Aarti Drugs (524348) Q3 25/26 earnings summary

Executive summary

• Q3 FY26 revenue grew 8% YoY to INR 602.9 crore, with PAT up 58% YoY to INR 40.5 crore and margin at 6.7%, driven by strong domestic and export formulation sales, but profitability was impacted by low utilization, weaker antibiotic demand, supply chain delays, and a one-time plant shutdown.

• Export formulations and operationalization of new backward integration and salicylic acid plants contributed to growth and margin stability.

• January sales trends are encouraging, indicating a potential inflection point for improved performance in coming quarters.

• Audited standalone and consolidated financial results for Q3 and nine months ended December 2025 were approved and published.

• Interim dividend of ₹2 per equity share declared, with a successful share buyback and new senior management appointments reflecting organizational realignment.

Financial highlights

• Q3 FY26 consolidated revenue: INR 602.9 crore (up 8% YoY); EBITDA: INR 56.3 crore (down 10% YoY, margin 9.3%); PAT: INR 40.5 crore (up 58% YoY, margin 6.7%).

• Nine months FY26 revenue: INR 1,846.6 crore (up 8% YoY); EBITDA: INR 215 crore (up 9% YoY, margin 11.6%); PAT: INR 139.7 crore (up 49% YoY, margin 7.6%).

• Standalone Q3 revenue: INR 530 crore (88% of consolidated); exports contributed 37%.

• Gross margin for 9M FY26 improved by 120 bps to 36.7%.

• Q3 FY26 tax includes INR 16.38 crore IT refund, boosting net profit.

Outlook and guidance

• Expecting 12%-15% volume growth in FY27, mainly from new projects (Salicylic Acid, Methylamine), with gross margin target of 36% and EBITDA margin expected to recover to 12%-13% in the near term.

• CapEx guidance of INR 150-200 crore per year for the next two years, focused on oncology, cardiovascular, antifungal, and specialty chemicals.

• Backward integration plant expected to reach 50% capacity by March/April 2026 and full self-reliance for Metformin intermediates in 6-8 months.

• Impact assessment of new Indian Labour Codes is ongoing; adjustments will be made in Q4 FY26.