Aurobindo Pharma Limited — Q3 FY26 earnings call

Call held 10 Feb 2026

Management summary

Aurobindo Pharma reported a strong Q3 FY26 with consolidated revenue growing 8.4% YoY and EBITDA margin at 20.5%. Growth was driven by robust performance in Europe and US injectables, alongside the Pen-G facility achieving break-even. The company is progressing on its biosimilar strategy and expects the Lannett acquisition to close in early Q1 FY27, while addressing procedural observations from the Eugia III inspection.

Highlights

  • Consolidated revenue grew by 8.4% YoY to ₹8,646 crores, reflecting sustained business momentum.

  • EBITDA margin expanded to 20.5%, with a 9% YoY growth, demonstrating strong operating leverage and fiscal prudence.

  • European business delivered robust 27% YoY revenue growth, amounting to ₹2,703 crores, and is on track to exceed €1 billion in annual revenue by FY26 close.

  • Pen-G facility has achieved break-even and is starting to contribute, with full impact expected from Q1 FY27 due to Minimum Import Price (MIP) policy.

  • The company launched 9 new products and received 7 approvals during the quarter, reflecting strong pipeline performance.

Concerns

  • Net profit of ₹910 crores was impacted by a one-time cost of ₹65 crores due to a change in the labour code amendment.

  • The 6APA market is experiencing predatory pricing, which has put the entire market at a loss, though correction is expected by April.

  • The elevated tax rate is due to not taking tax credits for losses in ramp-up phase of independent companies like CuraTeQ and Lyfius.

Key financials

  1. Consolidated Revenue ₹8,646 Cr +8.4%YoY
  2. EBITDA ₹1,773 Cr +9%YoY
  3. EBITDA Margin 20.5%
  4. Net Profit ₹910 Cr
  5. Gross Margin 59.7%
  6. R&D Expenditure ₹409 Cr

What they filed

Q1 FY27: revenue up 16.3%, net profit up 25.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue7,796 7,979 8,382 7,868 8,286 +6%8,646 +8%8,853 +6%9,150 +16%
EBITDA1,566 1,578 1,760 1,603 1,678 +7%1,773 +12%1,750 −1%1,880 +17%
Net profit817 846 903 824 848 +4%910 +8%921 +2%1,032 +25%
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

SegmentRevenueYoY Growth
Formulation Business₹7,683 Cr10%
API Business₹963 Cr—
U.S. Formulation (ex-gRevlimid)₹420 Cr—
U.S. Injectable Sales—17%
European Business₹2,703 Cr27%
Growth Markets₹865 Cr0%
ARV Formulation₹376 Cr22%

Capital allocation

high confidence
  • Capex $79 Mn
    • Enhancing manufacturing capabilities, strengthening compliance and accelerating automation
    • Biologics/CDMO (TheraNym) facility $120 Mn
    Net capex for the quarter stood at USD 79 million, in line with our strategic priorities of enhancing our manufacturing capabilities, strengthening compliance and accelerating automation.
  • M&A Lannett Acquisition · Pending regulatory

    Further strengthened the US business

    The Lannett acquisition further strengthened the US business, and this is subject to regulatory approvals.
  • Liquidity Liquidity disclosed Generated net cash inflow of USD 118 million during the quarter, resulting in improved net cash position.
    We generated net cash inflow of USD 118 million during the quarter, resulting in improved net cash position, including investment and appropriating for the purchase consideration of domestic pharma acquisition of USD 251 million as of 31st March 2025, compared to USD 170 million as of September 30, 2025.

Guidance & targets

Margin

  • EBITDA Margin Margin · FY26 · High confidence 20-21%
    Taken together, these initiatives provide strong earnings growth visibility and reinforce our confidence in achieving our internal EBITDA margin target of mostly on the higher side of 20% to 21% for FY26.

    — S. Subramanian

Revenue

  • Annual European Revenue Revenue · FY26 · High confidence Exceed €1 billion
    Consistent execution across key European markets firmly underpins our trajectory to exceed 1 billion in annual European revenue by close of FY26.

    — S. Subramanian

Production Volume

  • Pen-G Annual Production Production Volume · next 12 months · High confidence >10,000 metric tonnes
    Based on our current production level, we expect to produce more than 10,000 metric tonnes on annualised basis over the next 12 months.

    — S. Subramanian

Capacity Utilization

  • Pen-G Ramp-up Capacity Utilization · March '26 · High confidence 65-70%

    From 42% today

    We expect to ramp it up to nearly 65 to 70% by March ‘26 against the last year average of 42%.

    — S. Subramanian

Profitability

  • OSD China Facility EBITDA Profitability · Q4 · High confidence Break-even
    We remain confident of achieving EBITDA break-even in Q4 and meaningfully contribute to the bottom-line EBITDA in the next year.

    — S. Subramanian

Commercialization

  • Vizag Injectable Facility Commercialization Commercialization · FY27 · Medium confidence Slow commercialization
    We expect a slow commercialization to happen in next year, FY27. And because we are going to file a very, very important product from this facility, because we have a cartridge line where like we will be taking all the GLP-1 products from there and we'll be filing.

