Aethos Wealth

Aethos Wealth

Aethos Wealth

@AethosWealth

May 31

🧪 Neuland Labs - FY26 results, pipeline update, and why the peptide bet is the real story here Q4 FY26 confirmed the thesis. Commercial CMS is compounding. Now let's look at what matters next. ____________ 🟩 FY26 FULL YEAR - SETTING THE BASE First time crossing ₹2,000 Cr. Operating leverage finally showed up at scale. - Revenue: ₹2,053 Cr ( 37% YoY) - EBITDA: ₹603 Cr ( 76% YoY) at 29.4% margin - PAT: ₹363 Cr ( 40% YoY) - EPS: ₹283 vs ₹202 last year - Net Debt: negative ₹157 Cr - net cash on balance sheet Commercial CMS revenue alone went from ₹511 Cr in FY25 to ₹1,146 Cr in FY26. Same fixed costs. More volume. Margins followed. ____________ ⚡ Q4 FY26 - THE BLOWOUT QUARTER Record quarter on every single line. Management was upfront that 40% EBITDA margin should not be extrapolated. - Revenue: ₹789 Cr ( 135% YoY) - EBITDA: ₹319 Cr ( 449% YoY) at 40.5% margin - PAT: ₹212 Cr ( 666% YoY) - EPS: ₹165 in a single quarter - Gross margin: 62.1% vs 56.3% in Q4FY25 - mix driven Q3FY26 was ₹448 Cr. Q4FY26 was ₹789 Cr. Same business, different quarter. This is the lumpiness management keeps flagging and they are right to flag it. ____________ 🔬 CMS PIPELINE - THE REAL COMPOUNDING ENGINE 98 total active projects as of Q4FY26. Commercial count is steady but revenue per project is scaling - that is the actual story. - Pre-clinical: 20 - Phase 1: 22 - Phase 2: 20 - Phase 3: 10 - Pre-Reg/Reg: 7 - Commercial: 19 Every molecule moving from Pre-Reg to Commercial is a multi-year revenue compounder. This funnel feeds FY28 and FY29. ____________ 💊 GDS SIDE - SOFTER BUT NOT BROKEN Management acknowledged GDS was subdued in FY26 and has deployed resources for recovery. - Prime: Ezetimibe and Mirtazapine were key - Ezetimibe likely to drive continued growth - Specialty: Paliperidone drag offset by Apixaban, Donepezil and Aripiprazole Sterile - New DMF filings FY26: Vonoprazan and Edoxaban ____________ 🧬 PEPTIDES - THE OPTIONALITY NOBODY IS PRICING RIGHT 16-18 years of in-house process chemistry R&D. The edge is not the facility - it is the process development capability for clinical-stage peptide APIs. - Peptide facility commissioning: July 2026 - on schedule per management - Active peptide programs: 8-10 across early and advanced stages - Global peptide API market: $6 Bn today to $14 Bn by 2030 at 18.5% CAGR - CDMO peptide market: $5-6 Bn opportunity per external consultants - Management view: peptides alone have potential to create another Neuland in scale ____________ 📋 WHAT MANAGEMENT SAID - FY27 AND BEYOND No formal guidance but the earnings call was reasonably direct. These are the calls worth tracking. - Revenue CAGR aspiration: 18-20% over a 5-year horizon - aspirational, not guaranteed - FY27 new CMS commercialization: 1 expected, 1-2 more possible after that - Lumpiness continues - assess over 10-12 quarters not individual quarters - Working capital days: 137 in Q4FY26 vs 107 in Q4FY25 - normalization expected in FY27 - Capacity: Units 1 and 2 at 85-90%, Unit 3 at 65% and ramping - Capex FY26: ₹397 Cr - free cash flow was negative ₹49 Cr despite ₹363 Cr PAT - ROCE will moderate as longer capex cycles begin - management comfortable with this ____________ 💰 VALUATIONS AT ₹17,088 (MKT CAP ₹21,924 Cr) Not cheap. The question is whether the pipeline quality justifies the premium at this entry point. - Trailing P/E on FY26 PAT ₹363 Cr: 60x - FY27 forward P/E on est. PAT ₹420-435 Cr: 50-52x - FY28 forward P/E on est. PAT ₹500-520 Cr: 42-44x At 50x forward you are paying for near-flawless execution on three things simultaneously - peptide ramp from H2FY27, FY27 volume delivery without a soft patch, and working capital converting profits into cash. Business quality is not the debate. Entry price is. ____________ ⚠️ KEY RISKS At 60x trailing these matter more than they did at 30x. - Customer concentration: top 5 customers at 68% of Q4FY26 revenue - Lumpiness is structural and will not go away as newer high-value molecules enter the mix - Middle East: raw material and freight costs being actively monitored - Free cash flow: negative ₹49 Cr in FY26 despite ₹363 Cr PAT - working capital drag is real ____________ 3-5 year story for investors who understand CDMO cycles. Not a momentum trade at current valuations. Views are personal. Not investment advice. DYOR. #NeulandLabs #NEULANDLAB #CDMO #IndiaPharma #APIStocks #Peptides #GLP1 #StockResearch #EquityResearch

274