Windlas Biotech Limited Q3 FY26 Earnings Call Summary

Summary

Windlas Biotech Limited - Q3 FY26 Earnings Call Summary Thursday, February 06, 2026 14:00 PM

Event Participants

Executives 2 Hitesh Windlass (Managing Director), Komal Gupta (CEO & CFO)

Analysts 8 Aniket (Cr Kothari Sons), Ankit Gupta (Bamboo Capital), Avnish Burman (Vaikarya Change LLP), Avnish Tiwari (Vaikarya Change LLP), Deepak Kumar (Kalyani Family Office), Dhwanil Desai (Turtle Capital), Gautam Gosar (Monarch AIF), Kushal Goenka (Mangal Keshav), Sajal Kapoor (Antifragile Thinking)

Financials & KPIs

Geographic & Segment Commentary

• Generic Formulations CDMO: Grew 23% YoY in Q3 and 20% in 9M FY26. Growth was primarily volume-driven, supported by higher contributions from the injectable facility and the Plant 2 extension commissioned last year.
• Exports: Grew 36% YoY in Q3 and 29% in 9M FY26. Performance was driven by increased penetration in RoW markets, specifically Southeast Asia, CIS, and Africa, benefiting from long-term product registrations such as South African audit clearances.
• Trade Generics & Institutional (TGX): Grew 7% YoY in Q3 and 18% in 9M FY26. The Q3 slowdown was attributed to the lumpy nature of institutional/Jan Aushadhi orders and increased competitive intensity in the segment.

Company-Specific & Strategic Commentary

• Capacity Expansion: Plant 6 is nearing mechanical completion by end of FY26 with a capex of ₹50-60 crores. This facility is expected to bring total revenue capacity to ₹1,000 crores (excluding injectables) and will begin commercial operations in H1 FY27.
• Compliance & Quality: Management highlighted that the company undergoes 70-80 audits annually, positioning it to benefit from the mandatory Schedule-M implementation. The shift toward stricter regulation is expected to drive industry consolidation away from fragmented, non-compliant players.
• Employee Incentives: ESOPs were granted to approximately 100 key employees to ensure long-term retention. CFO clarified that ESOP accounting charges will not impact regular annual increments for the broader workforce of 1,100.
• Business Development Structure: The company has reorganized its BD teams horizontally to focus separately on existing client mining, new customer onboarding, and nurturing recently added accounts.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Segment Dynamics

• Question: What caused the slowdown in Trade Generics growth to 7%? (Sajal Kapoor)
• Answer: It is a combination of lumpy institutional business where tenders don’t always fall within the quarter, increased competition, and ground-level execution. (Hitesh Windlass)

Operational Expansion

• Question: When will Plant 6 start contributing to revenue? (Gautam Gosar)
• Answer: Mechanical completion is due by end of FY26. We expect commercialization in H1 FY27, though we may find ways to use some machinery for partial benefit earlier. (Komal Gupta/Hitesh Windlass)

Compliance Landscape

• Question: How is the Schedule-M implementation impacting the industry? (Vileh Rai)
• Answer: The regulator is serious with no further extensions. This is a textbook case for consolidation as smaller players lack the talent and systems to maintain compliance, benefiting established players like Windlas. (Hitesh Windlass)

Financial Strategy

• Question: Will the company take on debt for future growth? (Kushal Goenka)
• Answer: We prefer to be cash-rich but are not risk-averse. We would utilize debt for a strong strategic acquisition if the opportunity arises. (Komal Gupta)

Key Takeaway

Windlas Biotech delivered a steady Q3 FY26, achieving its 12th consecutive quarter of record revenue at ₹233 crores (+20% YoY), despite a slowdown in the Trade Generics segment. Growth was anchored by the CDMO vertical (+23%) and Exports (+36%), supported by recent capacity additions in injectables and Plant 2. Strategically, the company is nearing the mechanical completion of Plant 6, which will expand its revenue ceiling to ₹1,100 crores by FY27. While reported margins were impacted by non-cash ESOP expenses, adjusted EBITDA remained healthy at 13.6%. Management remains focused on leveraging industry consolidation triggered by New Schedule-M compliance and deepening existing client relationships. Investors should monitor the ramp-up of Plant 6 and the recovery of the Trade Generics vertical, as the company navigates a transition from its “learning phase” to a high-capacity execution model.