Beta Drugs Ltd — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

Beta Drugs Ltd reported a solid H1 FY26 with 13% revenue growth and 17% EBITDA growth, driven by strategic market entries and backward integration. Despite a slight dip in gross margins due to product mix and H1 growth being below annual targets, management expects a strong H2, particularly in exports, and is progressing on regulatory approvals and new product launches, including biosimilars.

Highlights

  • Revenue grew 13% YoY to ₹204 crores in H1 FY26, driven by strong performance in branded oncology and CDMO.

  • EBITDA increased 17% YoY to ₹47 crores, with margins expanding by 72 basis points to 23.08%.

  • PAT, excluding one-time interest on convertible debentures, rose 18% YoY to ₹28.71 crores.

  • Successfully completed COFAPRIS audit in Mexico and cleared INVIMA audit for injectables, paving the way for international expansion.

  • Acquired a new facility for backward integration, reducing dependency on the China market and strengthening DMFs.

Concerns

  • H1 FY26 revenue growth of 13% was below the company's stated annual target of 20-25%, attributed to tender seasonality and order processing delays.

  • Consolidated gross profit margins saw a 1.5% decline YoY, primarily due to product mix changes in the CDMO segment towards lower-margin products.

  • Europe approval for the cytotoxic suspension plant has been delayed, now expected in Q1 FY27 (Jan-Mar 2026).

Key financials

  1. Total Sales ₹204 Cr +13%YoY
  2. EBITDA ₹47 Cr +16.6%YoY
  3. EBITDA Margin 23.1% +3.3%YoY
  4. PAT (excl. debenture interest) ₹28.71 Cr +18.1%YoY
  5. PAT Margin (excl. debenture interest) 14.1% +4.1%YoY

What they filed

Q1 FY27: revenue up 26.0%, net profit up 33.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue180 88 94 100 103 −43%87 −1%94 +0%126 +26%
EBITDA39 18 17 20 21 −46%17 −6%18 +6%27 +35%
Net profit24 9 9 12 12 −50%9 +0%9 +0%16 +33%
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

Share of Revenue
₹203.5 Cr Total
  • CDMO ₹79 Cr 38.8%
  • Domestic Owned Brand (Oncology) ₹60 Cr 29.5%
  • International (Exports) ₹43 Cr 21.1%
  • API ₹12.25 Cr 6.0%
  • Dermatology ₹9.25 Cr 4.5%

Capital allocation

high confidence
  • Capex Capex disclosed
    • Acquisition of oncology intermediate plant ₹9.45 Cr
    • Build-up and machinery for intermediate plant ₹15 Cr
    • Land for corporate R&D center and intermediate plant (total additions in H1) ₹25 Cr
    The total CAPEX involved in acquiring the plant that was around Rs.9.45 crores, and there will be additional CAPEX requirement to build up for the plant, machinery, everything, additional will be around Rs.15 to 20-odd crores. If I see the total additions in the first half, this is somewhere around Rs.25 crores in the first half. And you were saying about the borrowings, which have practically increased in the borrowings, there are debentures, which you have seen. So, cash has gone out from the cash and cash equivalent side to the fixed assets, but the borrowings are still the same, which will be converted next year June, and then you will see that borrowings have gone away.
  • Debt Debt disclosed
    And you were saying about the borrowings, which have practically increased in the borrowings, there are debentures, which you have seen. So, cash has gone out from the cash and cash equivalent side to the fixed assets, but the borrowings are still the same, which will be converted next year June, and then you will see that borrowings have gone away.
  • M&A Licensed Oncology Intermediate Plant Acquisition · Closed · Consideration ₹[object Object] (cash)

    To produce own intermediates, strengthen DMFs, reduce dependency on China, and enter regulated markets, bypassing long approval times for new plants.

    Expected to be built up in 6-8 months with additional capex of Rs.15-20 crores.

    We have recently acquired a new facility for further backward integration to produce our own intermediates and further strengthen our DMFs and reduce our dependency on the China market. So, fortunately, we got an opportunity where we have our own current API plant right now, like only 50, 70 meters away, we got a plant who already had the license, so, we acquired that facility. The total CAPEX involved in acquiring the plant that was around Rs.9.45 crores, and there will be additional CAPEX requirement to build up for the plant, machinery, everything, additional will be around Rs.15 to 20-odd crores.
  • Liquidity Liquidity disclosed Cash has gone out from the cash and cash equivalent side to the fixed assets. Management is keeping cash for new product development, inorganic growth, and biosimilar investments.
    So, the cash we have just kept it for the development of the new product for further, maybe there can be an opportunity tomorrow for some inorganic growth also and maybe there is an opportunity to have some good market globally. So, this is why we have kept some cash aside there. Also, we are planning to get in-license with some biosimilars. So, we have kept some cash for that purpose only. So, cash has gone out from the cash and cash equivalent side to the fixed assets.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · Medium confidence 20-25%
    We said we will continue to grow at 20% to 25%. Although this time the growth was only 13%, but we will be having strong numbers for the next half of the year.

