Akums Drugs — Q1 FY26 earnings call

Call held 11 Aug 2025

Management summary

Akums Drugs reported a resilient Q1 FY26 with a 2.4% YoY increase in total income to ₹1,051 crores and a 4% YoY growth in adjusted EBITDA to ₹129 crores, despite a challenging market with tepid volume growth and declining API prices. The company made significant strides in R&D with 27 DCGI approvals and expanded its global footprint with its first European Dossier approval for Rivaroxaban, backed by a strong cash surplus of ₹1,518 crores. Management guided for mid-single-digit growth in CDMO and aims for an 18% EBITDA margin for domestic branded formulations.

Highlights

  • Total Income grew 2.4% YoY to ₹1,051 crores.

  • Adjusted EBITDA increased 4% YoY to ₹129 crores, with adjusted margins at 12.6%.

  • Reported EBITDA grew 19% YoY to ₹156 crores, with margins expanding 208 bps YoY to 14.8%.

  • Achieved 27 DCGI approvals in Q1 FY26, nearing last year's full total of 31.

  • Secured first European Dossier approval for Rivaroxaban and received €100 million for the European contract, contributing to a cash surplus of ₹1,518 crores.

  • API losses reduced by 50% compared to Q1 last year.

Concerns

  • Tepid industry volume growth below 0.40% in Q1 FY26.

  • API prices declined 10-12% in the last 12 months, leading to a negative EBITDA of ₹6 crores for the API segment this quarter.

  • Trade generic segment reported negative EBITDA of ₹5 crores, with continued efforts to bring down losses.

Key financials

  1. Total Income ₹1,051 Cr +2.4%YoY
  2. Reported EBITDA ₹156 Cr +19%YoY
  3. Reported EBITDA Margin 14.8% +2.1%YoY
  4. Adjusted EBITDA (excl. other income) ₹129 Cr +4%YoY
  5. Adjusted EBITDA Margin (excl. other income) 12.6%
  6. Adjusted PAT ₹65 Cr +13%YoY

What they filed

Q1 FY27: revenue up 18.1%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue328 337 329 332 309 −6%369 +9%338 +3%392 +18%
EBITDA43 34 18 44 17 −60%25 −26%12 −33%49 +11%
Net profit50 41 28 45 23 −54%28 −32%15 −46%45 +0%
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

Share of Revenue
₹1,023 Cr Total
  • CDMO ₹813 Cr 79.5%
  • Domestic Branded Formulation ₹107 Cr 10.5%
  • API Business ₹45 Cr 4.4%
  • International Branded Formulation ₹35 Cr 3.4%
  • Trade Generic ₹23 Cr 2.2%

Capital allocation

high confidence
  • Capex Capex disclosed
    • Ramping up Penem facility
    • Ramping up second dedicated injectable facility
    • Baddi facility for liquid commercial supplies (H2 FY26) and oncology products
    • Steroidal block (Q1 FY27)
    • Jammu plant (ready by March 2027)
    Our recent CAPEX on newer facilities have started to ramp up. We are gaining traction on our dedicated Penem facility as well as our second dedicated injectable facility. Our Baddi facility will commence commercial supplies of liquid this quarter in H2. We will commercialize oncology products from this site. And Q1 next year, we will start steroidal block. ... So, Jammu, as I said, in earlier calls, we have to start the plant by March of 2027, right. So, we are tracking that timeline given our current CAPEX is already ongoing in Baddi plants as well as the utilization scope of ramp-up already exists in the Haridwar facility... towards the end of this year, we will start CAPEX and over the next 12-13 months, we will do the CAPEX and subsequently, March'27, we should be ready to go live from that facility.
  • M&A Deal Acquisition · Announced

    Acquire a dosage form capability currently not possessed or gain access to other markets.

    Two things which we will deploy our cash inorganically. One is if we can acquire a dosage form capability we currently don't have... Secondly, if it could give me access to other markets.
  • Liquidity Cash ₹1,518 Cr Cash surplus bolstered by positive free cash flow of ₹935 crores, partly from EU contract consideration.
    Akums has received €100 million as part consideration for the European contract this quarter. Consequently, our cash surplus stands at around Rs. 1,518 crores. We had a positive free cash flow of Rs. 935 crores, which was partly on account of the money we received from the EU contract.

Guidance & targets

Revenue

  • CDMO Revenue Growth Revenue · FY26 · Medium confidence mid-single-digit growth

    Previously mid-to-high single-digit growth → mid-single-digit growth

    I think one of the guidance which we initially gave was a mid-to-high single-digit growth in the top line in the CDMO business. ... while that growth is still achievable, I would rather say from mid-to-high, we would target a mid-single-digit growth as of now.

    — Sahil Maheshwari

  • International Branded Formulation Growth Revenue · Full year · Medium confidence high teen growth
    Despite the weaker growth, we continue to expect high teen growth in this segment for the full year.

    — Sumeet Sood

  • European Contract Annual Revenue Revenue · from April '27 (FY28) · High confidence Rs. 300 crores annually
    So, we should do at least Rs. 300 crores annually from this contract. And yes, April '27 is when we start commercial supplies.

