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Eris Lifesciences Ltd
Earnings Call Analysis
Q1-2025 Analysis
Eris Lifesciences Ltd
Eris Lifesciences Limited reported a consolidated revenue of INR 720 crores for Q1 FY '25, reflecting a remarkable 54% growth year-over-year. This impressive performance is primarily attributed to the successful integration of Biocon acquisitions, which have propelled the company's position in the market substantially.
The company's EBITDA also showed substantial growth, reaching INR 250 crores, which represents a 47% increase compared to the previous year. The overall EBITDA margin for the quarter was reported at 35%, although this value is down slightly due to a change in product mix and fixed costs. Nonetheless, the firm is setting its sights on an EBITDA margin near 36% for the fiscal year.
Since acquiring different segments of the Biocon business, Eris has swiftly integrated these new assets and reported strong early performance. The Biocon 1 segment, focused on dermatology and nephrology, has shown a remarkable Q1 revenue growth of 16%. Meanwhile, the Biocon 2 sector, which includes insulin and oncology products, has experienced a promising 13% rise.
Looking ahead, Eris projects revenue growth of 25% in the Biocon segment for FY '25. For its base business, the company anticipates organic revenue growth between 12% and 14%, with an estimated EBITDA margin of 37%. Specific revenue targets include INR 125 crore for Biocon 1, with expected margins rising significantly from the acquisition level.
Eris has successfully shifted its operations from a traditional specialty model to a more advanced specialty and super specialty framework. This shift allows it to capitalize on high-demand segments like oncology, critical care, and insulin, which are seeing substantial volume growth. Consequently, the firm is positioning itself amongst the top 20 companies in the Indian Pharmaceutical Market (IPM).
Eris reported a gross margin of 75% for Q1, even with a slight decline attributed to product mix changes. However, management expressed optimism for a margin rebound, supported by efficiency gains and cost synergies from new integrations. Specifically, the company expects to see continued improvements in the margins due to operational efficiencies and effective cost management.
Net debt stood at over INR 2,700 crores at the end of June. The company plans to reduce its debt-to-EBITDA ratio to less than 2x within 18 months, with targeted debt levels of around INR 2,600 crores by FY '25, and reaching approximately INR 2,000 crores two years thereafter. For Q1, cash flow from operations was a strong 70% of EBITDA, reflecting healthy operational performance.
With plans to invest INR 200 crores over the next two fiscal years to support expansion into biosimilars, Eris is aggressively pursuing growth. Meanwhile, new product launches are set to bolster future revenues, particularly in the insulin segment, which is projected to reach INR 340-350 crores this year.
Overall, the earnings call reveals a company on a robust growth trajectory, backed by successful integration of acquisitions and strong product lines in high-demand areas. With solid guidance on revenue growth and margin expansion, combined with prudent debt management strategies, Eris Lifesciences presents an attractive opportunity for investors seeking exposure in the burgeoning pharmaceutical sector.
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Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Earnings Conference Call of Eris Lifesciences Limited. We have with us on the call today Mr. Amit Bakshi, Chairman and Managing Director; Mr. V. Krishnakumar, Chief Operating Officer and Executive Director; Mr. Sachin Shah, Chief Financial Officer; and Ms. Kruti Raval, Head, Investor Relations. [Operator Instructions] Please note, this call is being recorded.
I now hand the conference over to Mr. V Krishnakumar, Chief Operating Officer and Executive Director of the company. Thank you, and over to you, sir.
Good evening, everybody, and welcome to our quarter 1 conference call. So before we dive into the details, it's probably useful to take a couple of minutes to articulate how we think about our business, how the business is structured. There's been a lot of change in the last few months. This also gives you a sense of how this presentation is organized. So we have 2 business units, strategic business units. One is domestic Branded Formulations, DBF which accounted for 90% of our Q1 revenue. And then we have Swiss Parenterals, which is our export-focused business, which accounts for 10% of Q1 revenue. Now within domestic Branded Formulations, we are calling out 2 separate pieces, the base business and the Biocon business.
So the base business consists of everything that's been amalgamated including all the derma piece and everything, which is fully integrated part of Eris. And the Biocon business, which is again being structured into Biocon 1 and Biocon 2. So Biocon 1 is the piece that we acquired in November '23, and Biocon 2 is the portion that was acquired most recently in early April. So we are calling out these various segments and this presentation, we're giving you a lot of color about how the Biocon first piece is done in Q1 how the Biocon 2 piece has done in Q1, and we are also giving you a sense of how we expect these segments to perform through the year.
