Fredun Pharma — Q1 FY26 earnings call

Call held 1 Aug 2025

Management summary

Fredun Pharmaceuticals reported a strong Q1 FY26, driven by a significant increase in revenue, EBITDA, and net profit. The company is strategically shifting towards higher-margin new age businesses and branded products, aiming for substantial growth and improved profitability in the coming years. Key initiatives include expanding the pet care ecosystem and diagnostic services, alongside a robust generics pipeline.

Highlights

  • Revenue grew by 52% year-on-year to INR 119.86 crores in Q1 FY26.

  • EBITDA increased by 62% to INR 16.99 crores, with a margin expansion to 14.18%.

  • Net profit rose by 64% year-on-year to INR 6.77 crores.

  • EPS grew by over 63% year-on-year, reaching INR 14.33.

  • The current order book stands at over INR 200 crores, providing strong visibility for upcoming quarters.

  • New age businesses (pet care, nutrition, mobility, wellness) are targeted to grow at 35-40% CAGR.

  • Company aims to double revenue to over INR 800 crores and PAT to over INR 90 crores within the next 3-4 years.

Key financials

  1. Revenue ₹119.86 Cr +52%YoY
  2. EBITDA ₹16.99 Cr +62%YoY
  3. EBITDA Margin 14.2%
  4. Net Profit ₹6.77 Cr +64%YoY
  5. EPS ₹14.33 +63%YoY

What they filed

Q1 FY27: revenue up 90.0%, net profit up 85.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue107 103 167 120 145 +36%161 +56%213 +28%228 +90%
EBITDA14 13 17 17 22 +57%26 +100%29 +71%33 +94%
Net profit4 5 7 7 10 +150%10 +100%11 +57%13 +86%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Vintage Business
    ₹350 Cr Revenue
  • New Age Business
    ₹100 Cr Revenue
  • Fredun Gx (within New Age)
    ₹55 Cr Revenue (FY25)
  • Pet Care (within New Age)
    ₹30 Cr Revenue
  • Nutra (within New Age)
    ₹16 Cr Revenue
  • Cosmetics (within New Age)
    ₹9 Cr Revenue
  • Dermaceutics (within New Age)
    ₹6.5 Cr Revenue
  • Mobility & New Segments (within New Age)
    ₹18 Cr Revenue

Order book

high confidence

Total value

₹200 Cr

as of 2025-06-30 quantified

Execution

Orders from export and local markets are for a 6-month period.

The order book is firm and provides strong visibility, with orders confirmed before being entered into the system.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    • Diagnostic center setup ₹6 Cr
    Capex will be depending upon what machines you get, but it will be somewhere around INR8 crores. ... Yes. INR6 crores to INR8 crores.
  • Debt Debt disclosed
    our debt equity was almost 1:1 considering the working capital loan. ... we don't have any long-term debt in our books. Most of the debt is working capital
  • M&A One Pet Stop Acquisition · Closed

    Acquired a tech-enabled doorstep grooming platform to complement existing offerings and serve urban pet owners more holistically, providing direct access to 4,000 pet owners.

    The acquired company's revenues were miniscule as they only offered grooming services; the value lies in access to customers for cross-selling Fredun's pet products.

    In Q1, we took a major step by acquiring One Pet Stop, a tech-enabled doorstep grooming platform, which complements our existing offerings and help us serve the urban pet owners more holistically.
  • Liquidity Liquidity disclosed The company has grown significantly without raising external funds, but is planning a fundraising activity soon to support future growth.
    So even if we don't raise any funds in the next month or 2 months or 3 months or 6 months, it's not going to hamper our growth. In fact, we haven't raised any funds and still we have grown about 30% last financial year, including growth of profits. ... Yes. We are definitely planning. We will definitely understand our requirements and hopefully have a raise soon.

Guidance & targets

Revenue

  • Overall Revenue Growth Revenue · year-on-year · High confidence 15-20%
    That's what I'm saying. We are looking at around 15% to 20% growth overall year-on-year.

