Granules India (532482) Q1 25/26 earnings summary

Executive summary

• Achieved key regulatory milestones, including successful FDA and EU inspections at multiple sites, with Gagillapur remediation nearing completion and Genome Valley facility ramping up capacity by 40%.

• Entered high-growth peptide and CDMO segments through Senn Chemicals AG acquisition and Ascelis Peptides subsidiary, targeting advanced therapeutics markets.

• Sales grew year-over-year in North America and sequentially in Europe, while rest of world sales declined due to PFI supply backlog from Gagillapur.

• Sustainability recognized with CDP Supplier Engagement A-list and EcoVadis gold medal, reinforcing commitment to climate action and supply chain excellence.

• Unaudited financial results for Q1 FY26 (ended June 30, 2025) were approved and released, covering both standalone and consolidated performance under Ind-AS.

Financial highlights

• Q1 FY26 consolidated revenue was INR 12,101 million, up 3% year-over-year and 1% sequentially, including INR 291 million from Senn Chemicals AG.

• Gross margin improved to 64.9%, up 593 bps year-over-year and 148 bps sequentially, mainly due to Senn Chemicals consolidation.

• EBITDA stood at INR 2,467 million (20.4% of sales), down 159 bps year-over-year and 69 bps sequentially, impacted by higher professional and manpower costs.

• PAT fell 16% year-over-year to INR 1,126 million, with margin at 9.3%, impacted by exceptional litigation and remediation expenses.

• Cash flow from operations was INR 2,806 million; CapEx for the quarter was INR 1,137 million.

Outlook and guidance

• Significant growth expected in FY 2027, with real momentum starting from the last quarter of FY 2026 as remediation and new approvals are completed.

• Europe revenue contribution projected to reach 15%-20% of total revenue, driven by increased capacity and new product launches.

• New R&D facility for peptide development being added at IIT Hyderabad.

• Focus on portfolio expansion, innovation, and sustainability initiatives, including net-zero targets by 2050.

• Revenue and profitability were impacted by the USFDA warning letter and subsequent voluntary pause at the Gagillapur facility, with ongoing remediation expected to continue affecting results.