Aarti Pharmalabs Ltd (AARTIPHARM) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Aarti Pharmalabs Limited Q2 & H1 FY27 earnings conference call, hosted by PhillipCapital Private Company Group. As a reminder, all participant lines will be
Moderator: listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Om Sanghvi from PhillipCapital Private Client Group. Thank you and over to you, Om.
Om Sanghvi (PhillipCapital Private Client Group): Thank you. A very good afternoon, everyone. On behalf of PhillipCapital Private Client Group, I welcome you to the Q2 and H1 FY27 earnings conference call for Aarti Pharmalabs Limited. Joining us today from the management are: Mr. Rashesh Gogri, the Managing Director; Mr. Piyush Lakhani, Chief Financial Officer; and Mrs. Hetal Gogri, Executive Director. I would like to hand over the call to Mr. Rashesh sir for the opening remarks. Over to you, sir.
Rashesh Gogri (Aarti Pharmalabs Ltd): Good evening and thank you for joining us today to discuss Aarti Pharmalabs' second-quarter and half-year results for financial year 2027. The investor presentation relating to today's results has been filed with the exchanges and is available on our website for your reference. We continue to make healthy progress in all our business segments and are executing well on our growth strategy. With clear focus on near-term opportunities, we aim to further solidify our standing as a preferred partner in the global pharmaceutical supply chain. Moving on to our standalone financials for Q2 FY26. Aarti Pharmalabs maintained strong momentum delivering its highest ever quarterly revenue of ₹613 crores as compared to ₹417 crores, which is 47% increase YoY basis. The EBITDA was ₹136 crores as compared to ₹74 crores in the corresponding previous period of the previous year, and that is an increase of 84% YoY. The profit after tax for the Q2 financial year 27 was ₹66 crores as compared to ₹24 crores a year back, which is which was 2.75 times increase on last year's low base. The EBITDA margins have remained healthy at 22.2% as compared to 17.7% in the same quarter last year. Now I would like to tell you about the specific businesses of the businesses in Q2 FY27. The xanthine derivatives and allied product segment contributed to 50% of the turnover. The volume split between the beverages and others was 62% and 38%, respectively. In terms of the geographical split, the export sales contributed to 59% and the rest was 41% with local sales. Due to geopolitical turmoil, the raw material costs have stayed elevated, and we are passing on the raw material increase to our customers. The API and intermediate business clocked 30% of the turnover. The sub-segment-wise breakup is 57% for the regulated market, 33% for the RoW market, and 10% for the non-regulated market. Benefiting from the recent capacity expansion undertaken in the steroid API, we have recorded healthy sales in this quarter. The third segment, CDMO/CMO, has contributed to 13% of the revenue in this quarter, and we are presently working with 23 customers. The number of active projects now is 59, out of which 39 projects are in commercial stages and 20 are under different stages of development, both at customers' end. We remain on track to achieve our target of 40% to 50% revenue growth over last year on this business segment. The balance 6% turnover was for other sales, which includes trading sales, export incentives, and solvent and other scrap sales. Let me share a brief update about our ongoing projects. The ground breaking of the Atali dedicated block, that is block number two, has been done and we target to commercialize this block in the H2 FY28. The ramp-up of xanthine expanded capacity is progressing and we plan to achieve the full capacity by the end of FY27, and we will achieve the utilization sequentially in the next year. The capacity expansion of the steroid block of API plant was completed and it has started contributing to the production and the revenue. I would like to share a few words about the strategic outlook. Building over 25 years technical expertise and heavy investments over last 3, 4 years, Aarti Pharmalabs has established a solid foundation to transition into robust, multi-pillar, global pharmaceutical partner. The mature xanthine derivative segment, which where we hold a dominant market position, continues to serve as a cash cow. The company is also geared up to accelerate growth led by its high-growth CDMO/CMO pillar, followed by API and intermediate segment. We are working on all
Rashesh Gogri (Aarti Pharmalabs Ltd): for growing these segments. Ultimately with the capacity additions still underway in the medium term Aarti Pharmalabs is well positioned to deepen its global partnerships and drive substantial long-term value creation. I now request the moderator to open the forum for Q&A. Thank you.
Moderator: Thank you so much, sir. Ladies and gentlemen, we'll now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Also, in order to ensure that the management will be able to address all the question from the participants, we request you to kindly limit your question to two questions only per participant. If you have a follow-up question please re-join the queue. First question comes from the line of Ahmed Madha with Unifi Capital. Please go ahead.
Ahmed Madha (Unifi Capital): Yeah. Thanks for the opportunity. Sir, can you give status on the both the projects the xanthine one as well as the Atali Phase 1? How has the utilization been? Because we still see capital work in progress on balance sheet of 300 crore plus. So, how should one read it? The capitalization of the assets and how the both the assets are operational?
Rashesh Gogri (Aarti Pharmalabs Ltd): Yeah. As explained to you on the earlier calls, the xanthine expansion was 2 phase. First was to get the finished product out and that has been fully, you know, as I mentioned on the call speech also that we we plan to ramp up the production to full production capacity by end of this year and I think the same will continue on the intermediate production also. So, that also will get fully operational by end of this year. So, by end of this year you will see full capitalization of the xanthine project. The Atali Phase 1 is complete and I think in the Q3 we will do the capitalization of the so, we have taken the trial batches of Atali Phase 1B. Trials are actually underway in this week and we will have full capitalization done on that that block as well.
Ahmed Madha (Unifi Capital): Okay. So, in terms of the CDMO visibility with the both the first phase A plus B both commercializing and the number of projects increasing as per your disclosures, what sort of visibility currently you have to be able to utilize Atali at the full full capacity in the second half?
Rashesh Gogri (Aarti Pharmalabs Ltd): Yeah. Yeah, so basically the Atali Phase 1A and B are serving different purposes. The 1B is a smaller line which can take care of you know, early work for the newer projects. Whereas the 1B, 1A which was commercialized was a commercial line. So, it was like a more scale-up line kind of thing which got commissioned now, you know, in the phases of commissioning now. So, it won't have too much difference or too much bearing on overall capacity addition that we will have in Atali by doing the Phase 1B. Okay, but overall we see that we will be able to completely utilize this Atali asset in this financial year, second-half of this financial year.
Ahmed Madha (Unifi Capital): Sure. And on the xanthine front, so compared to Q1, Q2 the top line is broadly same. So, how should one look at it? Is the volumes have been broadly same and the pricing has been the same or there has been volume increase and price decrease? There's been some change in the mix also in terms of the domestic sales proportion is much higher compared to the exports proportion. So, how should one read it in terms of overall volumes, pricing for xanthine in Q2 compared to Q1 and in terms of Q3, Q4 there should be a significant jump in volumes, is what we should assume?
182 more turns of this transcript: log in to Stocksigma to read the full call.