    — Management

  • Total Revenue Revenue · next 3-4 years · High confidence INR 800+ crores
    What I can tell you is our target for the next 3 years is to 3 to 4 years is to double our revenue and to double our PAT from where we are right now. So we are looking at somewhere around INR800 crore plus top line with a INR90-plus crore PAT kind of thing after a few years.

    — Management

  • New Age Business CAGR Revenue · CAGR · High confidence 35-40%
    Our new age business; pet care, nutrition, mobility, and wellness are expected to grow at 35% to 40% CAGR, and we are focused on building long-term value in these categories.

    — Management

  • Fredun Gx Revenue Revenue · this year · High confidence INR 85 crores

    From INR 55-60 crores (FY25) today

    So Fredun Gx does around -- did around INR55 crores to INR60 crores of business last year. So that we are planning to take it to around INR85 crores this year and then about INR150 crores the year later.

    — Management

  • Fredun Gx Revenue Revenue · year later · High confidence INR 150 crores

    From INR 85 crores (this year) today

    So that we are planning to take it to around INR85 crores this year and then about INR150 crores the year later.

    — Management

  • Fredun Gx Revenue Revenue · next 12 quarters · High confidence INR 250-300 crores
    So in terms of a long-term target, we are looking at around INR250 crores to INR300 crores of revenue within the next 12 to around 12 quarters from the Gx line, from the Fredun Gx brand.

    — Management

  • Vintage Business Growth Revenue · next 7-9 years · High confidence 15-20%
    And the reason why it is our focus is because the vintage business is going to grow around 15% to 20% year-on-year for the next 7 to 9 years.

    — Management

  • Institutional Sales (India) Revenue · this year · High confidence INR 35-40 crores

    From INR 18-25 crores (annually) today

    But in India, about around INR18 crores to INR25 crores annually is institutional sales. This year, we'll do -- end up doing around INR35 crores, INR35 crores to INR40 crores.

    — Management

  • Diagnostic Center Revenue (per center) Revenue · annually · High confidence INR 15 crores
    The one center right now has a potential to do around INR15 crores annually in terms of revenue with a 20% to 25% net.

    — Management

  • Diagnostic Center Run Rate (per center) Revenue · within next 18 months · High confidence INR 15 crores
    Within the next 18 months, we will hit the run rate to achieve INR15 crores annually per center.

    — Management

Profitability

  • PAT Growth Profitability · year-on-year · Medium confidence Substantially grow
    And our PAT will also substantially grow.

    — Management

  • Total PAT Profitability · next 3-4 years · High confidence INR 90+ crores
    What I can tell you is our target for the next 3 years is to 3 to 4 years is to double our revenue and to double our PAT from where we are right now. So we are looking at somewhere around INR800 crore plus top line with a INR90-plus crore PAT kind of thing after a few years.

    — Management

Revenue Mix

  • New Age Business Share of Revenue Revenue Mix · by FY32 · High confidence 51%+
    By FY '32, we aim for over 51% of our revenue to come specifically from new age business.

    — Management

Expansion

  • Diagnostic Center Network Expansion · next few quarters · Medium confidence across major Indian metros
    Over the next few quarters, we plan to expand this network across major Indian metros.

    — Management

  • Diagnostic Centers Expansion · by end of this year · High confidence 1 more center
    By end of this year, we are planning one more center in north of Mumbai.

    — Management

Working Capital

  • Debtor Days Working Capital · within next 6-8 quarters · Medium confidence 125-127 days
    But overall, within the next 6 to 8 quarters, the debtors will stabilize at around 125 to 127 days after the new age brands start kicking in, in terms of cost efficiency and repeat orders on continuous levels across the existing markets and new markets as well.

    — Management

  • Inventory Days Working Capital · within next 6-7 quarters · Medium confidence 125-130 days
    Hopefully, within the next 6 to 7 quarters, our inventory will align at around 125 to 130 days.