    — Rahul Batra

  • Exports Revenue Revenue · H2 FY26 · High confidence ₹100 crores
    if we did Rs.43 crores, we will be crossing Rs.100 crores of top line in exports for next half.

    — Management

Profitability

  • EBITDA Margins Profitability · FY26 · High confidence 23-25%
    EBITDA margins will remain between 23% and 25%.

    — Rahul Batra

Sales

  • Derma Business Sales Sales · next 3-5 years · Medium confidence ₹30-50 crores
    we see between the sales between Rs.30 to 50 crores in the next three to five years.

    — Management

Market Share

  • Italian Product Market Share Market Share · next 3-5 years · Medium confidence ₹50-100 crores
    we want to have and we will have a very good market share in coming three to five years in this market. If it is Rs.1,000 crores, so we should be having at least Rs.50 to 100 crores market share.

    — Rahul Batra

Product Launch

  • Biosimilars Launch Product Launch · next 3-4 years · Medium confidence 3-4 years
    we will be coming up with some biosimilars maybe in the coming three, four years.

    — Rahul Batra

  • New Oncology NDDS Launches Product Launch · next year · High confidence 2
    In oncology, we are expecting two more NDDS to be launched next year which will be again the first time in India.

    — Management

Capacity

  • Intermediate Plant Commissioning Capacity · next 6-8 months · High confidence 6-8 months
    In the next six to eight months, our target is that we will be building up this facility and making our own intermediates.

    — Management

Regulatory Filings

  • Dossier Filings Regulatory Filings · next two years · High confidence 150+ doses
    We are in the process of doubling our regulatory team and to file 150-plus doses in the coming two years.

    — Management

Regulatory Approval

  • Europe Approval Regulatory Approval · Q1 FY27 · High confidence Q1 FY27 (Jan-Mar 2026)
    The Europe approval has been delayed for long, but finally it will happen in the first quarter of next year, that is between January and March.

    — Management

  • NSE Main Board Migration Regulatory Approval · within 10 days of Nov 7, 2025 · High confidence within 10 days
    So maximum 10 days, we will be migrating on NSE's main board.

    — Rahul Batra

What to watch in Q3 FY26

NSE Main Board Migration

next quarter
Current Principal approval received, expected within 10 days of Nov 7, 2025
Target Migration completed

Why it matters

Successful migration to the main board will enhance the company's visibility, liquidity, and investor confidence.

Before we begin, I would like to share that today we have got a call from NSE and they have said that they will be giving principal approval to migrate to the main board. So maximum 10 days, we will be migrating on NSE's main board.

Risks & concerns

  • Europe Approval Delays

    medium

    Europe approval for the cytotoxic suspension plant has been delayed, now expected in Q1 FY27 (Jan-Mar 2026).

    Management acknowledged

  • H1 Growth Below Target

    medium

    H1 FY26 revenue growth of 13% was below the company's 20-25% annual target, attributed to tender seasonality and order processing delays.

    Management acknowledged

  • Production Challenges

    low

    Bad rains across North India and two audits from Mexico and Colombia caused 15-20 days of production challenges in H1 FY26.

    Management acknowledged

Q&A highlights

8 direct
Gross Profit Margin Decline Direct
See, our gross margin on a consolidated level is 1.5% less than the last year. This is basically because of the product mix only. I mean, in CMO, some products are there which we cannot keep it constant every time. Some price erosion is there, something like that. So, it is just because of product mix.

Analyst questioned a 3% decline in gross profit margins, and management clarified it was a 1.5% consolidated decline due to product mix in the CDMO segment, specifically lower-margin Platin group products.

Asked by Aastha Jain

International Business Growth Slowdown Direct
So, the international market globally, it is dominated by tender business. So, the most of the tenders tend to come in the latter half of the year. So, that is between October to November. So, the award goes somewhere in December. So, the sales will reflect generally from January, February and March.

Analyst questioned the low 10% growth in international business, and management explained it's due to the seasonality of tender business, with significant sales expected in H2.

Asked by Aastha Jain

Platin Business Contribution and Margins Direct
Platins, we cannot deny, it is like a basic. Supposing you are going to a dermatologist, supposing you are going to a cardiologist, they will always give you PPI along with any medicine. So, this is the basic protocol. Even if you go for immunotherapy, anything, the Platin has to be given. But what we do is that supposing the demand is for 10,000 vials, so, we tend to give only 2,000, 3,000 vials only. So, this is how we are controlling our margins in spite of getting a growth in the sales also. It is less than 7% only.

Analyst inquired about the low-margin Platin business, and management clarified its essential nature, its limited contribution (<7% of revenue), and their strategy to control margins by managing supply.

