Aarti Drugs Ltd (AARTIDRUGS) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Q2 and H1 FY '27 earnings conference call of Aarti Drugs Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing "*" then "0" on your touch-tone phone. Please note that this conference is being recorded. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance, and it may involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Adhish Patil, Managing Director of Aarti Drugs Limited. Thank you, and over to you, sir.
Adhish Patil (Aarti Drugs Ltd): Thank you. Good morning, everyone, and thank you for joining us for Aarti Drugs Limited's earnings conference call for the second quarter and first half of FY '27. With me today are Mr. Harshit Savla, our Joint Managing Director; Mr. Harish Shah, Whole-Time Director; Mr. Vishwa Savla, Managing Director of Pinnacle Life Science Private Limited; and our investor relations advisors, SGA. Our results and investor presentation for the quarter ended 30th September 2026 have been filed with the stock exchanges and are also available on our website. I hope you have had a chance to go through them. I am pleased to report that Q2 FY '27 has been a milestone quarter for Aarti Drugs Limited. For the first time ever, our total consolidated revenue was at ₹829 crores in a single quarter, 27% higher than a year ago. Operating environment remained positive, supportive throughout the quarter. Developments in West Asia kept API prices firm across the industry while customers increasingly prioritized reliable and uninterrupted supply of APIs. Aarti Drugs was well-placed to benefit from this, delivering a 16% improvement in realizations year-on-year alongside a volume growth of 5%. Just as important as the recovery in our margins, EBITDA grew 63% to ₹138 crores, the highest quarterly EBITDA we have ever reported, with our EBITDA margin for the quarter reaching 16.6%, up 370 basis points year-on-year basis and the highest we have achieved in nearly six years. Profit after tax rose 83% to ₹82.8 crores. Our focus remains firmly on what is within our control, that is, growing volumes, improving our product mix and market mix, and lowering our costs through backward integration, process improvement, and energy optimization. Our API business, which remains our largest segment, grew 17% to ₹605 crores compared with ₹516 crores in Q2 FY '26. Our specialty chemicals business continued to scale up with the support of our Saykha facility and grew 92% to ₹72 crores from ₹37 crores a year ago. Our formulations business also had an excellent quarter, growing 58% from ₹82 crores in Q2 FY '26 to ₹130 crores in Q2 FY '27, led by exports which rose 73% year-on-year. Now, let's talk about some projects. Let me begin with our methylamines facility at Saykha. During the quarter, the plant operated at around 72% utilization and captive consumption of our antidiabetic portfolio rose to around 85%.
Adhish Patil (Aarti Drugs Ltd): in product mix, backward integration, and cost efficiency are structural, and they will stay with us even as the pricing environment normalizes over time. I would like to highlight how quickly this facility has come together. We commissioned it in September last year, and within roughly a year, a large share of our key intermediates for metformin, which we earlier bought from outside, is now being made in-house. This gives us better control over the cost, quality, and availability of inputs for one of our most important products and it strength- strengthens our position as a dependable, integrated supplier for our customers. We are now working to improve utilization of the other products at the site as well. At the Tarapur facility, the improvements we spoke earlier are now underway, and we have started producing technical grade methyl salicylate as well. We have manufactured roughly around 85 tons so far in the last quarter. We are also expanding our US FDA-approved block at Tarapur by building an adjacent block, which will more than double its capacity. This expansion includes three multi- three new multipurpose plants, which will give us the flexibility to make a wider range of products for regulated markets. We expect the project to take around 18 to 20 months, with commercial production targeted towards the end of FY '27. At Sarigam, we are increasing our metformin capacity from 1,400 tons per month to 1,700 tons per month, with commercialization planned in FY early FY '28. Alongside this, we are adding a dedicated 500 tons per month US FDA-compliant block by the end of FY '28. And our US FDA DMF for Metformin