So it's probably useful to let you know at this stage that now we will revisit these pieces in Q4. So once we set out a guidance on how we expect them to perform, we'll come back to you in Q4 and tell you that how they have performed vis-a-vis expectations, but we won't necessarily be calling out this level of detail on these pieces every quarter. So with that context, let's move ahead. We start with the base business. So happy to share with you that Eris now ranks among the top 20 companies in the market. So just as a reminder, we went public in 2017. And at that time, we were ranked 29. So the company has gained 9 ranks since the IPO.
Today, we have 5 brands with more than INR 100 crores of revenue, this includes Basalog and Insugen, and we have 12 brands with revenues of INR 50 crores to INR 100 crores. In terms of quarter 1, as per the AWACS report, the covered market for us grew at 8.1%, and we beat the covered market by 460 bps. So 12.7% is where we landed for Q1 and 4 out of 6 therapies saw market-beating growth.
Oral antidiabetes market share inching towards 6% and very good growth in all our big brands and also in terms of new product launch and scale-up, we ranked #3 in the market in terms of count and value for new products.
Moving on to the financial highlights for the base business. We had an organic revenue growth of 10% in quarter 1. The gross margin in quarter 1 was 86%, which is up by nearly 300 basis points on a year-on-year basis. The EBITDA margin for Q1 was at 39%, which is up by 185 bps on a year-on-year basis. This was again due to a mix of productivity gain, gross margin improvement and better fixed cost leverage. And it's also worthy calling out that our derma portfolio gross margin was up 100 bps in 80%. You might recall that we told you that we started manufacturing the derma products in-house from January. So this is some of that getting reflected and fixed cost as a percentage of revenue are down by 97 bps year-on-year.
So in terms of guidance for the year, we are looking at an organic revenue growth of 12% to 14% with an EBITDA margin of 37%. This is for the base business. Now moving to the Biocon 1 business segment. So very strong start to business integration. This is a portfolio that we have acquired in November. So dermatology and nephrology, it's been about 6 to 7 months since acquisition. This portfolio clogged the Q1 revenue growth of 16% with a 40% growth being seen in the top 7 power brands in both derma and nephro. The piece has a Q1 YPM of close to INR 7.5 lakhs, the teams are settled down. They are all well integrated. We augmented the derma team to around 80 reps. The gross margin for this piece has improved by 1,500 basis points in quarter 1.
So you might recall that at the time of acquiring, we had a 50% GC, which is now at 65%, and we expect further upside. The Q1 EBITDA margin for this piece was at 39% versus 19% at the time of acquisition. So again, a 2,000 bps gain in just 6 to 7 months from acquisition. In terms of guidance for the year, INR 125 crore revenue, which is a 25% growth on the acquired base with an EBITDA margin of 36%, which is up by 1,700 bps from the acquired base.
Moving forward to the second Biocon piece, which was acquired in early April. So this piece has insulin oncology and critical care. Again, Integrated well ahead of schedule. We saw a 13% revenue growth in quarter 1 with a YPM of close to INR 8 lakhs. Basalog and Insugen very strong early traction, 2 more 100 crore brands in the [indiscernible] . Onco critical care, we have lined up a lot of new product launches. Swiss is manufacturing a good portion of the critical care portfolio. In terms of gross margin and EBITDA margin, this represents what we acquired the business at. So 40% gross margin and 90% EBITDA margin is what we came with and that is where it is. And we expect a further upside of up to 1,000 bps in gross margin driven by sourcing initiatives. And in tandem with that, an expected improvement in EBITDA margin as well.
In terms of outlook for the year, we are looking at Basalog and Insugen to do a combined revenue of INR 280 crores, which represents a 40% growth over the acquired base. So if I add the Xsulin and Xglar, which are the homegrown insulin products, our insulin franchise for this year should land at about INR 340 crores to INR 350 crores.
The Biocon 2 segment, we expect a revenue of around INR 460 crores, which represents a 28% growth on the acquired base with an EBITDA margin of 28%, which is an improvement of 900 bps from the acquired base.
So this is the domestic Branded Formulations Q1 financial summary. All 3 pieces put together, revenue of INR 632 crores for the quarter, which is close to a 40% growth. EBITDA of INR 225 crores for the quarter. The EBITDA margin, 36% for the quarter, but 39%, excluding Biocon and a YPM of close to INR 5.7 lakhs. So dissecting this further, we have given you the P&L for the DBM segment. Similar set of numbers, but I think the thing that really stands out here, which we are happy to share is the fixed cost synergies from integration have really started coming in. So we saw a gross margin reduction of close to 600 bps in Q1 because of change in product mix, Biocon coming in, but we also saw a reduction of around 450 bps in fixed cost as a percentage of sales. So leading to a Q1 EBITDA margin dip of around 140 bps. And in terms of guidance for the year, we're looking at a revenue of INR 2,600-plus crores, with an EBITDA margin of 36%. And this is something we would like to call out that the way the business has evolved, it's evolved from a specialty business to a specialty plus super specialty business.
