Neuland Laboratories Ltd

NSE:NEULANDLAB

Earnings Call Analysis

Neuland Labs Reports Strong Growth Driven by CMS Business

Neuland Labs saw a solid Q1 FY'25 with total income rising by 21.7% to INR 44.4 crores, driven predominantly by its CMS business. EBITDA grew to INR 18.6 crores, with a margin expansion to 28.9%. Gross margin reached 56.1%, slightly up from the previous year. Despite an exceptional item of INR 20.6 crores, profit after tax jumped to INR 98.3 crores. The company repaid INR 8.7 crores in debt and generated INR 50.9 crores in free cash flow. Neuland Labs plans for moderate growth and normalized margins in FY'25 but anticipates stronger momentum in FY'26.

Strong Financial Performance

Neuland Laboratories has reported strong financial results for Q1 FY '25, with total income rising by 21.7% to INR 44.4 crores compared to INR 36.5 crores in the same period last year. This growth was significantly driven by the Contract Manufacturing Services (CMS) segment, which saw a favourable response from market dynamics.

Profit Margins and Future Guidance

The company's EBITDA for the quarter was INR 18.6 crores, yielding a margin of 28.9%, reflecting an increase of 174 basis points year-over-year. Although there was a gross margin decrease to 56.1% from 58.8% in FY '24, the emphasis remains on optimizing costs and enhancing productivity. For FY '25, the management anticipates a year of moderate growth, reiterating that the current performance should not be used as an indicator for the full year’s outcome.

Cash Flow and Debt Management

Neuland generated a healthy free cash flow of INR 50.9 crores during the quarter, showcasing its ability to manage cash resources effectively. The company also managed to reduce its debt by INR 8.7 crores, resulting in a net negative debt position of INR 110.2 crores, which fortifies its financial stability.

Investment in Capital Expenditures

In light of ongoing expansion efforts, Neuland has invested INR 59.1 crores for capital expenditures during Q1 FY '25, focusing on augmenting production capabilities. The completion of new production facilities is on track for FY '25, with commercial production expected to start in the latter half of FY '26.

Business Model Transition

The company has transitioned its business model to a balanced mix of CMS and Generic APIs (GDS), enhancing its positioning as a player of note within the API market, which is over $120 billion. This shift is reflected in the growing demand from existing customers who are seeking to collaborate on multiple molecules, underscoring confidence in sustained revenue from the CMS segment.

Future Outlook and Potential Risks

While management exhibits cautious optimism for FY '26 onward, they foresee a 'normalization' of revenues, cautioning investors that double-digit growth rates from the past few years are not expected to continue. Factors that could impact future performance include fluctuations in raw material costs, changes in foreign exchange rates, and possible geopolitical tensions that could influence supply chain dynamics.

Long-term Strategies and Market Positioning

Neuland remains focused on enhancing its competitive edge through continuous improvements in R&D capabilities and operational efficiencies. The fruition of expected partnerships with biopharma clients, as they engage larger clientele looking to broaden their portfolios, is anticipated to strengthen Neuland’s market share significantly.

Investor Sentiment and Market Conditions

Despite the ever-present risks and challenges, Neuland is strategically positioned to leverage favourable market conditions. The management is judicious in the potential capacity expansions, ensuring that future increments will align with projected customer demand, fostering long-term growth and sustainability.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good evening, and welcome to the Neuland Laboratories Limited Q1 FY '25 Earnings Conference Call. As a reminder, all the participants will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ravi Udeshi from Ernst & Young. Thank you, and over to you, sir.

[Ravi Udeshi]

Thank you, Gia. Good evening, friends. We welcome you to the Q1 FY '25 Earnings Conference Call of Neuland Laboratories Limited. To take us through the results and to answer your questions, we have with us the top management from Neuland Laboratories, represented by Mr. Sucheth Davuluri, Vice Chairman and CEO; Mr. Saharsh Davuluri, Vice Chairman and Managing Director; Mr. Abhijit Majumdar, CFO; and Mr. Sajeev Emmanuel Medikonda, Head, Corporate Planning and Strategy.



