Cohance Lifesciences Ltd Q2 FY27 Earnings Call: Pharma CDMO Revenue Jumps 34.5% QoQ, Guides H2 YoY Growth

Cohance Lifesciences Ltd held its Q2 FY27 earnings call on November 06, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Sequential Recovery Off a Low Q1 Base; YoY Still Negative

• Revenue of Rs.4,767 million, up ~13% QoQ — vs Rs.4.2 billion in Q1 FY 2026-2027; adjusted EBITDA rose to Rs.458 million from Rs.92 million in Q1, with margin improving to ~10% from the Q1 low point.
• Adjusted PAT returned to positive territory in Q2 FY 2026-2027, though YoY performance remained lower, principally reflecting reduced contribution from pharma CDMO and Adchem plus unfavorable business and product mix.
• Gross margins were hit by volumes, adverse product mix and higher raw material prices in Q2/H1 FY 2026-2027; selective pricing and procurement actions are underway, partly offset by stronger nucleic acid and formulations contributions.
• Cash-positive balance sheet at end-September — cash and liquid investments of ~Rs.2.9 billion vs borrowings of ~Rs.2.3 billion; receivables improved materially in H1 FY 2026-2027, but inventory rose to Rs.7.3 billion from Rs.5.6 billion, with a focus on improving the cash conversion cycle.
• New CFO Abhimanyu Oja's first call — priorities outlined: consistent financial performance, stronger cash flow generation, and disciplined return on capital.

34.5% QoQ Rebound, Three Lateral Programs, Reload Visibility

• Pharma CDMO revenue grew 34.5% QoQ in Q2 FY 2026-2027, driven primarily by higher small molecules contribution; revenues remained down 27% YoY in Q2 and 32% YoY in H1 FY 2026-2027, with sequential momentum expected to sustain through H2 FY 2026-2027.
• Three significant lateral programs secured in Q2 — two commercial programs and one Phase 3 program from large global pharmaceutical customers; per CEO Pharma CDMO Yan Yav, the two commercial wins are patent-protected small molecules where Cohance will supply RSM, with first campaign revenues expected in Q4 FY27 or Q1 FY28.
• Forward position strengthened — multiple reload orders across existing commercial programs provide better visibility into Q3-Q4 FY 2026-2027 and FY 2027-2028; Phase 3 programs stood at net 11 and commercial products at 19 as of Q2 FY 2026-2027.
• Niche technologies contributed 13.7% of Q2 revenue (14.4% in H1 FY 2026-2027); Cohance standalone commercial revenues remained healthy at ~78% of sales, though the quarter had an adverse product mix.
• Capacity already in place — Yan Yav noted capacity added ~2 years ago means the network can support the additional new business; relations with several large pharma customers were confirmed at the CPHI meeting ~1 month before the call.
• KSM generics headwind flagged — Yan Yav cited a "binodal distribution" situation: two small-molecule KSMs are becoming generics over the next 1-2 years, with volumes declining in FY 2026-2027 and expected to keep declining; a separate patent-protected molecule has received "very good" reload orders for end of FY 2026-2027 and FY 2027-2028.

Modest Growth Amid Heavy Audit Schedule; Pricing Power From Moving Up-Chain

• API Plus revenue of Rs.2,671 million, up 5% YoY in Q2 FY 2026-2027, contributing 56% of consolidated revenue; performance was significantly impacted by a heavy audit schedule across facilities, which disrupted operations and shipment timing, and H1 FY 2026-2027 revenue remains slightly below H1 FY 2025-2026.
• Raw material pressure on select API products in Q2 FY 2026-2027; management is working with customers on price revisions and driving sourcing/process cost improvements, with YTD FY 2026-2027 material margin percentage still ahead of FY 2025-2026.
• Life cycle management engagement advanced to sampling with two of the three innovative pharma companies highlighted in Q1 FY 2026-2027; per CEO API Plus Gunjan Singh, innovator pricing is slightly premium to the generic space with better margins and higher predictability, and monetization typically begins 18-36 months after the sampling stage if all steps go well.
• Pricing power expected from API Plus strategy, not generic APIs — Umang Gora said the market environment is relatively stable with no significant price increases or decreases, akin to the normal generic industry; pricing power is expected from Gunjan Singh's strategy of going a few extra steps beyond generic API.
• Formulations performed as per plan in Q2 FY 2026-2027, with a new extension of a key product in emerging markets and traction in pellets, modified-release and differentiated products driven by geographical diversification across EU markets.

