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    Akums Drugs

    AKUMS
    Healthcare·17 Nov 2025
    Management Summary

    Akums Drugs reported a challenging Q2 FY26 with revenue and EBITDA declines primarily due to API price downtrends and ramp-up costs for new facilities. Despite this, the domestic branded formulations segment showed robust growth, and the company made significant strides in international expansion with a new JV in Zambia and progress on a European CDMO contract. Management remains focused on long-term value creation and margin improvement initiatives.

    Highlights

    5
    • Domestic Branded Formulations revenue grew 5.3% YoY to INR 122 crores and EBITDA increased 28.2% YoY to INR 26 crores.

    • International branded business EBITDA increased 52% YoY to INR 5.5 crores despite revenue decline.

    • New joint venture in Zambia (51% stake) for a US$45 million manufacturing plant, expected to supply US$50 million over two years.

    • European CDMO contract progressing, with GMP audit completed and approval expected in Q4 FY26.

    • Healthy balance sheet with a cash surplus of INR 1,649 crores and no interest expenses.

    Concerns

    5
    • Overall revenue declined 1.5% YoY and 0.6% QoQ to INR 1,018 crores.

    • EBITDA declined 22% YoY and 27% QoQ to INR 94 crores, with EBITDA margin compressing to 9.3% from 11.7% in Q2 FY25.

    • API business reported negative EBITDA of INR 14 crores in Q2 FY26, with gross margins at 9.3% down from 12.8% in FY25.

    • International branded business revenue declined 14% YoY and 36% QoQ to INR 22 crores due to seasonal factors.

    • Trade Generics segment continued to post negative EBITDA.

    What Changed2

    vs Q3 FY26

    Guidance items12 → 11 (-1)Risks discussed3 → 6 (+3)

    Key financials

    Single quarter

    04 metrics
    1. 01Revenue₹1,018 Cr-1.5%YoY
    2. 02EBITDA₹94 Cr-22%YoY
    3. 03EBITDA Margin9.3%
    4. 04PAT₹43 Cr-35.8%YoY

    Segment breakdown

    • CDMO₹804 Cr79.1%
    • Domestic Branded Formulations₹122 Cr12.0%
    • International Branded Business₹22 Cr2.2%
    • API Business₹44 Cr4.3%
    • Trade Generics₹24 Cr2.4%
    Donut· Share of Revenue

    Order Book

    high confidence

    Total Value

    USD 50 million

    as of 2025-09-30

    quantified

    Execution

    over the next two years (CY 2026-2027)

    Composition

    Zambia (from India facilities)(geography)
    USD 50 million100.0%

    Pipeline

    other

    Zambia JV facility potential to serve $200-250 million of medicines; European contract for oral liquid segment (six-year commercial supply).

    "The company has secured initial supply contracts for the Zambia JV and has a six-year commercial supply contract for a European CDMO project, with further long-term potential from the Zambian facility."

    Source:
    Prepared remarks

    Capital allocation

    4
    high confidence
    CategoryHeadline
    Capex

    ₹200 crores

    Debt

    Debt disclosed

    M&A

    Zambian government (JV)

    joint venture · announced · Consideration ₹NaN (mixed)

    Liquidity

    Cash ₹1,649 crores

    Net cash position augmented to over INR 1,600 crores, with a cash surplus of INR 1,649 crores.

    Guidance & targets

    11
    CategoryTargetPriority
    Regulatory Approval
    European GMP approval for Plant 2
    Approval
    High
    Product Launch
    Rivaroxaban tablet supply to Europe
    Expected
    High
    Production Commencement
    Zambia JV manufacturing plant production
    Commence production
    High
    Revenue
    Zambia JV initial supply from India
    US$50 million
    High
    Revenue
    Zambia JV + European initial supply annual revenue
    INR 300+ crores
    Medium
    Revenue
    Zambian facility annual revenue contribution
    US$40-50 million
    Medium
    Profitability
    API business full-year losses
    Lower than last year
    Medium
    Profitability
    API business month-on-month positive
    Positive
    Low
    Commercial Supplies
    CDMO Europe commercial supplies
    Start
    High
    Margin
    CDMO H2 FY26 margins
    Largely mimic H1
    Medium
    Capex
    FY26 Capex
    INR 200-220 crores
    Medium

    European GMP Approval for Plant 2

    Q4 FY26
    CurrentAudit completed in October
    TargetApproval received

    Why it matters

    Crucial for commencing commercial supplies for the European CDMO contract, a key growth driver.

    We underwent a European GMP audit for our plant 2 in October and are expected to get the approval in Q4 of this year.