    — Sahil Maheshwari

Profitability

  • CDMO EBITDA Margin Profitability · Annual · High confidence 14-15%
    So, a 14% to 15% margin is what we usually deliver in this business. That should be the zip code in which we operate.

    — Sahil Maheshwari

  • Domestic Branded Formulation EBITDA Margin Profitability · FY26 · High confidence around 18%
    Overall, EBITDA margin for the year is expected to remain similar to last year at around 18%.

    — Sumeet Sood

  • API Business EBITDA Improvement Profitability · FY26 · High confidence Rs. 20 odd crores improvement
    What we initially indicated was we will do an improvement of Rs. 20 odd crores in EBITDA this year.

    — Sahil Maheshwari

Exports

  • Total Formulation Exports Exports · over five years · High confidence $100 million

    From $15 million today

    So, over the five years time, we should target maybe $100 million in exports. ... So, we currently are at 15. Over five years, we should scale up to 100.

    — Sahil Maheshwari

Capacity

  • Jammu Plant Go-Live Capacity · March '27 · High confidence ready to go live
    So, Jammu, as I said, in earlier calls, we have to start the plant by March of 2027, right. ... March'27, we should be ready to go live from that facility.

    — Sahil Maheshwari

  • Baddi Facility Liquid Commercial Supplies Capacity · H2 FY26 · High confidence commence commercial supplies
    Our Baddi facility will commence commercial supplies of liquid this quarter in H2.

    — Sandeep Jain

  • Steroidal Block Start Capacity · Q1 next year (FY27) · High confidence start
    And Q1 next year, we will start steroidal block.

    — Sandeep Jain

R&D

  • CEP Dossier Filings R&D · next 12 to 15 months · High confidence 3 CEP dossier
    We are on track to file 3 CEP dossier over the next 12 to 15 months.

    — Sandeep Jain

What to watch in Q2 FY26

CDMO Revenue Growth

Full year FY26
Current 4% YoY in Q1 FY26
Target Mid-single-digit growth for FY26

Why it matters

CDMO is the core business, and achieving the revised growth target will indicate resilience against API price headwinds.

On the full-year guidance for this CDMO business, we still have 9 months to work hard on this. ... we would target a mid-single-digit growth as of now.

Risks & concerns

  • API Price Decline

    medium

    API prices declined 10-12% in the last 12 months, impacting CDMO revenue growth and leading to negative EBITDA for the API segment.

    Management acknowledged

  • Trade Generic Segment Losses

    medium

    The trade generic segment continues to incur losses, reporting negative EBITDA of ₹5 crores in Q1 FY26, with ongoing efforts to rationalize underperforming units.

    Management acknowledged

  • Domestic Cephalosporin Price Erosion

    medium

    Domestic cephalosporin prices are a concern due to extensive price or margin erosion driven by competitive pressures.

    Management acknowledged

  • Challenges in Domestic Branded Price Hikes

    medium

    Management noted they did not take price hikes in Q1 for domestic branded formulations and needs to assess Q2 before making a conscious call, indicating potential difficulty in passing on costs.

    Management acknowledged

  • Tepid Industry Volume Growth

    low

    Industry volume growth was below 0.40% in Q1 FY26, indicating a slow market.

    Management acknowledged

Q&A highlights

7 direct
EU Dossier Revenue Potential & Pipeline Partial
Rivaroxaban, which is Xarelto, is a large molecule globally, right? So, we expect it to continue. Dapagliflozin, again, serves a large market in the diabetes segment. And its combination along with Metformin is something we have filed and will get approval soon. ... Europe, across our own brands and across CDMO, is a key focus for the group over the next five years.

Analyst sought quantified revenue potential, but management provided qualitative market size and strategic focus, indicating long-term ambition without specific numbers.

Asked by Rehan Syed

CDMO Full-Year Growth & API Pricing Impact Direct
On the full-year guidance for this CDMO business, we still have 9 months to work hard on this. I think one of the guidance which we initially gave was a mid-to-high single-digit growth in the top line in the CDMO business. ... while that growth is still achievable, I would rather say from mid-to-high, we would target a mid-single-digit growth as of now.

Management revised down its full-year CDMO growth guidance due to continued soft API pricing, signaling ongoing headwinds.

Asked by Vivek Agrawal

CDMO Margin Stability Direct
So, I think this is quarterly, I think blip. As we also mentioned earlier, this business is really looked at an annual level. So, a 14% to 15% margin is what we usually deliver in this business. That should be the zip code in which we operate.

Analyst questioned a margin dip, and management clarified it as a temporary fluctuation, reaffirming the long-term margin band for CDMO.

Asked by Vivek Agrawal

Semaglutide Strategy Direct
Semaglutide really is a value, not a volume-driven product, right? So, can Semaglutide really pull up the volumes in the market? No. Right. The volumes will still be driven by mass therapies. On our play in this segment, that is not really the core segment we are focusing on.

