💰 Financial Performance

Revenue Growth by Segment

India business grew 12% YoY to INR 432 Cr in Q2 FY26, outperforming the Indian Pharmaceutical Market (IPM) growth of 8% by 32%. Asia business grew 5% YoY to INR 310 Cr in Q2 FY26, with H1 FY26 sales at INR 614 Cr (up 7%). Africa business recorded sales of INR 221 Cr in Q2 FY26. US Generics is expected to deliver high-teen growth in the coming year.

Geographic Revenue Split

India contributes 32% of total revenue. Asia (Middle East, South-East, and Central Asia) and Africa (West and East Africa) represent the primary export markets. US Generics remains a selective play.

Profitability Margins

Gross margins stood at 77% for Q2 FY26 and 78% for H1 FY26, with a full-year guidance of 78% (+/- 1%). Profit After Tax (PAT) margin was 19% in Q2 FY26, increasing to 22% when excluding mark-to-market forex impacts. PAT grew 20% YoY to INR 260 Cr in Q2 FY26.

EBITDA Margin

Reported EBITDA margin was 24% in Q2 FY26 (INR 328 Cr, up 5% YoY). Excluding mark-to-market forex losses of INR 41 Cr, the adjusted EBITDA margin was 27% (INR 369 Cr, up 9% YoY). Management guides for a sustained EBITDA margin of 27% (+/- 1%).

Capital Expenditure

Not disclosed in available documents, though the company maintains 7 manufacturing plants and continues to invest in R&D and field force expansion.

Credit Rating & Borrowing

The company maintains a strong credit profile with a Return on Capital Employed (ROCE) of 30% and Return on Net Worth (RONW) of 25% as of H1 FY26. Specific interest rates are not disclosed, but finance costs were minimal at INR 3 Cr in Q2 FY26 (0% of revenue).

⚙️ Operational Drivers

Raw Materials

Pharmaceutical active ingredients and excipients for specialty formulations. Cost of materials consumed was INR 217.60 Cr in Q2 FY26.

Capacity Expansion

The company operates 7 manufacturing plants located in Paithan, Chikalthana, Chitegaon, Waluj (Maharashtra), Dahej (Gujarat), Guwahati (Assam), and Pithampur (Madhya Pradesh). Specific MTPA capacity is not disclosed.

Raw Material Costs

Cost of Goods Sold (COGS) represented 23% of revenue in Q2 FY26 (INR 317 Cr) and 22% in H1 FY26 (INR 592 Cr). Procurement is managed to maintain a high gross margin of 78%.

Manufacturing Efficiency

The company focuses on specialty pharmaceutical formulations, outpacing IPM volume growth by 2x and new launch growth by 39%.

Logistics & Distribution

Other expenses, which include distribution and forex losses, were INR 392 Cr in Q2 FY26 (29% of revenue), up 11% YoY.

📈 Strategic Growth

Expected Growth Rate

14%

Growth Strategy

Growth is driven by outpacing the IPM (currently by 32%), launching new products (10 in India and 13 in Asia during H1 FY26), and expanding the field force (personnel costs increased 21% due to MR additions). The company is targeting low-teen growth in Asia and high-teen growth in the US market for the next year.

Products & Services

Specialty pharmaceutical formulations primarily in chronic therapeutic segments (Ophthalmology, Dermatology, Cardiology, and Pain Management).

Brand Portfolio

Ajanta Pharma (Corporate Brand).

New Products/Services

Launched 10 new products in India (including one first-to-market) and 13 in Asia during H1 FY26. New launches outpaced the market by 39%.

Market Expansion

Focusing on high-potential chronic therapy markets in Asia (Middle East, SE Asia, Central Asia) and selective play in US Generics.

Market Share & Ranking

Ranked among the top 3-5 pharma companies in terms of margins; outpaces IPM growth (10% vs 8%).

🌍 External Factors

Industry Trends

The pharmaceutical industry is seeing a shift toward chronic therapies and specialty formulations. Ajanta is positioned as a specialty player, growing at 1.25x the market rate (10% vs 8% IPM).

Competitive Landscape

Faces intense competition and pricing pressure in both domestic and export markets from other generic pharmaceutical manufacturers.

Competitive Moat

Durable competitive advantage through branded generics in emerging markets, high ROCE (30%), and a lean, selective model in the US market. Sustainability is driven by consistent R&D and field force expansion.

Macro Economic Sensitivity

Sensitive to global healthcare spending and regulatory environments in the US and emerging markets.

Consumer Behavior

Increasing demand for chronic therapy medications globally due to aging populations and lifestyle changes.

Geopolitical Risks

Operations in Middle East and Africa expose the company to regional geopolitical instability and currency volatility.

⚖️ Regulatory & Governance

Industry Regulations

Subject to USFDA and other national regulatory standards for manufacturing facilities. Compliance is critical for maintaining access to regulated markets.

Taxation Policy Impact

Effective tax rate was approximately 23.7% in Q2 FY26 (INR 81 Cr tax on INR 341 Cr PBT).

Legal Contingencies

Income Tax Authorities conducted search operations at certain premises of the company in August 2025. The outcome and potential financial liability are currently pending and not yet determined.

⚠️ Risk Analysis

Key Uncertainties

Forex volatility (impacted margins by 3% in Q2), regulatory changes in drug pricing (DPCO in India), and the outcome of the August 2025 Income Tax search.

Geographic Concentration Risk

India accounts for 32% of revenue, with significant reliance on emerging markets in Asia and Africa.

Technology Obsolescence Risk

Risk is mitigated by continuous R&D in formulation development and a focus on chronic therapies which have longer product lifecycles.

Credit & Counterparty Risk

Trade receivables stood at INR 848.98 Cr as of September 30, 2025, up from INR 438.71 Cr in March 2025, indicating a significant increase in credit exposure.