Neuland Laboratories (524558) Q3 25/26 earnings summary

Executive summary

• Q3 FY26 total income reached INR 447.8 crore, up 11.4% year-over-year, with commercial CMS projects contributing over 50% of revenue.

• EBITDA stood at INR 85 crore (19% margin), impacted by higher labor costs and product mix; adjusted EBITDA would be INR 95 crore (21% margin) excluding a one-time INR 10 crore labor cost.

• Profit before tax was INR 54.3 crore, compared to INR 71.8 crore in Q3 FY25 (excluding prior year extraordinary gain from property sale).

• PAT for Q3 FY26 was INR 40.4 crore, down 60% YoY; 9MFY26 PAT was INR 150.6 crore, down 35% YoY.

• Management remains optimistic about medium-term growth, citing strong commercial molecule ramp-up, ongoing investments in capacity and R&D, and robust business momentum.

Financial highlights

• Nine-month gross margin maintained at 56% versus 55% last year.

• Free cash flow for the year was INR -9.2 crore, with CapEx outflow of INR 254 crore over nine months.

• Net debt position at -INR 202.6 crore, reflecting a strong balance sheet and improved from -INR 185.1 crore at Q3FY25 end.

• Working capital cycle stood at 145 days of sales, with inventory holding at 124 days, and working capital days reduced from 155 in Q2FY26.

• Quarterly EPS was INR 31.5 per share.

Outlook and guidance

• Management expects FY26 to be a growth year, with ramp-up of new CMS molecules and expanded capacity in Unit 3.

• Growth for the next two to three years is considered preordained by the current commercial base and capacity investments.

• Peptide facility commissioning in July is expected to drive future growth, with early-stage interest from innovators and big pharma.

• Board approved R&D move to a new leased facility, with Rs. 254 crore capex in 9MFY26.

• Management emphasizes a medium- to long-term evaluation of performance due to inherent business lumpiness.