So the addition of segments like critical care, oncology and nephrology. These are super specialty segments, which are still growing at 10% plus volume growth per annum. And we're also happy about the fact that despite nearly doubling, this is still like a chronic, subchronic business for more than 85% of the turnover. So this is something that results in significant headroom for growth going forward.
Moving on to Swiss Parenterals, Q1 financials, revenue of INR 73 crores with an EBITDA of INR 26 crores. In terms of guidance for the year, we are looking at a revenue of INR 330 crores with an EBITDA of INR 115 crores, which represents a top line growth of around 14% and an EBITDA growth of around 30%. A lot of building blocks being put in place, new regulatory inspections and qualifications, expanding the product pipeline. They have an order book of nearly INR 130 crores for delivery. So looking good as of now. This is the consolidated P&L for the quarter. Total revenue of INR 720 crores, which represents a 54% growth. Again, Q1 margin movement also reflects the fixed cost synergies.
So at a gross margin level, we are at 75%, which is down more than 800 bps, again due to business mix and product mix. But the EBITDA margin level, we are down only 164 bps because fixed expenses as a percentage of revenue are down by more than 660 bps. Q1 EBITDA of INR 250 crores, consolidated, which represents a growth of 47%. So this is the full impact of all amount and depre and finance costs and book tax rate has increased as guided. We continue to pay cash tax at 17%.
So the Q1 PAT of INR 89 crores reflects all this impact. Cash flow from operations for the quarter was at 70% of EBITDA. At a cash EPS level, we saw a growth of 10% and net debt as of 30th June stood at INR 2,700 plus crores. We'd like to share an update in terms of an acquisition of an approved LLS site -- LLS loan license manufacturing. So this was a -- this is a site in [ Opal ] which was built to Biocon quality specs, very, very good quality fill-finish facility for insulins and designed as a broad spectrum biosimilar fill-finish facility to handle a wide range of biosimilar products. They have capacity, which is rolling for liquid vials, and we will also look to add cartridges and prefilled syringes and it has attractive benefits under Section 115BAB.
Now if you look at the thesis for this, I think we would look at it from 2 perspectives. One is that this site is a key stepping stone to realize our biotech vision. So in a lot of ways, we are looking at the site to be a biotech hub with injectable manufacturing facility across a wide range of presentations, which is wide cartridges and PFS and across a wide range of product categories, insulins, analogues, GLP-1s, MABs and so on.
And the second point is this site really enables us to get GLP ready. Because an approved fill/finish site is the most critical component of the last mile in building competitive advantage for a scalable and profitable GLP play. So I think in the GLP business, I think having a cartridge filling line of this caliber is probably the most valuable asset that 1 can have today. So we have a lot of plans for the site in terms of where it can potentially take us. And in terms of the whole buy versus build rationale, we see that this site has reduced at least 2 years for us in terms of time to market compared to the greenfield operation and we will immediately realize a margin improvement in our insulin segment, which has significant scale now, INR 340 crores to INR 350 crores is the outlook we have given for the year. And we see that as soon as we move to the site, we will see a margin bump of at least 1,000 bps.
So this really sets the stage for our large molecules play. Putting it all together, what does the year look like? So we're looking at a DBF revenue of INR 2,600 crores with EBITDA margin of 36%. And this is how it breaks up between the organic piece and Biocom. At a consol level, we are looking at a revenue of INR 3,000-plus crores with an EBITDA margin of 35%. And in terms of expenditure for the year, the site acquisition is INR 105 crores, and we envisage an additional CapEx of INR 100 crores to INR 120 crores on the various biotech segments that we spoke about. And these factors and everything has laid out in terms of depre, amort, interest costs, cash tax rate and operating cash flow ratio.
We remain committed to rebuilding balance sheet strength. So this is the balance sheet strategy that we had shared with you at the end of the last financial year that we would want to reduce the debt-to-EBITDA ratio to less than 2x in 18 months. So we are on track. So by the end of fiscal '25, net debt of INR 2,600 crores or slightly below. And by fiscal '26, net debt of around INR 2,000 crores. That's where we see us going.
So in closing, calling out our 5 strategic priorities for the year, the base business delivered the organic growth with the EBITDA margin of 35% -- 37%. In the Biocon piece, we are looking at an overall revenue growth of 27% with a margin expansion of close to 1,000 bps. Swiss Parenterals deliver the financials, INR 330 crores revenue with a 35% EBITDA margin, but more importantly, build the base for accelerated growth in export markets as well as oral solid exports. Rebuild balance sheet strength as per guidance and really take tangible next steps in terms of our large molecule play, which is both in terms of manufacturing capability and product basket. So that brings us to the end of this presentation. Thank you.
