentration on single blockbusters.
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Digital Transformation: Partnered with an external consultancy to define an “AI-first” roadmap. Goal is to automate routine tasks, allowing scientists to focus on high-value science while improving operational scalability.
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Capacity Expansion: Unit 8 (200 fume hoods) commissions in Q4 FY26. Total manufacturing capacity at Bidar to increase by 70% (450 KL total) by Q4 FY27. Phase 1 of Animal Health API production is targeted for March 2027.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 15% - 20% CAGR | Broad-based multi-year guidance; confident despite current high growth outperforming this range. |
| EBITDA Margin | 28% - 30% (Sustainable) | Management aims to sustain this range in FY27, balancing growth investments with operational discipline. |
| New Capacity | 450 KL Addition | 225 KL by June 2026 and 225 KL by Q4 FY27 to support the late-stage pipeline. |
| R&D Infrastructure | Doubling Capacity | Process R&D facility and peptide pilot plant to be commissioned by September 2026. |
Risks & Constraints
| Risk | Context |
|---|---|
| Inventory Destocking | While not currently visible in the pipeline, management admitted CDMOs have low visibility on client inventory levels. Mitigation relies on portfolio diversification and adding more commercial molecules. |
| Biotech Funding | Global weakness in biotech funding may impact early-stage CRO work. Management believes large pharma’s shift to India provides a 18–24 month buffer until funding recovers. |
| Margin Pressure | Rapid capacity expansion and upfronting of talent costs for new sites (Animal Health, Unit 8) may create temporary margin variability despite the 28-30% long-term target. |
Q&A Highlights
Commercial Pipeline & Destocking
- Question: How is Sai avoiding the destocking issues seen by peers? (Rahul Jeewani)
- Answer: We don’t control stocking, but we mitigate risk by ensuring a broad portfolio. We added 7 late-phase/commercial molecules this year to reduce concentration; our top customer is only ~12% of revenue (Siva Chittor).
Margin Sustainability
- Question: With margins already at 30-34%, is there further upside? (Ameya Chalke)
- Answer: We prefer to sustain 28-30% and maximize market share rather than over-optimize. We need to invest in technology to stay competitive with large-scale Chinese players (Krishna Kanumuri).
Capital Expenditure Strategy
- Question: Are you building capacity ahead of demand? (Yash Doshi)
- Answer: We follow a “technology-first” approach. We are not just adding volume but specialized capabilities like ADCs and Peptides where we see active Phase 2/3 engagement (Krishna Kanumuri).
Revenue Recognition
- Question: Is revenue linked to dispatches or milestones? (Nirvana Laha)
- Answer: It varies; some contracts use percentage-of-completion based on Ind AS regulations, while others are triggered by dispatches or specific milestones (Siva Chittor).
Key Takeaway
Sai Life Sciences delivered a robust Q3 FY26 with revenue growing 27% YoY to ₹556 crores and EBITDA margins expanding to 34%, aided by a ₹16 crore provision reversal and significant operating leverage on employee costs (450 bps benefit). The CDMO segment remains the primary engine, contributing 65% of revenue, bolstered by the addition of 7 late-phase and commercial molecules during the first nine months of the fiscal year. Strategically, the company is pivoting toward complex modalities including ADCs, Peptides, and Animal Health, with a massive 70% capacity expansion at Bidar and a new Hyderabad R&D site (Unit 8) on track for FY26-27. Management has guided for a sustainable 28-30% EBITDA margin range, choosing to prioritize market share gains and technological investments over further margin maximization. While the macro-environment for biotech funding remains a watch point, the company’s deep-rooted “development-plus-commercial” relationships with large pharma provide a clear growth trajectory into FY27.
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