PAR - Par Drugs & Che.

📊 NSE: PAR 🏢 Pharmaceuticals - Indian - Bulk Drugs 📅 Last Updated: 12/14/2025 10:51

💰 Financial Performance

Revenue Growth by Segment

The API segment, which currently contributes over 99% of total revenue, grew 5.6% YoY in FY25. Revenue for the quarter ended September 30, 2025, was INR 28.66 Cr.

Profitability Margins

Operating Profit Margin declined from 34.42% to 28.74% (a 16.51% decrease) in FY25. Net Profit Margin softened from 20.41% to 17.75% (a 13.02% decrease) due to raw material and operating cost inflation.

EBITDA Margin

EBITDA margin declined to 21.36% in FY25 from 24.00% in FY24. EBITDA contracted 6.0% YoY due to input cost inflation affecting core profitability.

Capital Expenditure

The company has committed a total capital expenditure of INR 95 Cr for strategic diversification, including INR 27 Cr for Real Estate, INR 27 Cr for Clean Energy, and INR 41 Cr for Capital Market Ventures.

Credit Rating & Borrowing

The company maintains a Debt-Equity Ratio of 0%, indicating it is debt-free. Interest coverage ratio is 0 as there is no significant long-term debt.

⚙️ Operational Drivers

Capacity Expansion

The company approved a slump sale of its primary API business unit (99% of revenue) to pivot into new sectors. Planned investments include INR 27 Cr in Real Estate and INR 27 Cr in Clean & Renewable Energy.

Raw Material Costs

Cost of materials consumed was INR 10.54 Cr for the quarter ended September 2025, representing 36.7% of revenue. Input cost inflation led to a 6.0% contraction in EBITDA.

📈 Strategic Growth

Growth Strategy

The company is executing a strategic pivot from its 99% revenue-contributing API business into three new verticals: Real Estate & Construction, Clean & Renewable Energy, and Capital Market Ventures. This INR 95 Cr investment strategy aims to align with 'Vision India @ 2047' and provide stable, countercyclical cash flows.

Products & Services

Currently sells Active Pharmaceutical Ingredients (API). Future products will include Real Estate construction units, Renewable Energy generation, and Capital Market services.

Brand Portfolio

PAR Drugs and Chemicals Limited.

New Products/Services

New services include Real Estate & Construction, Clean & Renewable Energy, and Capital Market Ventures, supported by a committed INR 95 Cr investment.

Market Expansion

Strategic diversification into resilient domestic sectors to reduce dependence on volatile global pharmaceutical cycles.

Strategic Alliances

The company entered into a slump sale agreement for its primary business unit, involving significant management judgment and related party transaction valuations.

🌍 External Factors

Industry Trends

The API industry is facing an evolving risk profile and high volatility. The company is positioning itself for the future by diversifying into sectors aligned with India's long-term development priorities (Vision India @ 2047).

Competitive Moat

The company is transitioning from a volatile API-based moat to a diversified multi-sector model to ensure sustainable long-term growth and stable cash flows.

Macro Economic Sensitivity

Highly sensitive to input cost inflation and global pharmaceutical cycles, which caused a 2.64 percentage point decline in EBITDA margins in FY25.

Geopolitical Risks

Exposure to volatile global pharma cycles is a primary risk, being mitigated by pivoting toward domestic-focused sectors like Indian real estate and energy.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by Ind AS 108 (Operating Segments), the Companies Act 2013, and ICAI's internal financial controls framework.

Environmental Compliance

The company continuously monitors and aligns operations with global ESG standards.

Taxation Policy Impact

The effective tax rate for the quarter ended September 2025 was approximately 25.6%, with INR 1.42 Cr in current tax on INR 5.55 Cr profit before tax.

Legal Contingencies

There have been no qualifications or adverse remarks in the Companies (Auditor’s Report) Order (CARO) reports for the audited periods.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the execution risk associated with transitioning from a 99% revenue-contributing API business to three entirely new business segments.