Advanced Enzyme Technologies Limited — Q2 FY26 earnings call

Call held 13 Nov 2025

Management summary

Advanced Enzyme Technologies reported strong Q2 FY26 results, driven by robust growth in Human Healthcare and Specialized Manufacturing segments. Despite global uncertainties and tariff-related headwinds in the US market, the company maintained healthy margins and is focused on strategic R&D investments and international expansion. Management reiterated its mid-double digit growth guidance for the year, supported by operational efficiencies and a diversified product mix.

Highlights

  • Consolidated revenue for Q2 FY26 stood at INR 1,845 million, reflecting a 26% YoY growth.

  • EBITDA came in at INR 601 million, a 42% increase YoY, with an EBITDA margin of 33%.

  • Profit after tax reached INR 447 million, registering a 34% growth YoY and an 11% increase QoQ, with PAT margins at 24%.

  • Human Healthcare, the largest segment, grew 22% YoY to INR 1,212 million, contributing 66% of total revenues.

  • Specialized Manufacturing delivered strong growth of 54% YoY to INR 185 million, representing 10% of overall revenue.

Concerns

  • US market experienced a 4% decline in H1 FY26 compared to the previous year due to tariff issues.

  • Tariff issues are anticipated to have a 2% impact on EBITDA if fully absorbed, translating to INR 10-11 crore on EBITDA and INR 7-8 crore on PAT.

  • Animal Healthcare revenues declined 26% QoQ to INR 193 million, despite a 6% YoY increase.

Key financials

  1. Revenue 1,845 Mn +26%YoY
  2. EBITDA 601 Mn +42%YoY
  3. EBITDA Margin 33%
  4. PAT 447 Mn +34%YoY
  5. PAT Margin 24%

What they filed

Q1 FY27: revenue down 7.2%, net profit down 70.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue77 101 87 125 116 +51%96 −5%116 +33%116 −7%
EBITDA14 22 14 31 30 +114%23 +5%27 +93%30 −3%
Net profit9 15 11 74 22 +144%13 −13%22 +100%22 −70%
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

  • Human Healthcare
    1,212 Mn Revenue22% YoY Growth1% QoQ Decline66% Contribution to Total Revenue
  • Animal Healthcare
    193 Mn Revenue6% YoY Growth26% QoQ Decline10% Contribution to Total Revenue
  • Bioprocessing
    255 Mn Revenue52% YoY Growth8% Sequential Growth
  • Bioprocessing - Food Business
    77% YoY Growth18% QoQ Growth
  • Bioprocessing - Non-Food Business
    4% YoY Decline20% QoQ Decline
  • Specialized Manufacturing
    185 Mn Revenue54% YoY Growth30% Sequential Growth10% Contribution to Total Revenue
  • JC Biotech (Q2 FY26)
    186 Mn Revenue37 Mn EBITDA17 Mn PAT
  • Evoxx (Q2 FY26)
    74 Mn Revenue17 Mn EBITDA14 Mn PAT
  • SciTech (Q2 FY26)
    185 Mn Revenue33 Mn EBITDA15 Mn PAT
  • R&D Spend (Q2 FY26)
    80 Mn Total Spend3% As % of Revenue
  • Bio-catalysis (H1 FY26)
    128 Mn Revenue
  • Largest Product Sales (H1 FY26)
    829 Mn Revenue

Capital allocation

high confidence
  • Capex ₹1 Mn
    • R&D CapEx ₹1 Mn
    Our R&D spending during Q2 is INR 78 million. Revenue expenditures and CapEx of INR 1 million, total is INR 80 million as compared to INR 85 million in Q2 of last year.
  • Liquidity Cash ₹600 Cr
    And, sir, we've got close to INR 600 crores of cash on our balance sheet right now.

Guidance & targets

Revenue Growth

  • Overall Revenue Growth Revenue Growth · this year · Medium confidence mid-double digit growth
    What I would say is that we will still stick with the numbers and the initial guidance what we have given that we will have this year, like, a mid-double digit growth.