[Operator Instructions] We'll take a first question from Dhruv Maheshwari from Perpetuity Ventures. LLP.
I have a few questions. The first 1 is regarding the cardiac portfolio, which has been constantly underperforming the YPM in the last few years. This trend has also continued for this year as well. So if you can highlight the reason behind it, what are the initiatives being taken to get this segment back on track? And my numbers are according to the IQVIA database.
Yes. So -- you are right. Even in AWAC, the data kind of looks similar. But if I remember directly June, we have come very close to the market. We were still behind, but I think 100, 150 basis. So what's the basic reason if you go to the detailed [indiscernible] , this was [indiscernible], which we launched, which actually got to a [ INR 5 crore ] monthly run rate and when the [indiscernible] Utilization happened and we actually ran short of stocks. So we couldn't service the market 3, 4 months before being [indiscernible] and that is the loss which we created and which we have not been able to kind of at that. So primarily coming from 1 brand, which is Zayo, which reflection of Zayo is more like INR 1.5 crores per month. From a peak of INR [ 50 ] crores. Would that something which is us. But I am quite okay to say that from next quarter onwards, we would be hitting the market numbers and third quarter onwards, you will see us changing ahead of it, primarily 2 reasons. One is, we have got 2 of [indiscernible] products which have been approved, which you remember, we do our pharma R&D basket.
One is Dapagliflozin and metoprolol, which has already been approved, we will be launching next month. And the second is Dapagliflozin with [indiscernible] which also has been improved. We should be launching it in the next month or the next month. So Q2, we'll see 2 solid launches in cardiology, especially heart figure. So [indiscernible]
Got it. The next one is regarding the D&A. So during Q4 FY '24, the guidance was about INR 285 crores for FY '25 which has been revised to [ INR 305 crores ] So what makes us the majority of the difference between these 2 numbers?
Dhruv, you're not clear what the question is about.
Depreciation.
Depreciation, yes. So it was revised from 285 to 305 within this presentation.
Dhruv what we put out in Q4 were estimates. Now what we have taken the actual depre and amort that has come in Q1. We have just annualized it and giving you the kind of what the year is looking like. So it was basically an estimate versus the actual accrual. Nothing major.
[Operator Instructions] The next question is from Kunal Dhamesha from Macquarie.
The first 1 on the -- I mean, if you can help me understand the clean base of FY '24 for our base business in terms of revenue and EBITDA on which we have provided guidance of revenue growth of 12% to 14% and EBITDA margin of 37% [indiscernible].
Kunal the clean base is around [ INR 1,850 crores ].
[ INR 1,850 crores ] revenue and EBITDA?
The base business EBITDA that we've given you, which was 37% last year [indiscernible] of 47% arch.
So 37% margins stay the same.
It's there on slide 7, base business EBITA of 37%. That's our reference point.
Which is Q1 or he's asking the [indiscernible]
This is Q1 '24, right? I'm asking about the full year FY '24.
Kunal let us kind of get this number and give it to you. It will be in that [indiscernible].
But if you're looking at the base point level kind of clarity, we can get back to you, the revenues in the range of [ INR 1,850 crores ].
No, I'm just asking from a perspective as to what kind of EBITDA margin improvement for the base business that we are baking in on a year-on-year basis? And then what would drive that? Since we are expecting strong growth of 12% to 14%, I naturally assume that there will be some gains on productivity, et cetera, or the base business, right? So then that should also translate to the improvement in margins?
Yes. Very fair. I think we called out 37% margin for the base business in FY '25. So we are saying what is the equivalent number in FY '24. So we'll come back to you with the exact number. Growth will be, I think margin expansion will be a combination of the 3 levers that we called out in Q1, which is productivity gains, gross margin and OpEx [indiscernible] synergies.
Yes, Kunal you're right. It should happen, but we are at this point of time, we are happy to call it at 37%. We want to see how it can kind of [indiscernible]
And this [ INR 1,850 crores ] , sorry to half on this [indiscernible] Or anything that we have bought 1 year before, right? Like.
Yes. It includes the [indiscernible] But it does not include in the [indiscernible]
[indiscernible] and the rental revenue for this quarter.
I'm sorry, your voice is breaking, sir.
Is it clear now?
Yes. Go ahead, please.
So I'm saying that the Swiss Parenterals revenue, is it all exports in this quarter?
