Aarti Pharmalabs Q4 FY26 PAT Drops 30.2% YoY

Q4 FY26 Highlights:

Operational Revenue: INR 5,797 Mn, up 9.5% YoY (INR 5,296 Mn in Q4 FY25) and 36.3% QoQ (INR 4,253 Mn in Q3 FY26).
EBITDA: INR 1,341 Mn, down 18.9% YoY (INR 1,653 Mn in Q4 FY25); EBITDA Margin at 23.13%, down 808 bps YoY.
Profit After Tax (PAT): INR 620 Mn, down 30.2% YoY (INR 888 Mn in Q4 FY25); PAT Margin at 10.70%, down 607 bps YoY.
Diluted EPS: INR 6.84, down from INR 9.80 in Q4 FY25.
Finance Costs: INR 169 Mn, increased significantly from INR 63 Mn in Q4 FY25.
Foreign Exchange Loss: INR 170 Mn, compared to a loss of INR 247 Mn in Q4 FY25.
Other Income: INR 106 Mn.
The profitability was impacted by the recognition of fair value movement on a long-dated USD forward contract under FVTPL, with previous quarterly figures restated accordingly.

FY26 Annual Standalone Highlights:

Operational Revenue: INR 17,976 Mn, a slight increase from INR 17,714 Mn in FY25.
EBITDA: INR 4,061 Mn (FY25: INR 4,265 Mn); EBITDA Margin: 22.59% (FY25: 24.08%).
PAT: INR 1,762 Mn (FY25: INR 2,573 Mn); PAT Margin: 9.80% (FY25: 14.53%).
Diluted EPS: INR 19.42 (FY25: INR 28.38).

Q4 FY26 Highlights:

Operational Revenue: INR 5,826 Mn, up 3.3% YoY.
PAT: INR 611 Mn, down 30.8% YoY; PAT Margin: 10.49%.
Share of Joint Venture: INR 55 Mn. The company noted that from April 1, 2025, Ganesh Polychem Limited became a joint venture, and consolidated accounts are prepared using the equity method, making current period numbers not directly comparable with previous periods.

FY26 Annual Consolidated Highlights:

Business Segments:

Xanthine Derivatives: The company is the largest Indian manufacturer with a capacity of 5,000+ MTPA, which is being expanded to 9,000+ MTPA. Commissioning is expected by June 2026, and it is currently operating at 6,000 MTPA. Post-expansion, the company targets a global market share increase from 15-20% to 20-25%. Geographically, 57% of sales were international in FY26. 68% of quantity was for beverages.
API & Intermediates: Geographically, 56% of sales were international in FY26. The company specializes in HPAPIs for oncology, corticosteroids, and cytotoxic medicines.
CDMO & CMO: The segment logged its highest-ever quarterly revenue of INR 155 Cr in Q4 FY26. The company is working with 21 customers on 54 active projects (35 commercial, 19 in development).

Manufacturing and Capex Update:

Atali Greenfield Project (Gujarat): Phase 1 with ~450 kL reactor capacity is ~80% operational. Fully operational expected in June 2026. Product focus is on Intermediates and CDMO/CMO. The site is scalable up to 8-10x of Phase 1 capacity.
Tarapur Brownfield Expansion (Maharashtra): Investment of INR 210 Cr to expand Xanthine capacity to 9,000 MTPA. Commissioning expected by June 2026.
Total FY26 CAPEX was ~INR 400 Cr. A similar level of CAPEX is expected for FY27.

Regulatory Approvals:

The company's manufacturing units (Dombivali, Vapi, Tarapur) hold certifications from USFDA, EU GMP, EDQM, KFDA, and COFEPRIS.

The company is targeting a 15-18% Revenue and EBITDA CAGR over the next 3-4 years.
For FY27, it plans to initiate R&D investment in TIDES (Peptides & Oligonucleotides) to expand portfolio capabilities.
It is evaluating a dedicated block for a specific CDMO project at Atali, with groundbreaking planned in FY27 and a 1-year completion target.

Face Value: INR 5.00
Market Price: INR 589.25
52-Week High/Low: INR 971.50 / INR 557.20
Market Capitalization: INR 53,420.08 Mn
Equity Shares Outstanding: 90.66 Mn
Shareholding Pattern: Promoters (43.08%), FII (8.39%), DII (7.41%), Public (41.12%)