We will start the call with a brief overview of the financials by Mr. Abhijit Majumdar and then Saharsh will give you broad highlights of the business trends and what are you seeing in the market? And post this, we will open up the call for the Q&A session. As usual, the standard safe harbor clause applies as we start the call.



With that said, I now hand over the floor to Abhijit. Over to you, Abhijit.

[Abhijit Majumdar, executive]

So thank you very much, Ravi. And good evening, and a warm welcome to each of you for joining our call. The financials are as follows for the quarter 1 of FY '25. Estimated total income of INR 44.4 crores against in quarter 1 versus INR 365 crores in the same period last year and increase of 21.7%. This has largely been driven by high growth in the CMS business.



However, I would like to point out that the inherit nature of our business is a reason on a quarter-to-quarter basis. And hence, this quarter is not an indication of the full year performance for FY '25.Our EBITDA, excluding exceptional items of INR 2.6 crores, excluding that [Technical difficulty] of INR 18.6 crores with a margin of 28.9%, an increase of 174 bps over Q1 FY '24. We continue to focus on productivity, which is leading through the financial revenues of our company.



Now coming to the specifics. Our gross margin for the quarter was 56.1% as compared to 55.2% in Q1 FY '23 and 58.8% in FY '24. This gross margin, as always, includes a cost pertaining to manufacturing and as attributable to the product. The profit after tax was INR 98.3 crores as compared to INR 62.2 crores in Q1 FY '24. This includes an exceptional item of INR 20.6 crores arising from the-- you can say, a surplus or investment property. The quarter EPS stands at INR 76.6 per share.



At the same time, we continue to focus on cash to optimize our working capital, which stands at 107 days sales, and thereby, we have generated a free cash flow in quarter 1 FY '25 of INR 50.9 crores. We also repaid somewhat of our debt of around INR 8.7 crores. Consequently, our net debt position, which is negative stands at INR 110.2 crores. While we continue to invest in upgrading our facilities, we have invested INR 59.1 crores in capital expense using Q1 FY '25. We continue to be mindful of balancing growth with profitability by continuously working on optimizing costs and processes, which will make us sustainable over a long time.



Now FY '25 is anticipated, as we have mentioned earlier, to be a year of consolidation, influence specific dynamics of our company in the life cycle of our products in GBS and CMS portfolios. The future investments that we will need will enable us as we proceed to meet our mid-range plan. And we will make this investment as and when we finalize includable opportunities on a risk return metrics. FY '25, as we have stated earlier, will be a year of normalized revenue as we will [Technical difficulty]. And we expect our businesses to once again be momentum from FY '26 based on our current visibility of our portfolio products. Overall, we continue to be cautiously optimistic of the future potential that our business goals.



With that, I would like to hand over the call to Mr. Saharsh for his remarks. Once again, thank you very much.

[Davuluri Rao, executive]

Thank you, Abhijit. Good evening, everyone. Welcome to the call. The performance that we witnessed over the last 7 quarters reflects the transition of our business model from being comprised predominantly of prime APIs to a healthy combination of CMS and GDS APIs. This transition has been driven by the commercialization of the last 2 years of certain molecules and also the ongoing improvement in R&D project management, operations and business-related initiatives. This progress is in line with our long-term strategy and is illustrative of the kind of business and the company you want to build.



Over many years, we've been consistently positioning Neuland as a pure-play API service provider with broad and capabilities, partnering with both innovators as well as generic pharmaceutical companies. I'm very pleased with the performance of Q1 FY '25, both in terms of revenue and profit. This was driven by commercial molecules in the CMS segment. But before elaborating more on this quarter, I'd like to reemphasize a few comments, I think some of which Abhijit has already made. One, the CMS business is lumpy in nature, and therefore, an annual progression is a better indicator than a quarterly progression.



Number two, as previously stated, we expect FY '25 to be a year of moderate growth and normalized margins and that outlook remains unchanged. Completion of additional manufacturing facilities in this year, coupled with anticipated commercial launch of more molecules, some on the CMS side, give us the confidence of achieving higher growth in FY '26 and beyond. We continue to see increasing interest in customers looking at Neuland as their CDMO partner.



In terms of the macro picture, we are yet to see significant impact of the of biotech act by way of active RFPs or others. But we believe that the environment is very favorable for us in the medium to long term. In terms of our biotech clients being acquired by big pharma, we see the continuity of customer engagement and are actually quite excited about future opportunities and possibilities.



