Alembic Pharmaceuticals Limited — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

Alembic Pharma reported a strong Q3 FY26, with revenue growing 11% year-over-year to INR 1,876 crores and PAT before exceptional items increasing 21% to INR 168 crores. Growth was broad-based across geographies, with ROW markets showing significant traction. While gross margins saw some moderation due to product mix and pricing pressures, operating leverage improved EBITDA. The company is on track for its first US branded product launch and continues to invest heavily in R&D and new product development.

Highlights

  • Revenue grew 11% YoY to INR 1,876 crores, driven by volume expansion, new product launches, and increased traction in ex-U.S. markets.

  • EBITDA before R&D and exceptional items grew 20% YoY to INR 464 crores, with margin improving to 25% from 23% in the prior year.

  • PAT before exceptional items increased 21% YoY to INR 168 crores, reflecting underlying revenue growth and margin improvement.

  • ROW markets demonstrated robust growth of 36%, reflecting strategic geographic expansion and focused execution.

  • On track to launch its first US branded product, Pivya, in February 2026, marking a strategic shift towards branded business.

Concerns

  • Gross margin moderated to 72% from 74% in the previous year, primarily due to changes in product mix and pricing pressure in US generics and API.

  • A one-time provision of INR 42 crores was recognized for employee benefits due to changes in the New Labour Code, impacting reported PAT.

  • India Branded business growth of 6% YoY is still below the market growth rate, with management aiming to catch up by Q1 FY27.

Key financials

  1. Revenue ₹1,876 Cr +11%YoY
  2. Gross Margin 72%
  3. EBITDA (pre-R&D, pre-exceptional) ₹464 Cr +20%YoY
  4. EBITDA Margin (pre-R&D, pre-exceptional) 25%
  5. PBT (pre-exceptional) ₹205 Cr +15%YoY
  6. PAT (pre-exceptional) ₹168 Cr +21%YoY
  7. R&D Expenses ₹165 Cr +33%YoY
  8. Reported PAT (post-exceptional) ₹126 Cr -4%YoY
  9. Net Working Capital ₹2,944 Cr
  10. Net Debt ₹1,213 Cr
  11. Other Income (Forex Gain) ₹15.5 Cr

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
    ₹652 Cr Revenue6% Growth
  • ROW Markets
    36% Growth
  • U.S. Business
    6% Growth

Capital allocation

medium confidence
  • Debt Net ₹1,213 Cr
    Net debt marginally declined to about INR 1,213 crores compared to the previous quarter.
  • M&A Deal Joint venture · Signed

    Support injectable and onco capabilities, scale utilization in new facilities

    We have executed a few out-licensing and manufacturing agreements as well that support our injectable and onco capabilities.

Guidance & targets

Revenue

  • India Branded Business Growth Rate Revenue · Q1 FY27 · Medium confidence in line with the market growth rate
    Q1 of the coming financial year is where we feel we should be back in line with the market growth rate.

    — Shaunak Amin

  • US Business Growth Rate (Full Year) Revenue · FY26 · High confidence between 10% to 12%
    But I expect the U.S. business to grow between 10% to 12% for the full on full year basis.

    — Pranav Amin

  • US Business Growth Rate (Long-term) Revenue · every year · Medium confidence mid-teens like between 10% to 15%
    Ideally, I would like to go into the mid-teens like between 10% to 15%, at least I would expect the U.S. business to continue growing every year.

    — Pranav Amin

R&D

  • R&D Spend as % of Revenue (Full Year) R&D · FY26 · High confidence about 8% to 9%
    for the current year, we are seeing it about 8% to 9% of total revenue as R&D spend.

    — G. Krishnan

  • R&D Expenses (Full Year) R&D · FY26 · High confidence INR 600 crores to INR 650 crores
    R&D expenses increased by 33% year-over-year to INR 165 crores for the quarter, and this is in line with the full year guidance of INR 600 crores to INR 650 crores that we had provided earlier.

    — G. Krishnan

Product Launches

  • Number of US Product Launches Product Launches · Q4 FY26 · High confidence another 4 to 5 products
    We hope to launch another 4 to 5 products in the fourth quarter of the year.

    — Pranav Amin

Product Launch

  • First US Branded Product (Pivya) Launch Product Launch · February 2026 (Q4 FY26) · High confidence Launch
    We're also on track to launch our first branded product in the U.S. in February 2026. Sometime in Q4, we'll do it.

    — Pranav Amin

What to watch in Q4 FY26

India Business Growth Rate

Q1 FY27
Current 6% YoY (Q3 FY26)
Target in line with the market growth rate

Why it matters

To assess if management's operational execution strategy is successfully closing the gap with market growth.

Q1 of the coming financial year is where we feel we should be back in line with the market growth rate.

Risks & concerns

  • US Generics Pricing Pressure

    medium

    Persistent pricing pressure in US generics and API business contributed to gross margin moderation from 74% to 72%, but was mitigated by cost efficiency programs.