    — Mukund Kabra

Profitability

  • EBITDA Margin Profitability · ongoing · High confidence 30% to 32%
    The margin, I think, we already mentioned, except, like, the impact of the tariff. Otherwise, I think we will continue to have the margin of PAT about 21% to 22%, EBITDA of 30% to 32%. That's what we are still managing.

    — Beni Rauka

  • PAT Margin Profitability · ongoing · High confidence 21% to 22%

    — Beni Rauka

R&D Spend

  • Increase in R&D Spend R&D Spend · next year (FY27) · High confidence INR 10 crores to INR 12 crores higher than FY26 spend
    So, I think this will increase substantially in the sense, supposing we are spending, say, about INR 25 crores. So roughly, for the next year, it is going to go about INR 10 crores to INR 12 crores higher than whatever we are going to spend in FY26. And gradually, it will ramp up.

    — Beni Rauka

B2C Business

  • B2C India Business Revenue B2C Business · this year · Medium confidence INR 1 CR to INR 1.5 CR
    This year, probably, we'll be hitting somewhere around INR 1 CR to INR 1.5 CR, which is lower than what we budgeted initially.

    — Mukund Kabra

Specialized Manufacturing

  • Specialized Manufacturing Margin Specialized Manufacturing · ongoing · High confidence 8% to 10%
    In this particular company, I think, maybe, about 8% to 10% of the kind of the margins we are going to have.

    — Beni Rauka

What to watch in Q3 FY26

US Tariff Impact & Mitigation

Next quarter / H2 FY26
Current 2% impact on EBITDA if absorbed, INR 10-11 crore on EBITDA, INR 7-8 crore on PAT. Causing slowness in US market.
Target Clarity on mitigation strategies, reduced impact, or recovery in US sales.

Why it matters

The ability to mitigate tariff impacts will directly influence profitability and US market performance.

If I go with the last year's number, at the worst scenario, probably, like, we'll have impact of INR 7 crores, INR 8 crores.

Risks & concerns

  • Tariff issues in US market

    high

    Caused a 4% decline in Americas sales in H1 FY26 and a potential 2% EBITDA impact; management is exploring mitigation strategies.

    Management acknowledged

  • Global uncertainties

    medium

    Leading to cautious guidance and a 'wait and watch' approach for future developments.

    Management acknowledged

  • Competition in Serratiopeptidase

    low

    Competition is always present, but rates are currently stable.

    Analyst acknowledged

Q&A highlights

5 direct, 1 evasive
Geographic growth drivers and US market decline Partial
The 30% has come from Americas where we see a decline of 4% in our numbers as compared to last year's six months. Europe is about 6% of our revenue, and we have seen 51% of growth from this geography. Asia is about 12% of our revenue... and we have seen 4% of growth in this particular geography.

Highlights regional performance variations, particularly the US decline and strong growth in Europe, providing context for overall revenue.

Asked by Rachna K

Impact of tariffs and mitigation strategies Evasive
Rachna Ji, I don't want to reveal those strategies. We will wait and see how the things pan out, and then we will take appropriate call at a given time. How do we need to do? We are still working on different area. If this persists, then what we need to do?

Management is unwilling to disclose specific plans to counter the known negative impact of US tariffs, indicating uncertainty or competitive sensitivity.

Asked by Rachna K

Specialized manufacturing margins Direct
I mean, see, margin in that particular business is really low. And currently a lot of expansion is happening... I think we will go with the same kind of margin that is what we had in the last year. In this particular company, I think, maybe, about 8% to 10% of the kind of the margins we are going to have.

Provides specific margin expectations for the Specialized Manufacturing segment, which is experiencing strong growth but has lower profitability.

Asked by Umang Shah

Sustainability of growth and one-off factors Direct
I would say that there is no one-off, but there is not every quarter we get the same -- I would say, the same orders. Some quarters maybe here and there -- few here and there. But I would say this is a little bit long-term growth rather than, we just go with a QoQ basis.

Reassures investors that the reported growth is sustainable and not driven by one-time events, reinforcing confidence in the company's trajectory.

