Aarti Drugs (524348) investor relations material

Executive summary

• Q3 FY2026 revenue grew 8% year-over-year to INR 602.9 crores, with nine-month revenue up 8% to INR 1,846.6 crores.

• EBITDA for Q3 declined 10% YOY to INR 56.3 crores, with a margin of 9.3%, while PAT rose 58% YOY to INR 40.5 crores, reflecting a PAT margin of 6.7%.

• Growth was driven by strong domestic and export formulation sales, with operationalization of new backward integration and salicylic acid plants contributing.

• Audited standalone and consolidated financial results for the quarter and nine months ended December 31, 2025, were approved and published.

• Interim dividend of ₹2 per equity share declared for FY 2025-26, with record date set as February 9, 2026.

Financial highlights

• Standalone Q3 revenue was INR 530 crores (88% of consolidated), with exports contributing 37%.

• Formulation segment revenue rose 58% YOY to INR 76.6 crores, with exports at 67% of segment revenue.

• API business breakdown: antibiotics 35.1%, anti-protozoal 19.8%, anti-inflammatory 12.9%, anti-diabetic 16.6%, antifungal 12.2%.

• Gross margin for the quarter was around 36%, impacted by inventory sales and lower export content.

• Standalone net profit for Q3 FY26: ₹3,384 lakhs; consolidated net profit: ₹4,055 lakhs.

Outlook and guidance

• Volume growth of 12%-15% expected in FY2027, mainly from new projects (Salicylic Acid and Methylamine/SAICA).

• Gross margin target of 36% for FY2027, supported by higher export share, backward integration, and stabilization of new plants.

• EBITDA margin expected to recover to 12%-13% in the near term, with a steady-state target of 14%-15% as new capacities ramp up.

• Oncology formulations to begin commercial sales in Q4, with significant revenue potential over the next three years.

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