Sudeep Pharma Q2 Revenue Hits Record INR196 Crores

Revenue from operations: INR196.7 crores, representing 21% year-on-year growth (from INR162.7 crores in Q2 FY26) and 24% sequential growth (from INR158.3 crores in Q1 FY27).
EBITDA: INR73.2 crores, representing 32% year-on-year growth (from INR55.5 crores in Q2 FY26) and 33% sequential growth (from INR54.9 crores in Q1 FY27).
EBITDA margin: 37.2%, compared to 34.1% in Q2 FY26 and 34.7% in Q1 FY27.
PAT: INR51.8 crores, representing 11% year-on-year growth (from INR46.8 crores in Q2 FY26) and 28% sequential growth (from INR40.6 crores in Q1 FY27).
PAT margin: 26.3%.
Gross margin: Improved to 64.7% compared to 62.5% a year ago.

Revenue from operations: INR355 crores, representing 23% year-on-year growth (from INR287.6 crores in H1 FY26).
EBITDA: INR128.1 crores, representing 29% year-on-year growth (from INR99.3 crores in H1 FY26).
EBITDA margin: 36.1% compared to 34.5% in H1 FY26.
PAT: INR92.4 crores, representing 18% year-on-year growth (from INR78 crores in H1 FY26).
PAT margin: 25.22%.

Specialty Ingredients Segment:

Q2 FY27 revenue: INR54 crores, up 9% sequentially but down 25% year-on-year.
The decline was primarily due to the temporary pause of the Government of India's Fortified Rice program, which contributed approximately 20-25% of segment revenue in FY26 (INR40-50 crores annually).
Received approvals from large customers across infant nutrition, dietary supplements, and human nutrition during Q2, with commercial revenues expected in Q3.
NSS subsidiary secured five customer approvals and has approximately 12 customer projects in evaluation.
Segment margin was depressed at 28% due to lower operating leverage and NSS drag.
Management expects positive year-on-year growth in Q3 and Q4 based on new customer contracts alone, without assuming restart of Fortified Rice program.

Pharma Food Nutrition (PFN) Segment:

Q2 FY27 revenue: INR142 crores, representing 57% year-on-year growth and contributing 72% of consolidated revenue.
Segment EBITDA margin: Increased to approximately 41% from 33% a year ago.
Segment EBITDA nearly doubled year-on-year.
Growth was broad-based across India, Africa, APAC, and Europe.
Volume growth was approximately 30-35% for the quarter and 19% for H1.
Key growth drivers: phosphate portfolio (70-80% growth), new customer additions, and magnesium bisglycinate.

Nandesari Greenfield Facility:

Received FDA approval during Q2 FY27.
Annual capacity: 51,000 tons.
Will produce glycinates, gluconates, citrates, and phosphates.
Customer qualifications underway with commercial supplies expected in H2 FY27.
40% of capacity allocated to bisglycinate, gluconate, and citrate products; 60% to phosphates.
Expected to operate at higher realizations than existing facilities.
Target utilization: 15-20% in FY28, reaching 75% optimum utilization over 3-4 years.
Expected asset turnover: Approximately 3x at optimum utilization.

Magnesium Bisglycinate (AbsorBis/MaxZobis):

Q1 FY27 sales exceeded full FY26 sales; momentum continued in Q2.
Realization is more than 3x the average PFN portfolio realization.
Global market opportunity approximately $1 billion, with $400-450 million from US alone.
Currently has 8-9 US approvals and 30-35 global approvals.
Expected to become a top 3 revenue contributor within PFN (potentially exceeding INR100 crores) over next 2-3 years.
Management targets 50% of volume to large customers and 50% to mid-small companies.

Battery Materials Business (Sudeep Advanced Materials):

Dahej project on track for commercial operations commencement in April 2027.
Phase 1 capacity: 25,000 tons annually of battery-grade iron phosphate.
Customer engagements advancing across US, Korea, Europe, and India.
Strong demand visibility for first 100,000 ton annual capacity.
Expect to provide update on binding offtake contracts in Q4 FY27.
Customer discussions for next phase (200,000 tons) progressing faster than expected.
Proprietary green chemistry process with 90% reduced effluent and 95% reduced solid waste compared to conventional methods.
Positioned as first and only non-Chinese producer of battery-grade iron phosphate with 18-24 month head start.
Targeting similar asset turnover (~3x) and ROCE profile as core business.
Raw materials secured through ex-China supply chain for up to 100,000 tons.

Cash flow from operations: INR43.5 crores for H1 FY27, up INR26 crores year-on-year.
Net working capital days: 214 days as of 30th September 2026 (similar to March 2026).
Elevated inventory due to strategic stocking of key raw materials (purified phosphoric acid) and battery project materials.
Target to reduce working capital cycle to 170-180 days (excluding Battery Materials inventory) and eventually to 150 days.
Capital expenditure: INR77 crores in FY27 mainly for Battery Materials project and greenfield facility completion.
Net debt: INR72.5 crores as of 30th September 2026 with net debt-to-equity ratio of 0.07x (compared to INR33.6 crores and 0.04x as of 31st March 2026).
Return ratios: Annualized ROCE of 22.4% and ROE of 19% for H1 FY27.

Logistics costs: Selling and distribution expenditure was approximately INR8 crores above normal quarterly average due to elevated sea freight costs.
Raw material costs: Phosphoric acid prices strengthened significantly (up 40% from Q4 levels and further strengthened in Q2).
Tax rate: Effective tax rate of 27% compared to 21% last year due to increased depreciation from new assets and revenue mix favoring higher-tax PFN segment (average 28% tax rate).
Other income: Lower by INR6 crores compared to INR10.2 crores in Q2 FY26.

Specialty Ingredients expected to return to positive year-on-year growth in Q3 and Q4.
NSS targeting similar growth pace to core business in FY28 with 30% EBITDA margin target.
Battery Materials Phase 1 validation expected to take 3-6 months post-April 2027 commissioning.
Working capital target of 170-180 days (excluding Battery Materials inventory) for FY27.
Margin levels expected to be sustained despite greenfield operating costs and battery project expenses.