    — Management

Manufacturing

  • Plant Size Manufacturing · within next 2 years · Medium confidence one of the largest in country for single location
    Hopefully, within the next 2 years, we'll have one of the largest plants in the country for a single location.

    — Management

What to watch in Q2 FY26

Debtor Days Stabilization

within next 6-8 quarters
Current Increasing, currently less than INR 100 crores as of July 31st
Target Stabilization at 125-127 days

Why it matters

Improvement in working capital management is crucial for positive cash flow from operations.

But overall, within the next 6 to 8 quarters, the debtors will stabilize at around 125 to 127 days after the new age brands start kicking in, in terms of cost efficiency and repeat orders on continuous levels across the existing markets and new markets as well.

Risks & concerns

  • Increasing Debtor Days

    medium

    Debtor days have been increasing over the last three years, but management attributes this to increased sales and market practices requiring 90-110 days credit. They expect stabilization at 125-127 days within 6-8 quarters.

    Analyst acknowledged

  • Negative Cash Flow from Operations

    medium

    Cash flow from operations has been consistently negative, which management explains is a necessary evil during the brand-building phase, expecting it to turn positive as inventories and debtors normalize.

    Analyst acknowledged

Q&A highlights

7 direct
Generics Business Split and OEM Manufacturing Direct
Right now, in terms of the distribution, about 25% to 27% of our entire sales is exports and the remaining is in India through third-party distribution and local sales. We tend to add we are in process of adding more therapeutic ranges and to create a basket of around 500-plus products and envisioning the GX business to cross around INR250 crores to INR300 crores in the next 8 to 12 quarters.

Clarifies the current distribution mix and future growth strategy for the generics business, emphasizing the shift to Fredun branded products and expansion of therapeutic ranges.

Asked by Surabhi

New Age Business Breakdown Direct
No, no. That INR350 crores of branded Fredun products are allopathic formulations. About INR30 crores is pet care, about INR16 crores to INR17 crores is nutra, about INR9 crores is cosmetics, and about INR6.5 crores is dermaceutics, about INR18 crores to INR19 crores is around our mobility and the new segments.

Provides a detailed revenue breakdown of the new age business segments, which are key growth drivers for the company.

Asked by Surabhi

Future Growth Focus (Pet Care vs. Generics) Direct
Why? Because we are the only pet care company right now in the country, which has allopathic formulations, nutraceuticals, functional foods, herbals, diagnostics, and medical devices such as bone grafts, all manufactured under the same roof. That gives -- including grooming products.

Highlights the company's unique positioning and comprehensive offering in the pet care segment, which is a major focus area for future growth.

Asked by Kushal Kasliwal

Inventory and Receivables Management Partial
So right now, our inventories will be in the base of around INR200-plus crores. And in terms of -- in July, our receivables are around in fact, 31st July, our receivables will be under INR100 crores.

Addresses concerns about working capital, providing current figures for inventory and receivables and explaining the rationale behind higher debtor days due to sales growth and market practices.

Asked by Dixit Doshi

Negative Cash Flow from Operations and Debt Direct
Yes, that is -- this answer is in line with what I just explained to the previous gentleman that once the inventories line-up days reduces and the debtors reduce, the cash flows will start getting positive shortly. So we have to wait and buckle up. It's a necessary evil that we have to endure in order to create brands in the country, which lasts for a prolonged period of time.

Explains the company's strategy regarding negative cash flow and debt, linking it to the investment in building brands and the expectation of positive cash flows as working capital normalizes.

Asked by Souresh Pal

One Pet Stop Acquisition Synergies and Revenue Model Direct
So One Pet Stop was an MMRDA-centric company where they used to do grouping for clients across the MMRDA. MMRDA region is a region in near Mumbai. If you're from Mumbai, you would know. So they had 4,000 customers for grooming, along with the grooming vans and equipments and everything. So we have taken over that because that gives us direct access to all the 4,000 pet owners and pet parents across the MMRDA region.