is under preparation. At our fa- facility in Baddi in Himachal Pradesh, we are executing a brownfield expansion, which involves utilizing an adjacent plot to nearly double the current oral solid dosage manufacturing capacity and support a long-term formulations revenue target. With a stronger, more integrated platform and capacity additions lined up at Tarapur, Sarigam, and Baddi, we enter the second half of the year with confidence. Once this block is approved, it is expected to open the door to many of the US and EU market customers. I would also like to share an update regarding our sustainability initiatives. CRISIL has assigned Aarti Drugs an ESG rating of 61 for FY '25-'26, which places us in the strong category. We see this as recognition of the steady work our teams have put into environment, safety, and governance across our sites, and we will continue to build on it. With that, let me take you through our financial performance. First, we'll talk about consolidated financial highlights for Q2 FY '27. Revenue stood at Rs. 829 crores as compared to Rs. 653 crores in Q2 FY '26, reflecting a growth of 27% YoY. EBITDA stood at Rs. 138 crores versus Rs. 84 crores in Q2 FY '26, recording a growth of 63% YoY. EBITDA margin stood at 16.6%, an expansion of 370 basis points YoY basis. PAT stood at Rs. 83 crores as compared to Rs. 45 crores in Q2 FY '26, a growth of 83% YoY. PAT margin stood at 10%, an expansion of 310 basis points YoY. Now let's speak about stand-alone business for Q2 FY '27. Revenue stood at Rs. 709 crores versus Rs. 579 crores in Q2 FY '26, a growth of 22% year-on-year. Stand-alone business contributed 84.3% to the consolidated revenue. 68% of the stand-alone revenue came from the domestic
Adhish Patil (Aarti Drugs Ltd): and 32% from the export market. Domestic revenue grew 43% YoY while export revenue declined 5% YoY. Within the API segment, the Antibiotic therapeutic category contributed 34.1%, Antidiabetic 18.2%, Antiprotozoal 18.1%, Anti-inflammatory 14.8%, Antifungal 9.3%, and the rest contributed 5.6% to total API sales. Consolidated financial highlights, H1 FY27: moving to the first half of the year, revenue stood at rupees 1,532 crores as compared to rupees 1,244 crores in H1 FY26, reflecting a growth of 23% YoY. EBITDA stood at rupees 235 crores versus rupees 158.8 crores in H1 FY26, recording a growth of 48% YoY. EBITDA margin stood at 15.3%, an expansion of 250 basis points YoY. PAT stood at rupees 133 crores as compared to 99 crores in H1 FY26, a growth of 34% YoY. PAT margin at 8.7%, an expansion of 70 basis points YoY. Now, let's talk about our formulation segment. Finally, our formulation business, which we run through our subsidiary Pinnacle Life Science, recorded a revenue of rupees 130 crores in Q2 FY27 compared to rupees 83 crores in Q2 FY26, up by 58% YoY. Exports contributed 74% to this formulation revenue. For H1 FY27, formulation revenue stood at rupees 212 crores compared to rupees 163 crores in H1 FY26, up by 30%, with exports accounting for 63% of total formulation sales. With that, I would now like to open the floor for questions. Thank you.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press "*" and "1" on their touchtone telephone. If you wish to remove yourself from the question queue, you may press "*" and "2". Participants are requested to use handsets while asking a question. Ladies and gentlemen, let's wait for a moment while the question queue assembles. I repeat, anyone who wishes to ask a question may press "*" and "1" on their touchtone telephone. The first question is from the line of Candice Pereira from Dolat Capital. Please proceed.
Candice Pereira (Dolat Capital): Yeah. Thank you for taking my question. So, my first question is on the API business. So, we had a 17% growth this quarter. So, how much of it was from price and how much was it from volume growth?
Adhish Patil (Aarti Drugs Ltd): So sorry, Candice, can you please repeat the question? I missed it.
Candice Pereira (Dolat Capital): Yeah. So, on the API business, how much is the growth from price and how much is from volume?
Adhish Patil (Aarti Drugs Ltd): Okay. Okay, yeah. So so for the API business on a YoY basis, we saw a price growth of almost around 17% to 18% and there was a volume growth o- o- on a overall stand alone basis, I am talking about. On a overall volume growth was around 5% for both API and Spec Chem put together.
Candice Pereira (Dolat Capital): Okay. And for H1, it was in the same range for the first half?
83 more turns of this transcript: log in to Stocksigma to read the full call.