Alembic Pharmaceuticals Limited

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 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 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.

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.

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.

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.