Yes, Kunal, whatever we have [indiscernible] You INR 73 crores, that's all [ expected ]
Okay. And have we -- and when we say that we have started some critical care products, et cetera, that would have been included in our DBF revenue, domestic business revenue.
Yes. So the sale is included in domestic branded formulations and any intercompany is eliminated when we do the consolidation. So whatever you see, INR 73 crores in [indiscernible] Revenue.
Kunal, Sachin here the standalone revenue of swiss is I[ NR 92 crores. ] But what we have shown is that it is after a limitation of intracompany transaction. So there's only 1 counting, which is sold powered by. [indiscernible] so Swiss sells to [indiscernible] Forward.
In domestic business. And in the international business, the same whatever Swiss had a business model that continues.
Yes.
Okay. Okay. Perfect. And at the end of quarter 1, what would have been our MR strength and how should we look at over this year or maybe coming 1 or 2 years?
Kunal, our DBF MR strength is close to [ INR 3,700 crores ] plus now. So more than 560 reps added through the 2 Biocon deals. So that's where we stand.
We don't have any plans Kunal as of now to increase the head count for this year. And next year, of course, there will be planned. This year, we are looking to consolidate.
Sure, sure. And this includes first-line business managers?
No. These are representatives.
Okay. Okay. So shall I add like 10% more to that?
That number will be bigger Kunal we'll get Q2. But generally, it's because of a YPM so we generally get the [indiscernible]
But my understanding is [ YBM ] is also like generally, they are on the field only, right?
Yes, of course, on the field. The other 1 is also in the field, but bit YBM is derived from the representatives. So the general [indiscernible] in MR numbers.
We have a next question from Kunal Randeria from Axis Capital.
So my first question was the acquisition that you made. The reason -- see, I think the entire reason for doing this JV with MJ Biopharm was to expand into insulins and GLP-1s, where they would be responsible for supplying the products and then factoring things like that. So just wondering what prompted you to acquire this asset now?
Mr. Randeria, can you self mute whenever you're not asking questions. Thank you. Sir, please go ahead.
So, look, what you are saying is absolutely right, the scale which we are now acquiring in insulin. The scale is such that it might not -- we will not be able to service that from MJ. We are looking at some INR 350 crores, INR 360 crores by the end of this year, and the growth is quite good. So therefore, we had to have a second parallel site available for us. Otherwise also, this business, as KK told you, we are looking for gross margin improvement and more control over the entire supply chain. So this was the reason primarily because the value and the volumes were beyond MJ kind of supply. So that is the primary reason.
And just secondly, on Biocon 2, margins today are like 19%. I mean can they go back to company level kind of margins in the next couple of years?
So we are giving the guidance of 28% for the Biocon 2 piece and overall 33% for both Biocon together.
What I meant was maybe the next maybe next 2 or 3 years? Can they go to like mid-30s, late 30s?
But the way our run start functioning completely, we should be there.
Got it. So which means that in the next couple of years, we should expect the consolidated margins to be somewhere in late 30s.
So margin even this year would be increased 30 days. But if this happens, it has a chance to kind of beat that.
[Operator Instructions] The next question is from Bino Pathiparampil from Elara Capital.
Just second clarification on the tax rate. So the cash tax rate you have mentioned is 17%. The reported rate for the quarter was 22.5% roughly. Will that be the rate for the full year as well?
Yes, we expect that to be around 25% tax rate. The annual tax.
Annualized. Great. Thank you.
So what will happen is along we were 80% manufacturing ourselves. And now we are only doing 60% in-house. 40% has gone out and then the major region is the Biocon piece. So when we build our plan, this is also under the same. What is it called Kruti?
Section 115BAB.
Yes. So this is also 115BAB. So once the transfer happens, we'll get 2 kind of runways one is the margin expansion and the result tax benefit. So going forward, we want to come back to that 80%, and that's where the work is going on.
Understood. So when you transfer -- when you shift manufacturing to that plant, the reported tax rate will come back to 17%, 18%.
Yes, at some amount of time, yes. If we're able to achieve that 80%. This is work in progress. But incrementally, you will see that more and more things are coming up -- coming inside.
[Operator Instructions] We'll take the next question from Vijay Karpe from Shriram Life.
I just have 1 question. So I appreciate the rationale which has been given for the latest acquisition. But as per the management commentary, which we had given in the fourth quarter, we had said that there will be no more acquisitions and it will be all about putting the head down and focusing on execution. So -- can we expect some more acquisitions? Or would this be the last acquisition?
