Financial Performance (Consolidated) - Q2FY27

Revenue from Operations: ₹51.15 Crores, representing 5% quarter-on-quarter growth and 12% year-on-year growth

Other Income: ₹0.19 Crores, showing 14% QoQ and 18% YoY growth

Total Income: ₹51.34 Crores, with 5% QoQ and 12% YoY growth

Total Operating Expenses: ₹48.14 Crores, increasing 1% QoQ and 3% YoY

EBITDA: ₹3.01 Crores, showing significant improvement of 169% QoQ and 440% YoY (from negative ₹0.88 Cr in Q2FY26)

EBITDA Margins (Excluding Other Income): 5.88%, improving by 358 basis points QoQ and 781 basis points YoY

Depreciation and Amortization: ₹4.87 Crores, increasing 12% QoQ and 14% YoY

Finance Cost: ₹2.91 Crores, increasing 4% QoQ and 8% YoY

Profit Before Tax and Exceptional Item: Negative ₹4.58 Crores, improving 21% QoQ and 40% YoY

Profit After Tax: Negative ₹4.22 Crores, improving 26% QoQ and 40% YoY

EPS: Negative ₹4.08, improving 26% QoQ and 40% YoY

Half-Yearly Performance (H1FY27)

Revenue from Operations: ₹99.86 Crores, up 10% YoY from ₹91.01 Crores in H1FY26

EBITDA: ₹4.13 Crores, showing 465% improvement from negative ₹1.13 Crores in H1FY26

EBITDA Margins: 4.14%, improving by 538 basis points YoY

Profit After Tax: Negative ₹9.97 Crores, improving 24% YoY from negative ₹13.13 Crores

Balance Sheet Summary (Consolidated) - H1FY27

Total Equity: ₹225.84 Crores (decreased from ₹234.72 Crores in FY26)

Non-Current Liabilities: ₹55.77 Crores (slight increase from ₹55.71 Crores)

Current Liabilities: ₹141.05 Crores (increased from ₹133.73 Crores)

Total Assets: ₹422.66 Crores (slight decrease from ₹424.16 Crores)

Non-Current Assets: ₹285.65 Crores

Current Assets: ₹137.01 Crores

Cash Flow Statement (Consolidated) - H1FY27

Cash Flow from Operating Activities: ₹7.18 Crores

Cash Flow from Investing Activities: Negative ₹3.76 Crores

Cash Flow from Financing Activities: Negative ₹3.20 Crores

Net change in cash: Positive ₹0.22 Crores

Closing cash balance: ₹0.44 Crores (up from ₹0.22 Crores at FY26 end)

Strategic Business Updates

Capsules Business Performance: Strong quarter driven by strategic conversion of idle HPMC lines to gelatine production, resulting in additional volumes. Realizations improved by approximately 3% from previous quarter, sustained in Q2. Second HPMC line conversion underway, expected to add volumes in second half of FY27.

Logistics Challenges: Container availability and freight rates remained concerns during the quarter, but company managed to maintain profitability despite these challenges.

Raw Material Outlook: Expectation of rising gelatine prices due to increasing international coal and oil prices. Company expects to pass cost increases to customers as done in previous quarters.

New Customer Additions: Added several new customers including Mankind Pharma during the quarter. Successfully completed audit by Zydus Lifesciences, with business expected to begin in coming quarters.

API Business Developments

Leadership Change: Appointed new Chief Executive Officer for API operations with previous nine-year experience at Shilpa Medicare.

Strategic Shift: Closing loss-making business lines and customer accounts. Focus on regulatory filings and approvals for products in target markets.

Regulatory Timeline:

  • WHO GMP certification audit expected at any time
  • Certificate of Pharmaceutical Product (COPP) filings for seven products underway
  • Validation completed for four products, remaining filings scheduled for December 2026
  • Expected completion of COPP process by March 2027
  • Pipeline of 16 molecules for US DMF and CEP filings: eight scheduled for FY28, eight for FY29
  • US FDA audit expected by Q1FY29

Contract Manufacturing: Program with Fermbox Bio facing challenges, products returned to lab for process rework. Exploring new contract with another organization and discussions with other parties ongoing. Also exploring CMO opportunity for synthesis block to utilize available capacity.

Company Overview

Business Segments: Hard capsule shell manufacturer (gelatine and vegetarian capsules) and API manufacturing through subsidiary Natural Biogenex Private Limited.

Manufacturing Capacity: 20.25 billion capsules per annum (BCPA) as of FY26, with one new HPMC line commissioned in FY26 enhancing capacity from 19.50 BCPA.

Global Presence: Exports to 28 countries across 5 continents, with 28.94% of revenue from exports in FY26.

Customer Base: 311 customers with 30% relationships exceeding 10 years, 58% exceeding 5 years. Repeat business accounted for 80% of FY26 turnover.

API Segment Details

Greenfield Capex: Integrated steroidal API facility at Tumkur spread across 5 acres, compliant with WHO GMP, USFDA and EU GMP guidelines. Zero Liquid Discharge manufacturing facility.

PLI Scheme: Awarded three PLI applications for Dexamethasone, Betamethasone and Prednisolone under government's Production Linked Incentive scheme for critical APIs. Expects to receive incentives over 6 years effectively de-risking investments.

R&D Focus: 27 team members focusing on product innovations and yield efficiencies. 2 patents granted, 3 patents under filing. ESOPs issued to senior R&D members to align long-term interests.

Investment Merits

Growth Drivers: Capacity enhancement with state-of-the-art machinery, backward integration in steroidal APIs, exploring foreign/domestic manufacturing facilities, benefiting from China Plus One strategy and government PLI incentives.

Strategic Priorities: Reducing margin volatility, growing sales in regulated markets, introducing new capsule variants, developing new API molecules, investing in technology for manufacturing efficiencies, and scaling up API production for higher-margin segments.