💰 Financial Performance

Revenue Growth by Segment

In Q2 FY26, Finished Dosages (FD) grew 29% YoY to INR 965.7 Cr (74% of revenue). Pharmaceutical Formulation Intermediates (PFI) grew 76% YoY to INR 133.1 Cr (10% share). Active Pharmaceutical Ingredients (API) grew 20% YoY to INR 170.5 Cr (13% share). Peptides/CDMO contributed INR 27.6 Cr (2% share).

Geographic Revenue Split

North America remains the largest market at 76% of revenue (INR 988.2 Cr), growing 30% YoY. Europe contributed 12% (INR 152.8 Cr), growing 66% YoY. Rest of World (ROW) contributed 12% (INR 155.9 Cr), growing 37% YoY.

Profitability Margins

Gross Margin expanded 82 bps YoY to 65.7% in Q2 FY26 due to improved product mix and operational efficiency. PAT margin stood at 10.1% (INR 130.6 Cr), up 34% YoY from INR 97.2 Cr.

EBITDA Margin

EBITDA margin was 21.5% in Q2 FY26, an improvement of 42 bps YoY and 106 bps QoQ. Absolute EBITDA rose 37% YoY to INR 278.2 Cr, despite an EBITDA loss of INR 20 Cr from the Ascelis Peptides acquisition.

Capital Expenditure

CAPEX spend in Q2 FY26 was INR 211.2 Cr, significantly higher than INR 113.7 Cr in Q1 FY26. Total planned CAPEX for FY2025 is approximately INR 600 Cr, focusing on scaling up the CDMO business and facility upgrades.

Credit Rating & Borrowing

ICRA maintains an adequate liquidity profile with cash balances of INR 381.1 Cr as of March 2024. Net Debt stood at INR 1,024.1 Cr in Q2 FY26 with a Net Debt/EBITDA ratio of 0.98x. Term loan repayments are scheduled at INR 100 Cr for FY25 and INR 50 Cr for FY26.

⚙️ Operational Drivers

Raw Materials

Key starting materials (KSMs) for core APIs including Paracetamol, Ibuprofen, Metformin, Methocarbamol, and Guaifenesin. These five products historically represent a significant portion of revenue, with 4 out of 5 being backward integrated.

Import Sources

Sourced globally with significant backward integration in India (Gagillapur and Bonthapally facilities) to mitigate supply chain volatility from external markets like China.

Key Suppliers

Not specifically named in documents, but the company utilizes a mix of internal manufacturing for 4/5 key APIs and external vendors for specialized KSMs.

Capacity Expansion

Operates 11 manufacturing facilities (8 in India, 2 in USA, 1 in Switzerland). Recent expansion includes a new subsidiary, Granules Pharmaceuticals Canada, Inc., and the acquisition of Senn Chemicals AG for CDMO capacity.

Raw Material Costs

Raw material costs are managed through vertical integration, maintaining operating margins between 18-20%. Gross margins improved to 65.7% in Q2 FY26 due to better operational efficiency and product mix.

Manufacturing Efficiency

Productivity improvements at the Gagillapur facility and the start of monograph product manufacturing at Genome Valley have enhanced throughput. Fixed Asset Turn stood at 1.46 in Q2 FY26.

Logistics & Distribution

Distribution spans 300+ customers in 80+ countries. The US front-end division (Granules Consumer Health) leverages integrated supply chains to improve OTC product margins.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth will be driven by scaling the CDMO business (Senn Chemicals), expanding the peptide portfolio (Ascelis), and entering the Canadian market. The company is also gaining market share in existing products approved 2-3 years ago and expects a revenue boost once the Gagillapur facility clears its US FDA warning letter.

Products & Services

Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediates (PFIs), Finished Dosages (FDs), Peptides, and CDMO services for innovators.

Brand Portfolio

Granules India, Granules Consumer Health, Senn Chemicals, Ascelis Peptides.

New Products/Services

Focus on controlled substances, OTC products, and monograph products from Genome Valley. 3 ANDAs were filed in Q2 FY26, adding to 91 total US FDA approvals.

Market Expansion

Incorporated Granules Pharmaceuticals Canada, Inc. in November 2025 to target the Canadian prescription generic market. Continued penetration in LATAM and Europe for PFI and FD segments.

Market Share & Ranking

One of the few global players present across the entire pharmaceutical value chain. Gaining share in US generic markets through long-term product positioning.

Strategic Alliances

CDMO partnerships where Granules acts as a 'co-traveler' with innovators on long-term projects (FY27-FY28 horizon).

🌍 External Factors

Industry Trends

The industry is shifting toward specialized CDMO services and complex molecules like peptides. Granules is positioning itself by moving from high-volume generics to value-added CDMO and peptide manufacturing.

Competitive Landscape

Faces intense competition in the generic space from other Indian and global pharma majors, mitigated by high-volume manufacturing efficiencies.

Competitive Moat

Moat is built on 'cost leadership through vertical integration' and 'regulatory excellence.' Being present from API to FD allows for superior margin control compared to non-integrated peers.

Macro Economic Sensitivity

Sensitive to Indian and international interest rates and changes in foreign exchange control regulations in India.

Consumer Behavior

Increasing demand for OTC products in the US market, which Granules is capturing through its front-end division and zero-observation packaging facilities.

Geopolitical Risks

Changes in political conditions in India or destination countries and evolving global pharmaceutical regulations pose risks to the 80+ countries of operation.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by US FDA, EDQM, EU GMP, and WHO GMP. The Gagillapur facility is currently undergoing remediation following a US FDA inspection in August 2024.

Environmental Compliance

Achieved 'A' rating in CDP Climate Change (2025), reflecting a two-level improvement. Invests in ESG to meet global standards required by international partners.

Taxation Policy Impact

Subject to Indian corporate tax rates and international tax laws for subsidiaries in the US, Switzerland, and Canada.

Legal Contingencies

The company faces industry-wide social risks related to product safety litigation and high manufacturing compliance standards. A US FDA warning letter for Gagillapur is the primary active regulatory hurdle.

⚠️ Risk Analysis

Key Uncertainties

The timeline for the US FDA re-inspection of the Gagillapur facility (scheduled for January 2026) is a major uncertainty that could delay new product launches.

Geographic Concentration Risk

High concentration in North America (76% of revenue), making the company highly sensitive to US regulatory changes and generic pricing dynamics.

Third Party Dependencies

While vertically integrated for 4/5 key APIs, the company still depends on external suppliers for specialized KSMs and chemicals for its CDMO division.

Technology Obsolescence Risk

Risk of digital disruption and information security incidents (similar to the one in FY2024). Mitigation involves continuous R&D (5.4% of sales) and IT infrastructure upgrades.

Credit & Counterparty Risk

Adequate liquidity and a Net Debt/EBITDA of 0.98x suggest low credit risk, though working capital intensity (204-day cycle) requires constant monitoring.