    How to verify

    guidance_and_targets[category='Regulatory Approval'][metric='European GMP approval for Plant 2']

    Risks & concerns

    6
    RiskSeverity

    API price downward trend

    Continued downward trend in API prices impacted margins, especially in the API business, leading to negative EBITDA.Management acknowledged

    medium

    Slower-than-expected ramp-up of new facilities and higher overheads

    New facilities operationalized in H1 FY26 had an EBITDA impact of INR 17 crores due to higher overheads during ramp-up.Management acknowledged

    medium

    Seasonal factors impacting international branded business

    International branded business was impacted by seasonal factors in Q2, but expected to have a strong H2.Management acknowledged

    low

    Trade generics segment losses

    The trade generics segment continues to incur losses, with efforts being made to reduce them through consolidation.Management acknowledged

    medium

    Near-term earnings apprehensions

    Current financial results may raise apprehensions about near-term earnings, though management reassures business strength.Management acknowledged

    medium

    Regulatory hurdles dampening sentiment

    Analyst noted that the regulatory front has been dampening sentiment, which management acknowledged to take into notice.Analyst acknowledged

    medium

    Q&A highlights

    8

    “So, as you rightly mentioned, we have filed two CEPs, proxetil and axetil, in the cephalosporins space for which we should get an approval in the next six months, right? So we'll start seeding formulations in those markets. And subsequently, we expect this business to be of higher gross margins in Europe.”

    Clarifies the strategy and timeline for API business expansion in Europe and addresses the margin impact from current API price trends.

    asked by Abdulkader Puranwala

    3 min read7 chapters

    Detailed Narrative

    01

    Q2 FY26 Financial Performance Overview

    Akums Drugs reported a revenue of INR 1,018 crores for Q2 FY26, marking a 1.5% year-on-year decline and a 0.6% quarter-on-quarter decrease. EBITDA stood at INR 94 crores, a significant 22% YoY and 27% QoQ decline, resulting in an EBITDA margin of 9.3%, down from 11.7% in Q2 FY25. Net profit after tax was INR 43 crores, lower than INR 67 crores YoY and INR 65 crores QoQ, reflecting the challenging quarter.

    02

    CDMO and Domestic Formulations Resilience

    The CDMO segment, despite API price headwinds, achieved INR 804 crores in revenue with a modest 0.7% YoY growth, though EBITDA declined by 31.3% YoY to INR 84 crores. Domestic Branded Formulations showed strong growth, with revenue increasing 5.3% YoY to INR 122 crores and EBITDA rising 28.2% YoY to INR 26 crores, driven by improved coverage and portfolio. This segment's margins were robust at 21.6%.

    03

    API Business Challenges and Turnaround Efforts

    The API business continued to face headwinds, with revenue at INR 44 crores (down 25.4% YoY) and reporting a negative EBITDA of INR 14 crores in Q2 FY26. Gross margins for API dipped to 9.3% from 12.8% in FY25 due to continued price downtrend. Management is aggressively working on cost optimization and expects full-year losses to be lower than last year, aiming for month-on-month positive results within 6-7 months.

    04

    Strategic International Expansion Initiatives

    Akums announced a new joint venture in Zambia with a 51% stake, investing US$45 million to set up a manufacturing plant by CY 2028, targeting US$50 million in supplies from India over the next two years. On the European front, a European GMP audit for Plant 2 was completed in October, with approval expected in Q4 FY26, enabling commercial supplies for a six-year CDMO contract by March/April 2027.

    05

    EBITDA Margin Compression Factors

    The significant drop in overall EBITDA margins to 9.3% was primarily attributed to two factors: a direct 4% impact on the top line and EBITDA from an 8% API price drop (due to the cost-plus model), and an INR 17 crores EBITDA impact from the operationalization of three new facilities in H1 FY26. These new facilities are currently ramping up, incurring higher overheads.

    06

    Capacity Utilization and Capex Strategy

    The company clarified that its current capacity utilization is 40% against a peak of 55%, with the remaining capacity serving as buffer for changeovers, SKUs, and maintenance. Capex for H1 FY26 was INR 107 crores, with a similar or slightly lower amount planned for H2, totaling approximately INR 200-220 crores for FY26. New capex is strategically directed towards dosage forms that are either fully utilized or represent new market opportunities, also considering potential shifts due to Schedule M enforcement.

    07

    Healthy Balance Sheet and Future Outlook

    Akums maintains a healthy balance sheet with a net cash position of over INR 1,600 crores and a cash surplus of INR 1,649 crores, with no interest expenses. Management expressed confidence in long-term growth, driven by strategic initiatives in CDMO, domestic and export branded businesses, and curtailing losses in API and trade generics, expecting H2 performance to improve and overall business to turn the corner into a growth phase from 2026 onwards.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.