Management explicitly stated that Semaglutide is not a core focus, clarifying their strategic priorities in the face of upcoming generic launches.

Asked by Vivek Agrawal

European Market Business Model & Competitive Advantage Direct
So, what we have identified are three levers wherein we can play in the European market, right? So, first is it is CDMO what we will do as a group largely in the European market. ... Secondly, if it could give me access to other markets... I have strong R&D, quality manufacturing... if I get any base wherein I can quickly come launch new products and expand to global markets, that is another thing...

Management detailed their multi-pronged strategy for Europe, including CDMO, limited competitive intensity products, and leveraging their existing strengths, providing clarity on their market entry approach.

Asked by Madhav

EU CDMO Contract Revenue & Margins Direct
So, we should do at least Rs. 300 crores annually from this contract. And yes, April '27 is when we start commercial supplies. ... Similar margins.

Management provided a specific annual revenue target and margin expectation for the significant European CDMO contract, offering concrete future financial visibility.

Asked by Madhav

Inorganic Growth Strategy Direct
Two things which we will deploy our cash inorganically. One is if we can acquire a dosage form capability we currently don't have... Secondly, if it could give me access to other markets...

Management outlined clear strategic criteria for potential M&A, indicating how the company plans to utilize its cash surplus for growth.

Asked by Madhav

Domestic Branded Formulation Growth & Margins Direct
So, nothing. I think it is a usual reorganization. You have certain periods. I think not necessarily I can pin down to one reason, Vivek. It is growing, but that should come. ... I think for the rest of the year, we should perform well. So, no significant concerns or deviations from the guidance earlier on this business.

Analyst probed the low growth in a key segment, and management attributed it to temporary factors and lack of price hikes, reassuring that full-year performance would align with expectations.

Asked by Dr. Neha Kharodia

3 min read 6 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Akums Drugs reported a total income of ₹1,051 crores in Q1 FY26, reflecting a 2.4% year-on-year growth. The company's reported EBITDA stood at ₹156 crores, an increase of 19% YoY and 40% QoQ, with margins expanding by 208 basis points to 14.8%. Adjusted EBITDA, excluding other income, was ₹129 crores, growing 4% YoY, with adjusted margins at 12.6%. Adjusted PAT increased 13% YoY to ₹65 crores, demonstrating resilience despite industry headwinds like tepid volume growth below 0.40% and a 10-12% decline in API prices.

R&D and Product Pipeline Achievements

R&D remains a cornerstone of Akums' strategy, evidenced by achieving a cumulative milestone of 1,000 DCGI approvals in Q1 FY26. The company secured 27 DCGI approvals during the quarter, a significant improvement compared to the 31 approvals received for the entire previous year. Akums also obtained one patent for a niche formulation of Doxylamine and Pyridoxine and filed 24 new patents in its CDMO business. The commercialization of triple-layered tablets this quarter further highlights its focus on innovative dosage forms.

Global CDMO Expansion and European Market Entry

Akums is actively expanding its global CDMO footprint, having received its first European Dossier approval for Rivaroxaban, a drug with a global market exceeding USD 15 billion. The company also filed its first dossier in Switzerland for Dapagliflozin plus combination. ANVISA Brazil approval was secured for injectable plant 3, and GMP Russia approval for hormone plant 4. The European GMP audit for the plant is expected this quarter, with commercial supplies slated to begin from April 2027. A significant €100 million was received as part consideration for the European contract, bolstering the company's cash surplus to ₹1,518 crores.

Segmental Performance and Strategic Focus

The CDMO segment, a key growth driver, reported revenues of ₹813 crores, growing 4% YoY, with a healthy EBITDA margin of 14.7%. Domestic branded formulations grew 3.4% YoY to ₹107 crores, with an expected annual EBITDA margin of 18%. International branded formulations saw a 2.4% YoY growth to ₹35 crores, maintaining 23% EBITDA margins. Conversely, the API business experienced a 35% YoY revenue decline to ₹45 crores, resulting in a negative EBITDA of ₹6 crores, while the trade generic segment also posted a negative EBITDA of ₹5 crores as the company rationalizes underperforming units.

Capacity Expansion and New Product Launches

Akums is actively ramping up CAPEX on newer facilities, including its Penem and second dedicated injectable facilities. The Baddi facility is on track to commence commercial supplies of liquid products in H2 FY26, including oncology products, with a steroidal block planned for Q1 FY27. The Jammu plant is targeted to be operational by March 2027, with CAPEX continuing through the end of this year and the next 12-13 months. These expansions are crucial for supporting future growth and diversifying the product portfolio.

Outlook and Inorganic Growth Strategy

For the full year FY26, Akums targets mid-single-digit growth for its CDMO business, with EBITDA margins expected to remain in the 14-15% range. The domestic branded formulation segment is projected to maintain an 18% EBITDA margin. The company aims for a ₹20 crore EBITDA improvement in the API business this year. With a strong cash surplus of ₹1,518 crores, Akums is actively exploring inorganic growth opportunities, focusing on acquiring new dosage form capabilities or gaining access to new markets, both domestically and internationally.

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