    — Yugandhar Puvvala

  • Vizag Injectable Facility Full Benefits Commercialization · FY28 · High confidence Full benefits
    And that is what we want to restrict it to, so that the ramp up should happen starting from FY27 and we should take full benefits starting FY28.

    — Yugandhar Puvvala

Biosimilars

  • Biosimilar Inflection Year Biosimilars · 2029 · High confidence 2029
    I believe 29 (2029)... to answer the second part of your question, as I have always stated, 29 (2029) would be the inflection year for biotech.

    — Dr. Satakarni Makkapati

PLI Scheme

  • PLI Amount for Pen-G PLI Scheme · next year · High confidence ₹240 crores for every 10,000 MT
    As per the government, it is Rs. 240 crores for every 10,000 MT, right, And as and when we produce the quantity, it will proportionately come. ... I mean, hopefully everything goes well, we should be able to see the full year... next year, we should be able to see the full amount.

    — S. Subramanian

Product Launches

  • US New Approvals/Launches Product Launches · next 12 months · Medium confidence Similar trend to 9 products launched in Q3
    So we launched about nine products in the last quarter ending December. We believe similar kind of trend would continue for the next 12 months. On a yearly basis, if you multiply, that's what we can look at.

    — Swami Iyer

What to watch in Q4 FY26

Eugia III Inspection Status

next quarter
Current Procedural observations, response submitted to USFDA
Target USFDA response received, warning letter status clarified

Why it matters

Resolution of regulatory issues at Eugia III is crucial for sustained US injectable sales growth.

Yeah, I think, Tushar, we have already clearly mentioned this, stating that these are all procedural observations. There is no stoppage of production, no stoppage of any nature and these are procedural and technical. And we are very confident of responding within 15 working days to USFDA. I do not see any issue.

Risks & concerns

  • 6APA Predatory Pricing

    medium

    Predatory pricing in the 6APA market has put the entire market at a loss, but correction is expected by end of March/April due to MIP.

    Management acknowledged

  • USFDA Warning Letter for Eugia

    medium

    The USFDA has to take a decision on the warning letters for Eugia, but management is cautiously optimistic about the future of the facility.

    Management cautiously optimistic

  • Eugia III Inspection Observations

    low

    Procedural and technical observations, no data integrity issues or production stoppage, confident of responding to USFDA within 15 working days.

    Management acknowledged

Q&A highlights

8 direct
Eugia III Inspection Observations and Production Impact Direct
Yeah, I think, Tushar, we have already clearly mentioned this, stating that these are all procedural observations. There is no stoppage of production, no stoppage of any nature and these are procedural and technical. And we are very confident of responding within 15 working days to USFDA. I do not see any issue.

Clarifies the nature of observations at Eugia III, assuring no production stoppage and confidence in resolution, which is critical for US injectable supplies.

Asked by Tushar Manudhane

Lannett Acquisition FTC Approval Timeline and Overlap Direct
Right now, we are actively engaging with the FTC through our attorneys and we are very pleased with the progression of the process to this point. We feel confident that this process will be completed early in the next fiscal year, that is Q1 of '27. As far as the overlap is concerned, you know, there are no surprises, there are no negative surprises.

Provides a clear timeline for the Lannett acquisition closure (early Q1 FY27) and reassures about regulatory hurdles, which is a key growth driver for the US business.

Asked by Neha Manpuria

Pen-G Facility EBITDA Impact and Profitability Direct
Let me put it like that. To give you some more color, we have already (achieved break-even) on the Pen-G facility and we started making a little bit contribution now itself. However, where we have been losing out is on the 6APA prices where there is a predatory pricing and it is going well below the cost of manufacture internationally also. And with the correction in the MIP, etc, hopefully this should get resolved by end of March or maybe by April.

Details the current profitability status of the Pen-G facility (break-even, slight contribution) and explains the drag from 6APA pricing, with an expected resolution timeline due to MIP.

Asked by Neha Manpuria

Sustainability of Q3 Gross Margin (59.5%) Direct
Overall, I think with the improved performance of the Pen-G and the related products, I think our losses, whatever the losses we have incurred has come down and which will turn into positive and this will help. And overall, Yugandhar also said, the injectable business is expected to go up and every business is working, and Murali has said that he is working on a double-digit growth, etc. So, all put together, I think we should be able to show a sustainable improvement in the EBITDA margin and the overall profitability.

Management attributes the high gross margin to multiple factors (Pen-G, injectables, Europe growth) and expresses confidence in its sustainability, which is crucial for future profitability.

Asked by Bino Pathiparampil

Pomalidomide (Pomalyst) Generic Launch Direct
Yes, we'll be launching and we have already prepared for the launch. ... That's right. (This quarter itself)

Confirms the launch of Pomalidomide generic this quarter, indicating a new revenue stream from a significant product.

