Aarti Pharmalabs Q2 FY27 results: net profit up 156.0% to ₹71.47 crore, revenue up 45.9%

How did Aarti Pharmalabs perform in Q2 FY27?

Aarti Pharmalabs’ consolidated revenue for Q2 FY27 was ₹610.45 crore, up 45.9% from ₹418.33 crore in Q2 FY26. EBITDA was ₹135.16 crore, up 80.9% from ₹74.72 crore, while the EBITDA margin increased 4.2 percentage points to 22.1%. Profit before tax rose 124.0% to ₹88.11 crore.

Against Q1 FY27, revenue increased 13.9% from ₹535.80 crore to ₹610.45 crore, but EBITDA fell 0.7% to ₹135.16 crore from ₹136.11 crore. The EBITDA margin declined 3.3 percentage points to 22.1%, while PBT fell 5.9% to ₹88.11 crore.

Net profit was ₹71.47 crore, up ₹43.55 crore from Q2 FY26 but down 6.1% from Q1 FY27. Profit attributable to owners was ₹68.92 crore, compared with ₹28.57 crore a year ago and ₹76.14 crore in the previous quarter. Basic EPS was ₹7.88, against ₹3.08 and ₹8.4, respectively.

On the standalone basis, revenue was ₹612.59 crore, profit before tax was ₹30.93 crore and net profit was ₹65.75 crore. Revenue was up 46.8% on the standalone basis, while the filing described standalone profit growth of 180% and a quarter-on-quarter margin decline.

What changed in Aarti Pharmalabs' costs and profit?

Total expenses rose 37.4% year on year to ₹520.77 crore, compared with ₹379.05 crore in Q2 FY26. Cost of materials increased 64.6% to ₹334.88 crore from ₹203.46 crore, other expenses rose 34.7% to ₹121.81 crore from ₹90.43 crore, and employee cost increased 25.7% to ₹54.55 crore from ₹43.41 crore.

Finance costs rose 40.1% to ₹14.95 crore from ₹10.67 crore, while depreciation increased 23.3% to ₹30.53 crore from ₹24.77 crore. Other income rose to ₹0.47 crore from ₹0.05 crore. The filing does not state a reason for the year-on-year increase in these cost lines.

Q2 FY27 included an exceptional charge of ₹2.04 crore, while Q2 FY26 had no exceptional item. Tax expense increased 118.4% to ₹23.52 crore from ₹10.77 crore. Profit before tax nevertheless rose 124.0% to ₹88.11 crore, and net profit increased 156.0% to ₹71.47 crore.

Sequentially, total expenses increased 17.7% to ₹520.77 crore from ₹442.59 crore, led by cost of materials, which rose 33.0% to ₹334.88 crore. Other expenses increased 8.0% to ₹121.81 crore, employee cost rose 8.4% to ₹54.55 crore and finance costs rose 16.1% to ₹14.95 crore. Tax fell 5.6% to ₹23.52 crore.

How did the first half of FY27 go?

In the first half of FY27, consolidated revenue was ₹1,146.25 crore, up 42.5% from ₹804.53 crore in H1 FY26. Total income was ₹1,147.17 crore, up 42.3% from ₹806.17 crore, while basic EPS was ₹16.28.

H1 FY27 profit before tax was ₹181.76 crore, compared with a loss of ₹15.02 crore in H1 FY26. Net profit was ₹147.61 crore, compared with a net loss of ₹44.18 crore, marking a return to profit for the first half.

What do the balance sheet and cash flow show?

At 30 September 2026, total assets were ₹3,825.88 crore, compared with ₹3,481.71 crore at 31 March 2026. Total equity increased to ₹2,254.76 crore from ₹2,124.6 crore, while borrowings rose to ₹836.47 crore from ₹685.63 crore.

Cash and cash equivalents fell to ₹4.21 crore from ₹8.53 crore. Inventories increased to ₹794.21 crore from ₹640.31 crore, trade receivables rose to ₹684.96 crore from ₹583.32 crore, and trade payables increased to ₹363.4 crore from ₹334.54 crore.

H1 FY27 operating cash flow was ₹29.99 crore, compared with an outflow of ₹22.02 crore in H1 FY26. Investing cash flow was an outflow of ₹131.21 crore against an outflow of ₹222.05 crore, while financing cash flow was ₹96.91 crore against ₹147.89 crore. Capital expenditure was ₹123.2 crore, compared with ₹216.48 crore.

How has Aarti Pharmalabs done over the last 8 quarters?