Our business development team continues to identify the right opportunities in line with our long-term strategy. The CMS revenues of INR 235 crores were driven by molecules in the commercial segment. The associated drugs seem to be doing well in their end markets, and we expect to continue serving the customer as well.



On the GDS front, we continue to focus on developing new specialty products while continuing to optimize processes and increase market share for key commercial APIs. Some specialty APIs, which have done well for us this quarter include Dorzolamide and Donepezil. And prime products that have done well for us are mitigating Mirtazapine and [Technical Difficulty]. Please note that we have transitioned exiting to the prime segment this quarter, which means that there is a marginal impact on the salience of the specialty segment because [indiscernible] was being counted as a specialty product. But now going forward, it will be counted as a prime product.



We expect that the segment should perform in line with stated expectations over the short to medium term. As always, I would like to point out the inherently uneven nature of the business, which makes it hard for us to share the sale numbers or guidance, especially for the short term. However, looking at the order flow, we continue to be confident of the medium and long-term prospects of the business.



Another reminder from our previous interactions, we continue to maintain that there are a variety of factors that could influence our projections. These include performance of individual products, fluctuations in foreign exchange rate, volatility of raw material costs and other dynamic business elements. We are aware of these challenges and continue to remain watchful of these factors. In terms of future capacity building, we are on track to complete new production blocks in Unit 3 by FY '25, and we expect to start commercial production by H2 of FY '26.



Neuland flexibility and nimbleness are crucial for an effective response to the shipping business landscape. I would also like to highlight that our growing business reputation and favorable macroeconomic conditions are attracting exciting opportunities. We are dedicated to enhancing our customer experience, which we believe makes us a differentiated API provider.



Our investments in expanding our capacity and capabilities are also to be seen as a testament to our commitment to the future by adhering to our core principles, which is customer focus, agility and operational excellence, Neuland is strategically positioned to harness opportunities and overcome short-term challenges. We remain steadfast on our journey to realize our long-term goals.



So maybe having said that, Ravi, I request you to open it up for Q&A.

[Operator]

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Sajal Kapoor, Ahuja Retail Investor.

[Sajal Kapoor, analyst]

A quick question. Slide 10 CDMO project dashboard phase 2 pipeline has improved significantly Y-o-Y. Is this organic or inorganic? What I mean by inorganic is molecule hitting our space from outside via track transfer instead of organic progression from Phase I to Phase II?

[Davuluri Rao, executive]

So Sajal, I think there's a combination of both which is happening when it comes to the number of molecules which are there in Phase II. We have had additions in terms of molecules which new business has gotten from customers. At the same time, we have worked with molecules in [indiscernible] and they have also progressed to update is the reason why you find the collective number up there. So it's a mix but I think if I were to put the number there, I would say that it is almost 60%-40%, 60% in terms of progression and 40% in terms of new business that we have brought in.

[Sajal Kapoor, analyst]

Right. Okay. Understood. And then second question is in a scenario where dollar starts reaping down to higher-than-normal inflation in the U.S. and the ballooning U.S. national debt, there will no doubt be a material impact on our business because we are predominantly a U.S. dollar-denominated exports. So how do you guys read into this USD-linked fragility, which may or may not play out in near term is anybody's guess, but in a scenario, if it happens, I mean, what sort of strategy mitigation, et cetera, you have put in place.

[Davuluri Rao, executive]

Sajal, at this point, we've discussed this, obviously, between ourselves and also at the board level. And we made a conscious decision that we will leave our hedging position open for now. Having said that, it's hard for us or anyone exactly the dollar is going to go in the future. So at this point is that we look for movement given the Fed rate came back as uncut for now. Maybe it will be a rate cut in September, at least that's the indication. But we'll wait and see how the market plays out, and we'll take a suitable call at this time. But for us, it's hard at this time to predict whether it's going to weaken or strengthen.

[Operator]

The next question is from the line of Karan Vora from GS.

[Karan Vora, analyst]

So firstly, on the U.S. Biosecure Act I just wanted some more clarity in terms of some of our peers have started mentioning that they are getting pilot projects or higher RFQs. So like are we doing anything or specific to kind of gain the attention of some of these Western innovators? Or what is it that is stopping us from getting more RFQs? So that's my first question.