No, was, if you look at our commentary, we have put in INR 70 crores, INR 80 crores for the Greenfield project. So actually, nothing has changed. That INR 70 crores, INR 80 crores of CapEx has moved here. So the plan has not changed. The only thing which has changed is from a greenfield to brownfield. Otherwise, it remains the same. And I reiterate that it again, heads down execution, no acquisition unless until we -- our balance sheet comes back in that order.
We'll take a question from Kunal Dhamesha from Macquarie.
So 1 on the Ahmedabad plant. I think last quarter, we had said that there's some drag of about INR 30 crores on EBITDA. So what's the current drag on the EBITDA from the plant? And what is the current utilization?
So Kunal, the plant is ramping up very well as we see. So just to give you a sense, this year, we are looking at a 70% increase in throughput from the plant, but the operating cost increase is 3% over last year. So the unabsorbed fixed costs, which we had called out last year, I think it was INR 17 crores, INR 18 crores, if I recall. So that will be substantially lower. I mean quarter 4, it should go down to zero, but I think at an annual level, we'll probably be down to less than INR 5 crores.
So this INR 30 crore number that I have was for full year.
Yes, that was a combination of other factors also. We happy to get on to a separate call and go through that, but there were other items in [indiscernible]
Yes. I think Kunal it had some acquisition cost. It has some [indiscernible] Cost.
And had some onetime cost which came into Q4, which was a significant number.
Sure. Sure. And Sir, that is fine. And on this debt reduction, we are expecting only around INR 400 crore debt reduction and what we should be generating OCF for at least around INR 700 crores this year?
Yes, yes. Yes. So this year, OCF, yes, you are right, and then we have to service the interest out of that, which is close to INR 240 crores. And then if you have the tables which we've called out between the acquisition and the organic [ segment ] . So net of that, whatever is there, we'll go towards the servicing, and that should get us to that INR 2,600 or slightly lower kind of a number by the end of the year.
And this beyond acquisition CapEx, is it just the maintenance or addition of line or.
Yes. So we called out all the biotechnology areas. So I think insulins is 1 piece, which is this acquisition and then we have MABs and [ hormones ] -- as we have called out, we would like to really build a strong bucket to get into a biotechnology play. So this is all going towards that.
Nothing maintenance. This is all creating new capability.
Will finish, right?
Yes, -- there's no DSL as now -- it's all [indiscernible]
So how many lines we are putting.
In which plant?
Like the entire INR 120 crore, which we are using for our internal CapEx consumption, how many manufacturing lines will we have?
So Kunal, the final line is something which is not -- which is only incremental cost. We have to actually make provision for lines. So we are -- it depends upon how much sales we are anticipating. So for example, in insulin, we are putting 4 plus 2, 4 for the vials and 2 for the cartridges. The hormone plant is very, very early days. We are just kind of digging it up. So for MABs, we will be putting only 2 vials. So depending upon that, but important thing from my side is, Kunal, you look at the way the product mix is happening. We are shifting from a specialty to a little bit of a super specialty also. And with this product, and we are becoming a little product company [ and a little ] Biotech company. And with all this coming through, we will be participating in what some people call high resistance or whatever.
High entry barriers.
High entry barrier businesses or low competition businesses or the future businesses. So that's the [indiscernible] Point. And we think that the [ Opal ] Facility gives us because I don't with KK when it says 2 years because getting the licenses, it still sometimes takes 1.5 years. So building plus the licenses and biotech licenses are a little bit time taking process in India. So in my view, we are we are better off at least 3 to 4 years.
Sure. So this is the CapEx for this year, this is not the CapEx for the overall project, like we continuing for next 2 to 3 years, right?
It will [indiscernible]
Because if you 6 lines, if you are even putting 6 lines plus hormone plus MAB, the CapEx would be much higher. That's what my sense is. I might be. [indiscernible]
Over FY '25 and FY '26, we called out a number of INR 200 crores. That is between [indiscernible] MABs and Hormones. It will be executed over FY '25 and '26 and the number we have called out is INR 200 crores.
Okay. That's perfect. And last 1 on the tax rate. We expect the tax rate -- effective tax rate to go from 25% to 18% as we ramp up from the new plant. What's the time line? And how should we see the progression? Is it gradual step up like step down in a way in terms of EPS.
Kunal, so gradually from 25%. I think in next year, we should be 23%. That's how it and then 21%. By that time, I think 2, 3 years, it will take [indiscernible] to finish our MAB. So once we finish our [ MAB ] that is set in [indiscernible] books, so then we plan to go to 18%. That's how we reach there. It's our book tax rate. Our cash tax will already be 17%.
We'll take the next question from Tushar Manudhane from Motilal Oswal Financial Services.
Just on the side, this has been acquired. [indiscernible] Helps what's the gross block of the site?
Tushar the gross block is about INR 65 crores. The net block is about INR 56 crores.
