💰 Financial Performance

Revenue Growth by Segment

Pharma CDMO accounts for 62% of revenue (INR 736.9 Cr in FY25) but saw an 8% YoY decline in Q2 FY26 due to destocking; Specialty Chemicals grew 166% YoY in H1 FY26 on a low base; API+ segment declined 22% YoY in H1 FY26 due to shipment delays.

Geographic Revenue Split

85% of total revenue is derived from exports to global markets, providing a broad international footprint but high exposure to global trade dynamics.

Profitability Margins

Gross margins expanded to 73.8% in H1 FY26 from 70% YoY due to a favorable product mix; Adjusted PAT margin stood at 11.8% for H1 FY26 (INR 130.2 Cr) compared to 20.7% in the previous year.

EBITDA Margin

Adjusted EBITDA margin was 23.8% in H1 FY26 (INR 263 Cr), a decrease from 32.3% YoY, reflecting upfront investments in employee costs and transition expenses; FY25 adjusted EBITDA margin was 37%.

Capital Expenditure

INR 106 Cr (INR 1.06 billion) was deployed in H1 FY26, primarily targeted at the Nacharam facility expansion for oligo and high-containment capabilities.

Credit Rating & Borrowing

Maintains a 'Positive' outlook from CRISIL with minimal reliance on external debt; consolidated repayment obligations are less than INR 40 Cr against projected accruals of over INR 600 Cr in FY26.

⚙️ Operational Drivers

Raw Materials

Not specifically disclosed; referred to generally as materials for semi-finished and finished goods inventory.

Capacity Expansion

Expanding Nacharam facility for oligo and high-containment capabilities; targeting 10 DMF filings in FY26 across US and Europe to build a new customer pipeline.

Raw Material Costs

Material costs were INR 289.3 Cr in H1 FY26, representing approximately 26.2% of revenue; material margins improved to 74.6% in Q2 FY26 due to yield improvements.

Manufacturing Efficiency

Material margin improved from 71.3% to 74.6% YoY in Q2 FY26, driven by business mix and ongoing yield efficiencies.

📈 Strategic Growth

Expected Growth Rate

20-25%

Growth Strategy

Achieving growth through the amalgamation of Casper Pharma to double operating income; integration of high-growth platforms NJ Bio (ADCs) and Sapala Organics (Oligos); and commercializing 5 new products in FY26.

Products & Services

Pharma CDMO services, Specialty Chemicals, AgChem intermediates, APIs, Antibody Drug Conjugates (ADC), and Oligo drugs.

Brand Portfolio

Cohance Lifesciences, NJ Bio, Sapala Organics.

New Products/Services

5 new products to be commercialized in FY26; Niche technologies (ADCs/Oligos) expected to reach low 20s % of CDMO revenue by end of FY26.

Market Expansion

Targeting 10 DMF filings in US and Europe; active business development in Japan and Europe following CPHI Frankfurt 2025.

Strategic Alliances

Acquisition of majority stakes in NJ Bio Inc and Sapala Organics; merger with Casper Pharma Private Limited.

🌍 External Factors

Industry Trends

Industry shifting toward India for CDMO services; increasing demand for complex modalities like Antibody Drug Conjugates (ADCs) and Oligonucleotides.

Competitive Landscape

Facing increased competition in the merchant API segment as large integrated pharma companies divest their API businesses.

Competitive Moat

Moat built on technical depth in niche technologies (>17% of revenue) and high-containment manufacturing which are difficult to replicate.

Macro Economic Sensitivity

Highly sensitive to global pharmaceutical R&D spending and the 'China+1' sourcing strategy adopted by global innovators.

Consumer Behavior

Global innovators are increasingly seeking to diversify supply chains away from China, benefiting Indian CDMOs with strong compliance records.

Geopolitical Risks

Exposed to evolving trade policies and geopolitical uncertainties that could disrupt the global pharma supply chain.

⚖️ Regulatory & Governance

Industry Regulations

Subject to stringent USFDA and global regulatory standards; currently managing an OAI status at the Nacharam formulations plant.

Taxation Policy Impact

Effective tax rate for H1 FY26 was approximately 23% (INR 38.8 Cr tax on INR 169 Cr adjusted PBT).

Legal Contingencies

Incurred INR 41.4 Cr in FY25 towards legal and merger-related costs linked to the integration of Cohance Lifesciences.

⚠️ Risk Analysis

Key Uncertainties

Regulatory risks associated with plant audits (OAI impact); volatility in CDMO revenue due to client destocking cycles (14% impact in Q2).

Geographic Concentration Risk

High geographic concentration with 85% of revenue coming from export markets.

Technology Obsolescence Risk

Risk of failure in clinical trials for ADCs using the company's specific payload technology, which could impact long-term pipeline revenue.

Credit & Counterparty Risk

Low risk given the strong liquidity position with INR 391 Cr in cash and liquid investments as of June 2025.