[Davuluri Rao, executive]

Yes. So I think the Biosecure at that's being discussed, I think there's a lot of anxiety amongst the U.S. pharma biotech segment, no doubt. And a lot of companies have started exploratory work involving India. And as I had mentioned in my comments, we don't see any tangible RFPs or business inflow yet.



But having said that, there's really a heightened level of customer it RFIs meeting requests, things like that, which could be considered as lead indicators of the behavior of pharma biotech, U.S. pharma, U.S. biotech. But it could also be premature on our part to bring that it will lead to a specific increase in new business. I think that's something that remains to be seen. I'm sure other companies are also enjoying the same thing. I think it's very evident in whatever conversations we have had with U.S. customers that they are looking at an alternative to China, whether or not the Biosecure Act gets implemented in its coming drop or not.



So there is business to come. It just remains to be seen how much and when. And that's where I think we also wanted to just caution that I don't expect any dramatic increase in new business, at least from our perspective. The other part in fact that I can give you is that we are also-- please understand that we are a pure-play API company. We don't offer a lot of other services to these companies. So obviously, Saharsh, given the focus area that we are in, our observations will be very different from what may be a clinical biologically focused CDMO or maybe med based focused CDMOs. So maybe you should take that also into consideration.

[Karan Vora, analyst]

Got it. That's helpful. Also, is it the case that the Biosecure impact is being felt more from a large pharma point of view right now than some of the biotechs. And is that the reason why some of the other guys are seeing more inflows or it's still it's broad-based, you think?

[Davuluri Rao, executive]

I think it's a good question, and that's what even I would expect. I think big pharma given where resources has started to move I think, much faster. They obviously have teams to deploy and partnerships in between countries. So perhaps they are moving faster. I think biotech companies are kind of waiting and watching. Also, we know that biotech companies have more finite resources when it comes to qualifying redundancies like second supplier, third suppliers. Big Pharma tends to do that more than biotech. So it could be, but I guess both of us are speculating at this point.

[Karan Vora, analyst]

Got it. My second question is with respect to CapEx. So I understand that we are adding more capacity in Unit 3, which I think you mentioned will be operational by end of FY '26, if I'm not mistaken. So like since our Unit 1 and 2 are already being utilized at optimum capacity. And we expect the revenues to inflect from FY '26 onwards.



So why are we not trying to put a larger capacity or start putting a larger capacity right now so that when 2 years down the line, the Unit 3 gets fully utilized, we already have a capacity in place. So anything on that? And also, the current small addition which we are doing in Unit 1, is that for EMS business? Is that for a commercialized molecule? What is it? Maybe some color on that.

[Davuluri Rao, executive]

Yes, sure. I think you kind of loaded up multiple questions, so I'll try to answer them. The Unit 3 capacity creation will be ready by end of FY '25. And will we commercialize in the second half of FY '26, that's the comment we had made. The capacities of Unit 2 and Unit 1 are more limited, given that there is limited space over there.



However, in Unit 1, as we had previously disclosed, we had acquired a 5-acre piece of land addition to Unit 1, which we will serve as an extension to Unit 1 and therefore, make units on a larger facility. There is some CapEx that was approved today, which will be deployed for expanding capacity Unit 1, which is largely for GBS products just because we have increase in volumes for some of the GBS products. We anticipate increasing the next 2-3 years, and we want to service that demand and therefore, this CapEx is being deployed for that reason.



With regards to your last question with regards to foreseeing capacity and creating capacity ahead of time. I think we definitely would like to do that, and we continue looking at ways to do that. But also, we are-- we believe, I think being a very specialized API company, we are very cautious in what kind of capacity we are going to create and how much capital we will deploy just purely for capacity creation because we also want to make sure that capacity is being created in anticipation of some specific demand rather than create a very large facility and then look for customers. I think that is not an approach that we believe was for the kind of APIs we are pursuing in CNS as well as GDS.



So yes, I think we are thinking well into the future. So we are thinking about capacity requirements for 3 years, 5 years into the future. And as we make progress on those areas, we will continue to update everyone.