Asked by Bino Pathiparampil

Elevated Tax Rate and Deferred Tax Assets Direct
What has happened is today, CuraTeQ, today Lyfius, all these are independent companies, right. We have incurred losses on account of the ramping up and other things, and CuraTeQ on account of the R&D cost and other things, right. So ideally for the losses, we should have taken a tax credit, but we have been very conservative in our accounting. So, we are not taking the tax credit. ... No, we are not creating the deferred tax asset. That is the point I am trying to tell.

Explains the reason for the higher tax rate (conservative accounting for losses in ramp-up entities) and clarifies that no deferred tax asset is being created, which impacts reported PAT.

Asked by Tarang Agrawal

Biosimilar Strategy and Inflection Point Direct
I believe 29 (2029)... to answer the second part of your question, as I have always stated, 29 (2029) would be the inflection year for biotech. All the efforts that we have made in bringing four biosimilars into the market (read as approval) in the last one year, and with two or three more ready for filing in both Europe and US, we expect to ramp all this up, convert this into some sort of commercial momentum by 2029, which is our inflection year, I believe.

Highlights 2029 as the inflection year for the biosimilar business, providing a long-term outlook for this strategic growth area.

Asked by Shyam Srinivasan

Capital Allocation Priorities and M&A Outlook Direct
So Shyam, which I told you earlier also, we are not going for any major greenfield project other than whatever we are committing to TheraNym which is the biologics which Satakarni has informed. Otherwise, we are not going for any major organic. In terms of the inorganic, yeah, we keep on looking at it, but it is not that we need to do it urgently, etc. If we get the targets at the right price and to our strategy, fitting into our strategy, we will look into that. I think this is the main thing actually in terms of the capital allocation.

Outlines the company's capital allocation strategy, emphasizing no major greenfield projects (except TheraNym) and a selective, opportunistic approach to inorganic M&A based on strategic fit and valuation.

Asked by Shyam Srinivasan

3 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Aurobindo Pharma reported a consolidated revenue of ₹8,646 crores for Q3 FY26, marking an 8.4% year-on-year growth. EBITDA for the quarter stood at ₹1,773 crores, with a margin of 20.5%, reflecting a 9% YoY growth. The net profit was ₹910 crores, after accounting for a one-time cost of ₹65 crores related to a labour code amendment. The gross margin for the quarter was strong at 59.7%, supported by favorable raw material prices and business mix.

Segmental Business Highlights

The formulation business was the primary growth driver, achieving a 10% YoY increase with revenues of ₹7,683 crores, contributing 89% to the consolidated revenue. The API business contributed 11% of the total revenue, amounting to ₹963 crores. The European business demonstrated exceptional growth, with a 27% YoY revenue increase to ₹2,703 crores (€261 million), and is on track to exceed €1 billion in annual revenue by the end of FY26. US injectable sales also saw a significant 17% YoY growth, while US oral formulation revenue (excluding gRevlimid) was stable at USD 420 million. Growth markets remained flat at ₹865 crores (USD 97 million).

Pen-G Plant and API Business Outlook

The Pen-G manufacturing facility is progressing well with its ramp-up, expected to produce over 10,000 metric tonnes annually over the next 12 months. Yield levels are consistently improving, and the facility has already achieved break-even, contributing slightly to profitability. The Government of India's new policy introducing a one-year CIF on minimum import price for Pen-G, 6 APA, and Amoxicillin is anticipated to be a significant positive catalyst, addressing the current predatory pricing in the 6APA market and improving margins from Q1 FY27.

Biosimilars and Specialty Pipeline Development

Aurobindo Pharma is actively advancing its biosimilar and biologic strategy, with recent milestones including the first Canadian approval for Dyrupeg and four biosimilar approvals in the European Economic Area. Bevqolva (Bevacizumab biosimilar) has launched in the UK, and Dazublys (Trastuzumab biosimilar) in the Baltics. The company aims for comprehensive coverage in Europe, LATAM, and Canada, with 2029 projected as the inflection year for its biotech business. Validation campaigns for Omalizumab and Denosumab biosimilars are underway, with filings expected from June/July in Europe and the US.

Capital Allocation and M&A Strategy

Net capex for Q3 FY26 stood at USD 79 million, aligned with strategic priorities of enhancing manufacturing capabilities and accelerating automation. The Lannett acquisition is progressing, with regulatory approval from the FTC expected by early Q1 FY27, and management anticipates no negative surprises regarding overlap. The company is not pursuing major greenfield projects, except for the TheraNym biologics facility, which has seen USD 120-130 million in capex over the last seven quarters. Inorganic growth opportunities are continuously evaluated based on strategic fit and price.

Regulatory and Operational Updates

The Eugia III inspection resulted in procedural observations, with no data integrity issues or production stoppage, and the company is confident in its response to the USFDA. The OSD China facility is steadily progressing towards an annual capacity of 2 billion units, with EU approval for 10 products and 3 local product approvals, and is expected to achieve EBITDA break-even in Q4. The Vizag injectable facility has 3 products filed and 10 more under filing, with slow commercialization anticipated in FY27 and full benefits from FY28.

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