And any particular reason like they got incorporated in 2020, I understand they would have also taken full year to the facility but approvals and all are still to take time. And for that matter, the sales is also yet to come. So anything you would like to highlight here?
Tushar, as far as we know, I mean, there was a date for the moon point was to get it to incorporate under the new law, which allows the 3% tax rate. So that's how it was [ imported ] after 2019 around that time. And they started the commercial manufacturing but before March '24. So that was the basic idea behind that.
Okay. And just on the coming like all approvals in place for insulin manufacturing. So you mean which -- is it like more of an India.
Yes, India. Tushar only India and only vials have license for the vials line, the cartridges line we don't have the licenses, and the line has also to be put up.
So these -- at least for the India market, like at least starting from vials, cartridges and PFS to start the commercial production in first place. So what is the kind of time line one should think of.
Tushar I think quarter 3, we should be there. Quarter 3, we should start the manufacturing of vials first, and the cartridges would take another 1 to 1.5 years, depending upon how on we are going to get the validation card.
And just lastly, on this particular aspect, how much subsequent further investment will be required in the form of CapEx.
And this in this plant for insulin fees alone we require around [ INR 20 crores INR 25 crores ]. And once we start the MAB lines, it will be an addition.
Which is a part of your -- the CapEx which are already [indiscernible] This is not overall more the CapEx.
Yes.
And broadly, how much OpEx will be there for this facility? Because I assume currently, it's already at least operational is not from a compliance onward.
We do not like to give OpEx number, start the operation first, and then we'll be in a better position to tell you about the OpEx.
And just on my side, maybe you [indiscernible]
We are already at INR 250 crores EBITDA as we stand on [indiscernible] -- and it is a business [indiscernible]
You can ask your question again, please?
Yes. What is trying to ask is that we are already at INR 250 crores EBITDA for first quarter FY '25 and the guidance indicates that we would then [indiscernible] By [ INR 1,050 crores ]. Just like the kind of improvement in the operations of both base business as well as acquired units. Isn't that conservative -- we are already at that number more or less plus/minus INR 10, INR 12 crores as we stand today.
Tushar, I think from a guidance point of view, we'll stick to [ INR 1,050 crores ]. But we will be happy, very happy if it goes up. So the efforts are on the same side. But from a guidance point of view, we would like to stick there.
[Operator Instructions] The next question is from Prashant Nair from AMBIT Capital.
Amit, in the past, you have mentioned that generally, you would like to keep your EBITDA margins in that 35% to 36% range and look for growth, reinvest anything over and above that for growth -- now your margins seem to be -- given your guidance tracking a bit above those levels. So is there any change either in thinking or in the way the business has shaped up? Where do you see kind of peak EBITDA margins settling say, if you take the next 3, 5 years as timeframe.
Prashant you are right. Look, we also had a little bit of surprise because we haven't done a business which gives 60% gross margins and 40% EBITDA. So there was a little bit of uncertainty around that piece. But having spent some time with business, the productivities are very nice. And there is a tailwind in these businesses. So I kind of will give a way that now I can see a chance of margins getting better with all that, which is planned. So certainly, next year, it should be better if great changes. So now I can tell you that 35% in the next 2, 3 years might not be the case, it should [indiscernible]
[Operator Instructions] We have a question from Kunal Dhamesha from Macquarie.
One question for Amit. Now we have from [indiscernible] so now you have these pieces in place. You have been with this [indiscernible] by '25, what's the kind of growth profile of the entire consolidated business that you are looking at.
[indiscernible] I'm saying that beyond FY '25, the growth profile of the business. [indiscernible]
Sorry. Mr. Dhamesha I request you to repeat the entire question again, please.
Sure. I'm saying that you have acquired a lot of these businesses and [indiscernible] So beyond FY '25, what's the growth profile of this entire consolidated business look like? -- and the investments, which would be required to [indiscernible]
And -- so how do I answer this? So look, 1 thing which at this point of time looks clear is that the insulin piece will see a growth going forward. And we are also investing in more insulins. We are right now covering only 2 pieces. If everything goes well, we should be launching a GNP now and then there are other insulins, which we are investing in. We are not presenting as part. We are not presenting as part mix. We have not presented in [indiscernible] , we are not present in [indiscernible] , which is expiring in '26, if I'm not wrong. So the insulin piece seems to have a lot of headroom from a growing perspective, are both from the existing products.
And there is a possible new product pipeline, which is also very exciting. So we continue to invest that, invest in them, while we talk, and we will keep on informing you at the right time that how is it, how is moving ahead. So that is 1 piece, which I am quite reasonably confident. The other be piece which is oncology and critical care. So critical care, again, the injectable is a large business. We have promised you will be INR 100 crores this year, which we will definitely be.