Sharp Q2 Decline and FY27 Guidance Cut

• Specialty chemicals revenue fell 40.6% YoY to Rs.417 million in Q2 FY 2026-2027, driven by lower agrochemical CDMO volumes, pricing pressure and program phasing; performance materials remained relatively stable.
• FY27 guidance lowered — management previously expected broadly flat specialty chemicals revenue in FY 2026-2027 (helped by second-half deliveries) but now expects a YoY decline in FY27, citing legacy agrochemical product performance and continuing generic pressure.
• Commercial manufacture and initial dispatches began for a crop protection program with two new Japanese innovators in Q2 FY 2026-2027; registration for a new AI with an existing innovator is progressing according to plan, with commercial launch expected from H2 calendar year 2028.
• Portfolio transition underway — targeted automation and environmental upgrades at the multi-purpose agrochemical facility plus a dedicated R&D laboratory aim to speed up new customer qualification; FY27 framed as an important qualification and portfolio transition year, with management confident the trajectory should improve over the next 2-3 years.
• Medium-term strategy (period unspecified) — two new product launch qualifications per annum and adding one new customer each in geographies like the US, Europe and Japan; early discussions are underway on OLED, electronic-related and semiconductor chemistry opportunities (no committed timeline stated).

Destocking Drag on ADCs; Sapala Momentum Continues

• ADC H1 FY 2026-2027 performance affected by continued customer destocking across two established commercial programs, impacting near-term payload demand; the development funnel is moving in the right direction with a broader range of RFQs across payloads and linkers, including opportunities potentially developable and manufacturable from India.
• NJ Bio delivered two ADC GMP campaigns in Q2 — including one program through the full development lifecycle (early R&D, process development, toxicologic studies, GMP manufacturing) — and supported an accelerated 28-day drug substance-to-drug product program for another customer.
• Bioconjugation capacity expansion on track for commercial availability by early FY28 (FY 2027-2028); the stated objective is moving NJ Bio to break even (period unspecified).
• NJ Bio restructuring costs largely behind — subsidiary expenses fell from Rs.41 crore in Q1 FY 2026-2027 to almost nil in Q2 (figures cited by analyst Sajid Kapoor); CFO Abhimanyu Oja said restructuring transactions were completed in the last 30-60 days with no further costs anticipated in H2 FY 2026-2027, though he did not explicitly break out recurring savings versus one-off writebacks.
• Tapala (oligo) grew 33.6% YoY in Q2 and 83% YoY in H1 FY 2026-2027 — Q2 growth achieved without contribution from early Phase 3 supplies, supported by demand for specialized nucleosides, amidites and building blocks; Sapala continues to perform strongly with increasing integration into Cohance's development and manufacturing network.
• Customized payload program for a large pharmaceutical customer is progressing through scale-up and could generate higher potential in FY 2027-2028.

USFDA Classification Awaited; Suryapet Overhang Unquantified; H2 Acceleration Guided

• USFDA inspections complete at Pashmaralam, Shamshabad and Jagjapet with comprehensive responses submitted; management has responded to all 3 audits and facility classification now rests entirely with the FDA — it is hoping to hear within 1 month to 45 days, or possibly 1-3 months (≈ Q3-Q4 FY 2026-2027); as of now the classification is unknown and management declined to pre-judge it.
• Suryapet PCB closure impact still being assessed — management declined to disclose the facility's FY26 revenue contribution; Suryapet is characterized as one of the company's smaller plants and a non-GMP facility; Umang Gora said the attempt will be to resolve the closure notice, which may take some time, and the facility is not expected to be perpetually shut.
• H2 guidance assumptions not confirmed — management did not quantify the share of H2 FY 2026-2027 revenue scheduled to ship from Suryapet, did not confirm whether the H2 growth guidance assumes reopening by a particular date, and did not state whether guidance holds if the unit remains shut through Q3 FY 2026-2027.
• Rs.260 crore of destocked revenue identified in FY 2026-2027 — management declined to specify how much will be recovered in H2 FY 2026-2027 versus FY 2027-2028 ("cannot exactly provide the revenue to be expected").
• H2 FY 2026-2027 acceleration guided — management expects H2 to be stronger than H1 on scheduled small molecule deliveries and reloads, API Plus resilience, Sapala growth, NJ Bio approaching break-even, and improved utilization and mix; H2 FY 2026-2027 is also expected to deliver YoY growth on both revenue and EBITDA vs H2 FY 2025-2026.
• No EBITDA guidance given — management declined a numeric target, stating only that the business will improve sequentially from the ~9% EBITDA margin reported in Q2 FY 2026-2027 (period unspecified); H1 FY 2026-2027 capex deployed was a little over Rs.1 billion, excluding acquisitions, with investments phased against customer visibility.