Details the strategic rationale behind the One Pet Stop acquisition, focusing on direct customer access for cross-selling pet care products rather than immediate revenue from grooming services.

Asked by Aditya

Diagnostic Center Capex and Revenue Model Direct
No. So we are not going to do any franchises. The one center right now has a potential to do around INR15 crores annually in terms of revenue with a 20% to 25% net. That is the easy numbers that we can target. So we just started this you can say we started in February, full-fledged operations and everything were started in, say, this quarter.

Provides specific financial targets and operational details for the diagnostic center business, including revenue potential, profitability, and expansion plans.

Asked by Dixit Doshi

Vintage vs. New Age Business Contribution to FY25 Revenue Direct
Yes, I've already answered that question a couple of times, but I'll reiterate it. Around INR350 crores to INR360 crores in terms of vintage business. Vintage business is what we are includes all our export business, which is our own brands and everything and also the third-party OEM manufacturing, also the loan licensing parties, also the distribution of our own brands, which we are doing for the last 7, 8, 10 years in India in terms of various product categories and different therapeutic classes. The new age business constitutes for the rest of the, what you call, the revenue.

Clarifies the revenue split between vintage and new age businesses for FY25 and defines what constitutes the 'vintage' segment, including OEM and export activities.

Asked by Krisha

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Detailed narrative

Q1 FY26 Performance Overview

Fredun Pharmaceuticals delivered a robust performance in Q1 FY26, with revenue growing by 52% year-on-year to INR 119.86 crores. This strong top-line growth translated into a 62% increase in EBITDA, reaching INR 16.99 crores, and an expanded EBITDA margin of 14.18%. Net profit saw a significant rise of 64% year-on-year to INR 6.77 crores, resulting in an EPS of INR 14.33, up over 63%.

Strategic Shift to New Age Business and Branding

The company is undergoing a strategic transition from an OEM manufacturer to a holistic healthcare company, focusing on branded generics and new age businesses. By January 2029, the goal is for every product from their ecosystem to be Fredun branded. New age businesses, including pet care, nutrition, mobility, and wellness, are projected to grow at a 35-40% CAGR, and are expected to contribute over 51% of total revenue by FY32. This shift aims to improve gross margins, which are currently above 50% for new age products.

Pet Care Ecosystem Expansion

Fredun is building a comprehensive pet care ecosystem under its Freossi brand, offering a range of products from nutraceuticals to diagnostics. A key move in Q1 was the acquisition of One Pet Stop, a tech-enabled doorstep grooming platform, providing direct access to 4,000 pet owners in the MMRDA region for cross-selling. Additionally, the company launched India's first 24x7 dedicated pet diagnosis center, equipped with advanced imaging, with a potential to generate INR 15 crores annually per center at a 20-25% net margin. Plans are in place to expand this diagnostic network across major Indian metros, with one more center planned for North Mumbai by year-end.

Generics Business and Product Pipeline

The generics division, including Fredun Gx, is a significant focus, with plans to grow Fredun Gx revenue from INR 55-60 crores in FY25 to INR 85 crores this year, and further to INR 150 crores the following year. The long-term target for the Gx line is INR 250-300 crores within the next 12 quarters. The company has over 1,200 products under registration, with 15-20% of these being new molecules specific to certain geographies, ensuring a continuous pipeline for growth in the vintage business, which is expected to grow 15-20% year-on-year for the next 7-9 years.

Working Capital Management and Fundraising

The company's inventory currently stands at over INR 200 crores, and receivables were under INR 100 crores as of July 31st. Management acknowledges rising debtor days due to increased sales and market practices, aiming to stabilize them at 125-127 days within 6-8 quarters. Inventory days are also expected to align at 125-130 days within 6-7 quarters. While the company has grown significantly without external funding, it plans to raise funds soon to support its ambitious growth and expansion initiatives.

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