But again, there is a lot of scope there. So 1 step things start moving, that is 1 business which can also give us a better growth. Now simultaneously Kunal the other as I alluded to, for the [ cardiovascular ], there are new products also coming in. So all the investment which we made last year in the R&D pipeline, those are built in the form of product, they will also show up. So certainly, there is some kind of a chip in terms of new product in new products and growth. So this piece looks to me is something which you can grow beyond that routine 10%, 12%. So hopefully, we should be in a trajectory for a couple of years, it should be significantly beating the market.
Okay. So a follow-up question for me when I look at [indiscernible]
I'm sorry lost you again.
Is it better now?
Yes.
Yes. So I'm saying that when we look at [indiscernible]
I think your network signal is the net connectivity is little poor you are sounding muffled. We can't hear you.
Why do you get on the call [indiscernible]
Yes. Can we take the next question? I can connect with Kunal later.
We'll take the next from Rahul Agrawal from Himalaya Investment Advisors.
Congratulations on a very good set of numbers with a sharp turnaround in the Biocon businesses. My question is a [indiscernible] Of what the previous participant was asking. From here on, if you look at the next 3 years, how do you see both growth and margins turning out? And if you can build up a little bit more on the numbers, like you said, I mean the base may grow at 10%, 12%. But what rate would you expect insulin grow at and combining it all today about where do you think can we go on the margins?
I mean we are coming back to the same point. And look, largely what I can say -- what I can tell you that we are better prepared for growth because of the organization moving from the specialty to super specialty. So we are 100% we are better prepared for a better growth at the same point of time, we are better prepared for margin expansion also. But what we finance for the next 3 years is something which is a little difficult for us at this point right -- but what we can tell you the macros and the way this -- the second set of diversification has happened, clearly, kind of you to put some there. So then the execution happens if everything happened. So we are there, but quantification will be a little different thing.
Understood. And on the Swiss Parenterals business, when you had done the acquisition, we had said that we may also look at starting with branded formulation sales in emerging markets. Have we made up our mind around that? Is that something we want to pursue? And second, how do you see Swiss Parenterals shaping up over the next few years?
Okay, answering the first question, which is an important thing. So there was a little bit of change in the plan. First, we thought that we will put in the injectable be directly into Swiss. And we will run it from there. But then there were some reasons which we couldn't do this. So we achieved more market in the year and itself. So that's why you see it is reflecting herein. So they are -- Swiss continuously support the domestic piece, but in an indirect way, not in a direct way. From an export piece -- there are a lot of stuff which is happening. At this point of time, we have given you the guidance for this year. And I hope you appreciate the fact from export piece needs a little bit more time to kind of turn around because of regulatory things. But if you look at the kind of approvals which we are seeking in this year, we are quite significant, especially the Brazil piece and the Switzerland piece. So we would need some more timing do you get back to you on that. For this year, our guidance will be -- I mean more or less should be impact.
[Operator Instructions] We'll take a question from Prashant Nair from AMBIT Capital.
So this is just -- this is a repeat probably. Sachin, I missed the comment you made about your tax rate and how it could move over the next few years? Can you just repeat that?
So Prashant, I mean, we expect to be around 25% at a consol level this year. And with products moving in the [indiscernible] plant and also the new acquisition that we had, actually, I think every year, it should go down by 2%, 2%. And finally, when we -- because we also have a [indiscernible] in is, right? So we have to consume that also in the next 3, 4 years. By that time, I think we should be around 18%, 19%. That's where we reach.
Ladies and gentlemen, we'll take that as a last question for today. I now hand the conference over to Mr. V. Krishnakumar for closing comments. Over to you, sir.
Thank you all for your presence today. In summary, consolidated revenue for the quarter was INR 720 crores, which represents 54% growth. Consolidated EBITDA for the quarter was at INR 250 crores, which represents growth of 47%. We've integrated the Biocon acquisitions well ahead of schedule and started realizing significant synergies in our flagship domestic branded business, which accounts for 90% of our revenue. We expect to deliver a growth of over 25% in the Biocon segment in FY '25 with a significant jump in operating margins.
Our business model has evolved from a specialty model to a specialty plus super specialty model with additional segments like oncology, critical care and nephrology. As a top 20 company in the IPM, we are taking tangible initiatives to step up our game in the biotech space as well. Thank you, and have a good evening.
Thank you very much, sir. Thank you, members of the management. Ladies and gentlemen, on behalf of Eris Lifesciences Limited, that concludes this conference. Thank you for joining us, and you may now exit the meeting.