Asked by Rajas Joshi

Drivers of gross margin expansion despite US sales decline Partial
So, all operational efficiency is driving. Operational efficiency as well as your some of the research is there and some of the, product mix which varies with quarter to quarter.

Explains the factors contributing to margin improvement, highlighting operational efficiency and favorable product mix as key drivers.

Asked by Rajas Joshi

World market share and growth headroom Direct
I would say that we are very small. Even though we will be among the top five or top ten players, there are very few companies in the world... Less than 2%.

Emphasizes the significant long-term growth potential for the company given its current small market share in the global enzyme industry.

Asked by Zakinaher Nasser

Update on new R&D center Direct
Probably, by the end of the March, it should have some kind of shape should come up, and, probably, we are targeting to capitalize some of the assets during that time. It will partially become active by the end of this fiscal year.

Provides a timeline for the operationalization of a key strategic investment aimed at boosting R&D capabilities and future product pipeline.

Asked by Shreyans Gathani

High inventory levels and US tariff preparation Direct
A little bit built-up. Yes.

Confirms that increased inventory levels were partly a strategic build-up in anticipation of US tariffs, indicating proactive management of potential supply chain disruptions.

Asked by Abhishek Kohli

2 min read 6 chapters

Detailed narrative

Robust Q2 FY26 Performance with Strong YoY Growth

Advanced Enzyme Technologies delivered a strong Q2 FY26, with consolidated revenue reaching INR 1,845 million, marking a 26% year-on-year increase. EBITDA surged by 42% YoY to INR 601 million, achieving a healthy margin of 33%. Profit after tax also saw significant growth, up 34% YoY to INR 447 million, with PAT margins at 24%. This performance reflects a continuation of the company's growth trajectory across its business segments.

Segmental Performance Driven by Human Healthcare and Specialized Manufacturing

The Human Healthcare segment, contributing 66% of total revenues, grew 22% YoY to INR 1,212 million, primarily fueled by higher sales in Pharma/API and Nutritional businesses. The Specialized Manufacturing segment showed the strongest growth, increasing 54% YoY to INR 185 million. Bioprocessing also recorded a 52% YoY growth, largely due to a 77% YoY increase in its food business. Animal Healthcare, however, saw a 26% QoQ decline despite a 6% YoY increase.

US Market Faces Tariff Headwinds and Slowness

The US market experienced a 4% decline in H1 FY26 compared to the previous year, primarily due to ongoing tariff issues and a general market slowdown. Management estimates a potential 2% impact on EBITDA if tariffs are fully absorbed, translating to INR 10-11 crore on EBITDA and INR 7-8 crore on PAT. The company is exploring mitigation strategies but has not yet disclosed specific plans, indicating a 'wait and watch' approach amidst global uncertainties.

Strategic R&D Investments and International Expansion Initiatives

Advanced Enzyme is investing in a new R&D center, expected to be partially active by the end of FY26, aiming to significantly increase its R&D capacity. R&D spending for Q2 FY26 totaled INR 80 million, representing 3% of revenue, with plans to increase this by INR 10-12 crores in FY27. The company is also pursuing EFSA/novel food approvals in Europe and pharma approvals in Asia, which are anticipated to drive faster growth in these international markets within the next 6-8 months.

Consistent Margin Profile and Long-Term Growth Outlook

Management reiterated its guidance for an EBITDA margin of 30-32% and a PAT margin of 21-22%, emphasizing that operational efficiency and product mix are key drivers for gross margin expansion. The growth achieved is considered long-term and sustainable, not reliant on one-off factors. Despite being a relatively small player with less than 2% world market share, the company sees significant headroom for growth, supported by its R&D focus and diversified product portfolio.

High Inventory Levels and M&A Strategy

The company noted high inventory levels, partly attributed to a strategic build-up in anticipation of US tariffs. Advanced Enzyme holds approximately INR 600 crores in cash on its balance sheet. M&A remains a strategic focus, with the company actively evaluating targets in human nutrition (probiotics) and industrial bioprocessing, as well as pursuing forward integration opportunities in the animal feed business.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Healthcare earnings calls