Alembic Pharmaceuticals Limited — Q2 FY26 earnings call

Call held 4 Nov 2025

Management summary

Alembic Pharma delivered a strong Q2 FY26, characterized by robust double-digit growth in international markets and significant operating leverage. While the India business faced temporary GST-related disruptions, the US and ROW segments outperformed. Management is pivoting towards a higher-margin profile by targeting 20% EBITDA margins in the next two years and entering the US branded specialty space.

Highlights

  • Revenue grew 16% YoY to ₹1,910 crores, driven by volume growth and new launches.

  • EBITDA (before R&D) stood at ₹503 crores with a margin of 26%, up from 23% YoY.

  • PAT (before exceptional items) increased 30% YoY to ₹185 crores.

  • US business grew 21% YoY, supported by the launch of Entresto and higher volumes.

  • Rest of World (ROW) markets delivered exceptional 31% growth.

  • R&D spend increased 41% YoY to ₹187 crores (~10% of revenue) due to complex injectable and peptide development.

  • Company announced entry into US branded market with the acquisition of Utility Therapeutics and the product 'Pivya'.

  • Net debt increased to ₹1,280 crores from ₹967 crores in June '25, primarily to fund working capital and acquisitions.

Key financials

  1. Revenue ₹1,910 Cr +16%YoY
  2. EBITDA Margin (before R&D) 26%
  3. PAT (before exceptional) ₹185 Cr +30%YoY
  4. R&D Spend ₹187 Cr +41%YoY
  5. Gross Margin 73% 0%YoY
  6. Net Debt ₹1,280 Cr +32%QoQ

What they filed

Q1 FY27: revenue up 25.7%, net profit up 11.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,648 1,693 1,770 1,711 1,910 +16%1,876 +11%1,848 +4%2,150 +26%
EBITDA239 260 271 281 316 +32%292 +12%228 −16%332 +18%
Net profit153 138 157 154 184 +20%132 −4%202 +29%172 +12%
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

  • India Branded Business
    ₹639 Cr Revenue5% Growth
  • US Business
    21% Growth3 New Launches
  • Rest of World (ROW)
    31% Growth85% Regulated Market Mix
  • API Business
    15% Growth

Guidance & targets

Profitability

  • EBITDA Margin Profitability · next couple of years · Medium confidence 20%
    In the next couple of years, get to a 20% EBITDA level

    — Pranav Amin, Managing Director

Other

  • R&D Spend Other · FY26 · High confidence ₹600-650 crores

    From ₹600-650 crores today

    Our annual R&D guidance was given at INR600 crores to 650 crores at the start of the year. We continue to have the same number in mind.

    — Pranav Amin, Managing Director

Revenue

  • ROW Generics Growth Revenue · FY26 · Medium confidence 15% to 20%
    at the year end, we will be about 15% to 20% in ROW generics.

    — Pranav Amin, Managing Director

  • API Growth Revenue · FY26 · Medium confidence 10%
    I think for the year we will grow at about 10%

    — Pranav Amin, Managing Director

Margin

  • Gross Margin Range Margin · FY26 · High confidence 70% to 75%
    It will be in the similar range of 70% to 75% that we've been guiding in the past.

    — G. Krishnan, CFO

Risks & concerns

  • US Generic Pricing Erosion

    medium

    Management noted pricing pressure in US Generics and specifically mentioned erosion in the large Entresto launch.

    Management acknowledged

  • Near-term Profitability Hit from US Branded Entry

    low

    Onboarding a field force for Pivya will impact margins for a few quarters before revenue ramps up.

    Management acknowledged

  • GST 2.0 Implementation Disruptions

    low

    Billing was paused for a few days in India to facilitate migration, marginally impacting Q2 growth.

    Both acknowledged

Areas of evasion (2)

  • Specific budgeted investment amounts for the US specialty field force.
  • Plant-level utilization percentages.

Q&A highlights

2 direct
R&D Spend Spike Direct
We've done batches of tirzepatide, the Mounjaro right now, which has caused a little bit of a bump up in the R&D costs for this quarter.

Explains the 41% YoY jump in R&D and confirms Alembic's active development of high-value GLP-1 peptides.

Asked by Damayanti Kerai, HSBC Bank

US Branded Specialty Strategy Partial
Initially, we will have a field force which will be promoting the product and it will take a couple of quarters for it to ramp up... for couple of quarters we may have a little bit of a profitability hit.

Signals a strategic shift into US branded drugs (Pivya) which will depress near-term margins for long-term de-risking from generics.

Asked by Tushar Manudhane, Motilal Oswal

Facility Utilization and Margins Direct
It's the injectable onco plants which are running a little lower than what we've anticipated... you'll see an impact of that in H2 itself.

Identifies the primary lever for future margin expansion: filling capacity in the new injectable and oncology facilities.

Asked by Maulik Varia, B&K Securities

2 min read 5 chapters

Detailed narrative

International Markets Drive Outperformance

Alembic's international business was the primary growth engine this quarter, with US revenue growing 21% and ROW markets surging 31%. The US growth was underpinned by the successful launch of Entresto and three other products, despite ongoing pricing erosion. In ROW, 85% of the business now comes from regulated markets like Europe, Canada, and Australia, where the company maintains a 20% CAGR over the long term.

Strategic Pivot to US Branded Specialty

The acquisition of Utility Therapeutics marks Alembic's entry into the US branded market with Pivya, a product for urinary tract infections. The deal involves a $4 million upfront payment and $12 million in total milestones. While the launch in late Q4 FY26 will require a dedicated field force and cause a near-term profitability hit, management views this as a critical de-risking strategy from the volatile generic business.

R&D Focus on Complex Generics and Peptides

R&D spend reached 10% of revenue this quarter, driven by development in complex injectables and peptides. Management confirmed they are working on Tirzepatide (Mounjaro) and have already produced batches, contributing to the cost spike. Despite the quarterly increase, the company maintained its full-year R&D guidance of ₹600-650 crores, expecting the ratio to normalize to 8% by year-end.

Margin Expansion Path to 20%

Management has set a clear target to reach 20% EBITDA margins within the next two years. This expansion is expected to come from operating leverage as utilization increases at the new injectable and oncology facilities, which are currently running at lower-than-anticipated levels. Improved productivity in the India field force and a shift toward higher-value complex products are also cited as key margin drivers.

India Business Navigates GST Transition

The India Branded Business grew a modest 5% YoY to ₹639 crores, impacted by a temporary billing pause during the migration to GST 2.0. While segments like Gynecology and Animal Health outperformed, the core acute business faced a high base effect from the previous year. Management expects growth to catch up with the Indian Pharmaceutical Market (IPM) as productivity improvements in the field force take hold in FY27.

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