[Operator]

The next question is from the line of Vivek Rakholiyaa from [indiscernible] Family Office.

[Unknown Analyst]

I would like to know the size of opportunity for the following specialty APIs paliperidone, entacapone, brinzolamide, apixaban. And I would also like to understand the competitive landscape of these specialty APIs.

[Davuluri Rao, executive]

Yes. So these are all molecules which can [Technical Difficulty] each of them has a different potential. Some of them have been general, some of them are yet to become general. I think so for paliperidone and apixaban, we see that there is going to be-- even as that contributed in the top the molecule will be going in the in markets at different points of time and we'll have significant potential to add to our growth in the future.



When it comes to, say, dorzolamide and entacapone. That's slightly older specialty molecules entacapone for Parkinson's and dorzolamide in the ophthalmic area. So I think we would see less growth, but we continue to add customers even in some of the older molecules too.

[Unknown Analyst]

What would be the competitive launch in the molecules?

[Davuluri Rao, executive]

So more often not the competition will say are the Indian API companies and European API company in some of the-- like a molecule like paliperidone, the competition is limited, but in the other molecule that is even in the case of entacapone, the competition is limited because facts like colored API, whereas the other molecules where there is significant competition from India and European players.

[Operator]

The next question is from the line of Sham Garg from [ Lerado ] Finance Limited.

[Unknown Analyst]

My first question is with respect to the capital utilization during the Q1. And what is the expected CapEx utilization and ROA of Unit 3 in FY '26.

[Davuluri Rao, executive]

So currently, at the capacity utilization in Unit 2 and Unit 3 is close to 90-plus percent. As far as Unit 3 is concerned, it is-- this year, it will be around 60%-40%. But I'm just preempting your question. So we expect CMS molecules to flow into Unit 3 at different stages. Some of it as Saharsh mentioned in the iterate flow in '27. So that we have the capacity to meet currency debt demand. And we're also increasing the capacity in Unit 1.

[Unknown Analyst]

Yes. Okay. And sir, we have seen a decline in manufacturing expense in Q1 FY '25. So an you please explain why it is sir?

[Davuluri Rao, executive]

So the decline in manufacturing expenses was predominantly because -- where we gave this number to you. But one of the reasons is our capacity utilization in the industry was 50-plus last year, and that has kind of dropped is expected to drop in FY '25.

[Unknown Analyst]

Okay, sure. And sir, what is the ROA of the new capital expansion that you are going to do?

[Davuluri Rao, executive]

We've not disclosed any ROA on the new investments. And I think the way we look at it is the product mix in Neuland is quite diverse. And therefore, what may have been the asset turns or the ROA in the past may not be an indicative reflection of what we expect in the future. So I think that's kind of an evolving metric and we really haven't given any kind of outlook or indication for that.

[Operator]

The next question is from the line of Akul Broachwala from Avendus Investment Managers.

[Akul Broachwala, analyst]

So first is on prime API. Can you just provide a like-to-like growth number for this quarter, just to understand the impact of Dorzolamide inclusion in the segment.

[Davuluri Rao, executive]

So I think in terms where we are we utilized this quarter has contributed probably close to around less than 10% of the prime revenue, just to give you an idea beyond that I don't want to talk about specific products.

[Akul Broachwala, analyst]

Okay, understood. And secondly, in terms of our CMS business, the kind of performance that we've seen this quarter, do you expect -- I mean, is there, first of all, some kind of lumpiness due to logistical issues or any sort of campaign-related timing because of which you've reported this number?

[Davuluri Rao, executive]

I think the lumpiness, as I said in the province is an inherent part of the nature. So I don't think you should attribute it to any logistics or other reasons. I think it's better to take it on sale value.

[Akul Broachwala, analyst]

Okay. And lastly, in terms of your comment about normalizing revenue growth. So does that mean that it's going to be lower versus what we've delivered in the last 2 years? Or maybe it's like an average of a couple of years putting together? Just wanted to understand a bit on your guidance for the full year.

[Davuluri Rao, executive]

Yes. I think the normalization means I do think last 2 years was above normal. So I leave the reduction to you.

[Operator]

The next question is from the line of Pranjal Mukhija from GrowthSphere Ventures LLP.