Revenue reached its highest level in the reported series at ₹610.45 crore in Q2 FY27, after ₹535.80 crore in Q1 FY27, and the company has recorded year-on-year revenue growth in each of the last three quarters. The lowest quarterly revenue was ₹386.19 crore in Q1 FY26.

Net profit peaked at ₹88.34 crore in Q4 FY25 and was ₹76.14 crore in Q1 FY27 before falling to ₹71.47 crore in Q2 FY27. Year-on-year profit rose in each of the last two quarters, while the EBITDA margin eased from 25.4% in Q1 FY27 to 22.1% in Q2 FY27.

What else did the company announce?

The board approved the unaudited standalone and consolidated financial results for the quarter and half year ended 30 September 2026, along with the auditors’ limited review reports. The results included the statements of profit and loss, assets and liabilities, and cash flows.

The company also disclosed that Piyush Lakhani resigned as chief financial officer and key managerial personnel to pursue an alternate career opportunity outside the organisation. He was relieved with effect from the close of business hours on 30 October 2026.

Vibha Thakkar was appointed chief financial officer and key managerial personnel with effect from 31 October 2026, upon the recommendation of the Nomination and Remuneration Committee and Audit Committee. The same-day filings reviewed did not announce a dividend or fund raise.

What did the auditors point out?

The auditors’ review report stated that nothing had come to their attention causing them to believe that the statements had not disclosed the information required under Regulation 33 of the Listing Regulations or contained any material misstatement. They described the review as providing moderate assurance and said it did not constitute an audit opinion.

The auditors included an emphasis of matter concerning the 29 August 2026 stamp-duty order relating to the demerger of the pharmaceutical undertaking of Aarti Industries Limited. The company recognised a provision of Rs. 204.00 lakhs as an exceptional item and disclosed Rs. 5,746.00 lakhs as a contingent liability; its challenge before the Gujarat High Court was pending.

The emphasis of matter also referred to the restatement of figures for the quarter and half year ended 30 September 2025 to recognise fair-value losses of Rs. 992.93 lakhs and Rs. 1,456.67 lakhs, respectively, on a target redemption forward contract entered into during the year ended 31 March 2025.

What did Aarti Pharmalabs' management say?

Management maintained CDMO revenue growth guidance of 40%-50% for FY27 and also framed 40%-50% growth for the following year. The longer-term CDMO revenue target of INR1,000 crore or US$100 million, whichever was achieved first, was retained, and management declined to provide pointed FY27 or FY28 company-wide guidance.

Management said expanded xanthine capacity was expected to reach full production by the end of FY27, with utilisation rising sequentially in FY28. Management gave a utilisation range of 7,500-8,000 next year and up to about 8,800 over two years, against nameplate capacity of 9,600.

Atali Phase 1 was expected to reach full utilisation in H2 FY27, while Block 2 was targeted for commercialisation in H2 FY28. API revenue was expected to run at INR180-200 crore per quarter in H2 FY27, and FY27 capital expenditure was targeted at INR350-400 crore.

Management identified elevated raw-material costs, customer pass-through timing, CDMO approval and conversion risk, elevated working-capital intensity, additional debt for the capital programme and spot-market xanthine pricing as risks. It said CDMO commercialisation depends on customer approvals and conversion of the active pipeline.

How did Aarti Pharmalabs shares react?

Aarti Pharmalabs rose 2.2% after 15 minutes and 3.8% after 30 minutes from the price when the filing appeared, after initially falling 0.3% after five minutes. The stock closed 6.5% above its pre-results close on the reaction day, compared with a 0.4% median rise for other Pharmaceuticals stocks.

By the next day’s close, the stock was down 0.7% from its pre-results close. The industry median was down 0.6% and the Nifty Microcap 250 was down 1.9%, leaving the stock 0.1 percentage points ahead of the industry on a cumulative basis from the pre-results close.

Earlier reaction-day moves were mixed. The stock rose 20.3% on 7 August 2026 and 3.0% on 10 May 2025, while it fell on 25 May 2026, 9 February 2026, 9 November 2025, 12 August 2025 and 28 October 2024.

How did other Pharmaceuticals companies do?

Among 60 Pharmaceuticals companies compared for the quarter, the median revenue growth was 18.9%. Of the other companies, 9 grew revenue faster than Aarti Pharmalabs and 51 grew more slowly; Aarti Pharmalabs’ own revenue growth was 45.9%.

Profit increased for 38 of the 54 peer companies whose profit was compared. The peer comparison was recorded as of 4 November 2026.