    Management acknowledged

  • India Business Underperformance

    medium

    India Branded business growth of 6% YoY is below market growth rates, which management attributes partly to a conservative approach on doctor spend (UCMP), but expresses confidence in catching up by Q1 FY27.

    Both acknowledged

  • New Labour Code Provision

    low

    A one-time provision of INR 42 crores for employee benefits due to the New Labour Code impacted reported PAT by 4% YoY, but does not affect operating performance or immediate cash flow.

    Management acknowledged

Q&A highlights

3 direct
India Business Growth Trajectory Direct
Q1 of the coming financial year is where we feel we should be back in line with the market growth rate.

Addresses concerns about underperformance in the domestic market and provides a specific timeline for improvement.

Asked by Damayanti

Pivya Branded Product Launch & Profitability Partial
Till the product starts scaling up we wouldn't have any margin because until it gets to a certain point, you have your MR cost, you have the royalty payments, you have everything else. So let's wait for a couple of quarters, and you guys will all get a much better idea.

Pivya is a strategic shift to branded business in the US, and its initial profitability impact and ramp-up are key for future growth.

Asked by Damayanti

US Business Growth & Pricing Pressure Direct
U.S. is already on the growth track as we speak. We are growing in terms of volumes. We're growing quite a bit with the pricing pressure. it's 6%.

Clarifies the current state of US business, highlighting volume growth offsetting pricing pressure, and reiterates full-year growth guidance.

Asked by Damayanti

R&D Spend for FY27 Partial
we will guide sometime when we start the next year. But for the current year, we are seeing it about 8% to 9% of total revenue as R&D spend. And it's been at the similar levels for Alembic in the last few years. So for next year, specifically, we will discuss at the time when we do the quarter 4 results.

R&D is a significant investment for pharma, and its future trajectory impacts pipeline and long-term growth.

Asked by Candice Pereira

Domestic Business Underperformance & Strategy Partial
I mean, if you want to talk about something that maybe we were too conservative on, the whole doctor spend scenario in the context of UCMP, possibly we were too conservative and extremely sensitive to it relative to the market. That's what I understand.

Highlights a persistent issue in a key market and management's evolving strategy, but without a clear path forward.

Asked by Rahul

US Long-term Growth Potential (Mid-Teens) Direct
Yes, it could. Ideally, I would like to go into the mid-teens like between 10% to 15%, at least I would expect the U.S. business to continue growing every year.

Provides a long-term aspiration for the crucial US market, indicating management's confidence in complex/differentiated products.

Asked by Rahul

2 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Alembic Pharma reported a robust Q3 FY26, with revenue growing 11% year-over-year to INR 1,876 crores. This growth was broad-based, driven by volume expansion, new product launches, and increased traction in ex-U.S. markets. EBITDA before R&D and exceptional items stood at INR 464 crores, representing 25% of revenue and a 20% year-on-year growth, reflecting improved operating leverage. Profit after tax before exceptional items grew 21% year-on-year to INR 168 crores.

Gross Margin and Profitability Drivers

Gross margin for the quarter was 72%, a moderation from 74% in the previous year, primarily due to changes in product mix and persistent pricing pressure in U.S. generics and API segments. However, this was partially offset by cost improvement programs in the International Business. Management noted that the 72% gross margin is within their comfortable operating range of 70% to 75%.

R&D Investment and Pipeline Development

R&D expenses increased significantly by 33% year-over-year to INR 165 crores for the quarter, aligning with the full-year guidance of INR 600 crores to INR 650 crores. R&D investment is approximately 9% of revenue, demonstrating a sustained commitment to pipeline development. The focus remains on complex and differentiated areas such as injectables, peptides, and oral solids, with an emphasis on early-entry opportunities.

Geographic Business Performance

The India Branded business delivered a 6% year-on-year growth, reaching a revenue of INR 652 crores for the quarter, though still below market growth rates. ROW markets showed strong performance with 36% growth, reflecting strategic geographic expansion. The U.S. business grew 6%, supported by higher volumes and new launches, despite continuing pricing challenges. Management expects the U.S. business to grow 10-12% for the full year.

US Market Strategy and Branded Product Launch

Alembic launched 2 approved products in the U.S. during the quarter, bringing cumulative ANDA approvals to 23 and tentative approvals to 20. The company plans to launch another 4 to 5 products in Q4 FY26. A significant strategic move is the launch of its first branded product in the U.S., Pivya, in February 2026 (Q4 FY26). This product targets uncomplicated urinary tract infections, marking a shift towards a part-branded business model, with expected scale-up over 12-18 months.

Capital Structure and Exceptional Items

Net working capital stood at INR 2,944 crores, broadly consistent with September levels, and net debt marginally declined to INR 1,213 crores compared to the previous quarter. The company recognized a one-time provision of INR 42 crores towards employee benefits due to changes under the New Labour Code. This exceptional item, while impacting reported PAT (which was 4% lower YoY), does not affect operating performance or immediate cash flow.

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