[Pranjal Mukhija, analyst]

So I just wanted want to congratulate the team on the journey that Neuland has been a [indiscernible] a lot of that is now visible in the numbers as well. So sir, I had a couple of questions. The first question was, sir, in our annual report, you're talking about growing interest from customers with larger pipeline. And I think we-- I think the team also alluded to in the con call. So could you shed some color on what kind of customers are we talking about? And I mean you shed some on details or some qualitative details about them.

[Davuluri Rao, executive]

Yes. Sorry, I was just getting a clarification on the question. So in terms of our customers, having larger pipelines, I think the way we have built the specialty business as well as the CMS business is that we typically start working on one molecule. And I guess what we were referring to in the annual report is that we are seeing customers now who have commercialized or advanced their drugs with us are coming back to us with additional molecules.



And the project pipeline that you are seeing increase is also not necessarily coming from unique new customers. It's also the same customers giving us more molecules. So that's the one indication that we had talked about. I guess the other part of it is that as M&A is happening in the biotech space, there is also an expectation and this is still very early at the moment. There is also an expectation that as our customers get acquired by larger companies.



The expectation is not only to retain the current business, but to also expand and broaden capabilities and perhaps work with other molecules of these customers. So I think that's the indication. And basically, a very high level of focus in this space is what was essential for us to be able to do that. And that's the perspective from which the comment was more in annual report.

[Pranjal Mukhija, analyst]

All right. So sir, this interest is from big pharma companies or with the biotechs that Neuland deals with?

[Davuluri Rao, executive]

I think it's both, but you all know that Neuland has predominantly built its business through biotech companies. So we are not necessarily seen as a household name for big pharma. But I think as these biotechs are getting acquired by big pharma, we're starting to see big pharma also build family as with Neuland. So yes, I think it's really more with biotechs, but also the expectation is 2-3 years from now, we expect big pharma to have a similar level of comfort with Neuland as well.

[Operator]

The next question is from the line of Rahul Bhardwaj, who's an Individual Investor. Please go ahead.

[Rahul Bhardwaj, analyst]

So as I understand last 4-5 years journey for Neuland has been moving more towards complex APIs and ensuring that their name and then comes as a trusted partner. Could you paint a color for us on what you envision bigger journey in the next 5 years? And what kind of risk do you anticipate? And how are you planning for that journey?



And the second question would be more on the lines of is there or has just a board discussed anything on the lines of ensuring participation from the wider community group of investors?

[Davuluri Rao, executive]

So it's really difficult to understand what you're saying, Raul. I think the first part, we were able to reduce, you wanted to talk about having gone through this journey in the last 10 years with complex molecules. What do we plan to do going forward? That seems to be the first question. Second question, we want able to understand it all. Could you just speak a little loudly?

[Rahul Bhardwaj, analyst]

Yes, sure. Sorry about that. So the second question was more on the lines of the Board has had any discussions in terms of potential stock split just in one perspective that it may it may enable a wider participation. So any of these questions with regards to stock split by the Board.

[Davuluri Rao, executive]

Okay. Got it. Okay. I think with regards to the future, I think, as we mentioned earlier, I think this model that we have built so far, the pure-play API model, I think it has started to give us results, and we are still very excited about what remains for us in the future.



And I think we want to really capitalize on this. We want to enable this business to grow, both on the GBS and the CMS side. And we feel that it has a long runway, right? I think even in the annual report, we had mentioned that the API market is over $120 billion. And I think we still are in the early stages of that. So we want to capitalize on that. Of course, we will try to diversify capabilities within the API space, maybe expand on certain technologies that we've already built. But the idea is to kind of keep growing on this model and enable drug development and manufacturing.



I think with regards to the stock split, the second question, I think that's something that we will definitely take into consideration. I think we've been getting this input, but we haven't really processed it. Yes, we will discuss it at a Board level and also talk to other advisers and then probably figure out what's the best way forward.

[Operator]

The next question is from the line of Avanish, Individual Investor. Please go ahead.

[Unknown Analyst]

Congratulations on the great set of numbers. I have one question. What kind of risk do we see in near to medium term on the business?

[Davuluri Rao, executive]

I mean, we've talked about some of the risks in the previous calls as well. But currently, there are about 2 or 3 risks that we are actively managing. One is this whole alternate sourcing, bringing our supply chain to the home, having an alternate supply to our Chinese partners. That's one thing which is an active strategy that we continue to pursue. In the past, we were impacted by this whole Russia-Ukraine situation because none of the metal prices went up, catalyst prices went up, there were some short supplies. We've derisked that as well.



The third is the overall currency risk, what's happening overseas in terms of the whole geopolitical instability. So right now, we've estimated our entire risk register has about 116 risks overall, which is both internal risk as well as external risks. And we do discuss them on a continuous basis. We also have a task force internally for risk management. So this is kind of our view.

[Unknown Analyst]

Okay. I have one more question. You talked about normalizing margins in the current year. So our past margin has been in the range of 14%, 15%. And last year, around 28% to 30%. So are we talking about going to that 15% change? Or it could be somewhat in between those 2 numbers?

[Davuluri Rao, executive]

I think we've left our commentary using the same words, right? I think normalized margin and moderate growth. I think it's something that we intentionally are using words are not numbers, and we are not intentionally referring to any past performance. I think as analysts, we would request you to make your own reductions in terms of what you reduce this to be. But I think for us, we eventually don't want to spell out any numbers. And at the same time, we don't want to point towards a particular area saying that the numbers are going to be this year.



So I think at the expense of repeating ourselves, the margin profile of the business what we have seen last year, I think has been something that really shows the direction in which the business is evolving, but we had also indicated that there were several favorable factors such as raw material costs, prices of products, exchange rate and which have which also optimized our margins last year.



What we had clarified post that is that expect margins to normalize. But what that would be is something perhaps you should be able to reduce. But I think our margins are definitely moved away from where we were a few years ago just and that's what-- the profile of the business has changed. I think 7, 8 years ago, we had to be 70% prime products. Now it's less than 30% prime product. So obviously, you will also be able to give that the fundamental margins of the business have changed. But how it will be something that I think will not try to even think or guide.

[Unknown Executive]

Just to add to that, there's obviously several other people listening in on the call. I think the reason we made that comment is because year-to-year, we grew 30%. And the year before that, the growth was about 24% year-on-year. So I think for us, it will be important to come out and say that, that's the kind of growth that we cannot expect year-on-year.



So it was to be able to create more transparency to our stakeholders as well as investors, and that's the intent of which that comment was at that those kind of growth over a long period of time are not sustainable. And fortunately or unfortunately, our business cycle doesn't necessarily coincide with the financial year or the calendar year. So I think as long as that is understood, I think we continue to be-- take a robust view of the overall business.

[Operator]

The next question will be from the line of Pranjal Mukhija from GrowthSpheres Ventures LLP.

[Pranjal Mukhija, analyst]

I just have a follow-up. So sir, I just wanted some highlights. Sir, I wanted to highlight some qualitative ways about the new peptide DMF that you're planning to filing. And along with that, like the 6-7 DMF that you're planning to file this year, just some highlights or some description on what are the areas, what kind of products are we filing for? So just some information would be really helpful. Thank you.

[Davuluri Rao, executive]

So I think in terms of the peptide molecule, I think we have disclosed in the past that this is a [indiscernible], and is also in development for other indications. Having said that, I think we are-- we will be filing, but the commercialization will happen in the post 2030. So I think this is more a related part of our pipeline and also enabling any customers who are looking for their filing.



And if we look at the remaining 6 months also, which we have mentioned in the analog as we target, I mean they are monitoring the channel with mix of -- or most of them would be on the what we call the specialty category. Some of them will have a shorter time cycle in terms of commercialization, whereas probably around 50% or more will do more for the long term as we continue to look at products, not just for the immediate factor and that's for the long-term perspective.

[Operator]

Okay. Ladies and gentlemen, as there are no further questions, I would like to hand the conference over to the management for closing comments.

[Davuluri Rao, executive]

Thanks. Once again, we'd like to thank everyone for joining the call and asking some interesting questions regarding the business. We appreciate your interest in Neuland. Good evening, everyone.

[Operator]

On behalf of Neuland Laboratories that concludes this conference. Thank you for joining us, and you may now disconnect your lines.