Asked by Avnish Burman

Impact of GST Change Direct
So, the sales were stopped for five, seven days, but eventually we have built them up and there is no loss in the sales. Actually, the product is described by the brand name. Even the hospital take it as a brand name. Second, GST is benefit to the patient. It is not a loss to the company. It is just a benefit to the patient they passed on. So, by reducing the GST rate, nothing has impacted on the overall business.

Analyst asked about the impact of GST changes, and management confirmed a temporary halt in sales for 5-7 days but no overall revenue loss, stating the change benefits patients rather than impacting the company negatively.

Asked by Avnish Burman

Increase in Working Capital and Receivables Direct
Receivables have gone up from 103 days to 108 days. Inventories have gone up from 60 to 65. No, this is nothing related to GST. So, that is what I said to the previous participant only that if you compare the working capital days, if you add the receivable, inventory and reduce the payable days, it is only a three days increase. So, keeping the volume in mind, I think this is marginal.

Analyst questioned the increase in working capital, receivables, and inventory. Management explained the marginal increase in days (3 days for working capital, 4.5 days for receivables) is due to increased volume and not a concern.

Asked by Avnish Burman

Standalone P&L Gross Margin Reduction Direct
So, the only reason this has happened is that total domestic sales, even the branded has been shifted to Adley formulation. So, we have increased a lot of capacity, we have added a lot of machinery in Adley plant for domestic meet out, whether it is for CDMO or whether it is for own brands. So, now coming on to the Beta standalone, the margins have decreased because the expenses side of the Beta is higher.

Analyst noted a sharp gross margin reduction in standalone P&L. Management clarified this is due to the strategic shift of domestic branded sales to Adley formulation, making Beta's standalone entity primarily focused on exports to regulated markets, which will improve margins once sales clock in.

Asked by Avnish Burman

Oncology Intermediate Plant Capex and Strategy Direct
In the next six to eight months, our target is that we will be building up this facility and making our own intermediates. The total CAPEX involved in acquiring the plant that was around Rs.9.45 crores, and there will be additional CAPEX requirement to build up for the plant, machinery, everything, additional will be around Rs.15 to 20-odd crores.

Analyst sought details on the acquired oncology intermediate plant. Management provided specific capex figures (Rs.9.45 crores acquisition, Rs.15-20 crores additional) and a timeline (6-8 months) for making its own intermediates, highlighting its strategic importance for backward integration.

Asked by Punit Mittal

Entry into Biosimilars Direct
So, that is a very long discussion on the biosimilars. We are actually planning, we have initiated many talks, we are discussing many things rather, some things have been signed as NDAs also. So, we are doing some things on the biosimilar side, but till the time it is done officially, we cannot give an announcement right now. But yes, since no oncology company is full without biosimilars, so we are into that area now, and we will be coming up with some biosimilars maybe in the coming three, four years.

Analyst inquired about biosimilar plans. Management confirmed active planning, ongoing talks, and NDAs, with launches anticipated in 3-4 years, underscoring the strategic importance of biosimilars for a complete oncology portfolio.

Asked by Punit Mittal

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Detailed narrative

H1 FY26 Financial Performance and Growth Drivers

Beta Drugs Ltd reported a 13% year-on-year revenue growth, reaching ₹204 crores in H1 FY26, despite production challenges due to adverse weather and audits. EBITDA increased by 17% to ₹47 crores, with margins expanding by 72 basis points to 23.08% from 22.36% in H1 FY25. PAT, excluding one-time interest on convertible debentures, grew 18% to ₹28.71 crores, reflecting improved profitability and a PAT margin of 14.10%.

Strategic Market Expansion and Product Development

The company successfully completed a COFAPRIS audit in Mexico, filing 16 dossiers and planning 15 more, alongside clearing an INVIMA audit for injectables. Beta Drugs also secured approval for India's first NDDS of Methotrexate oral solution and initiated its first in-licensing deal for aesthetics fillers with an Italian company, targeting a ₹50-100 crore market share in 3-5 years from an estimated ₹1,000 crore market. The derma division itself grew 45% YoY and became profitable with ₹11.32 lakhs EBITDA.

Backward Integration and Capacity Enhancement

To reduce dependency on China and strengthen its DMFs, Beta Drugs acquired a licensed oncology intermediate plant for ₹9.45 crores, with an additional ₹15-20 crores planned for build-up and machinery over the next 6-8 months. This acquisition, along with increased capacity at the Adley formulation plant, positions the company for enhanced production and entry into regulated markets. Total additions to fixed assets in H1 FY26 amounted to approximately ₹25 crores.

Segmental Performance and Future Outlook

In H1 FY26, CDMO contributed 39% (₹79 crores) to total revenue, domestic owned brands 34% (₹60 crores), and exports 21% (₹43 crores). While H1 exports growth was 10%, management anticipates a significant acceleration in H2 FY26, targeting over ₹100 crores in exports due to tender seasonality. The company maintains its full-year revenue growth guidance of 20-25% and EBITDA margins of 23-25%, expecting strong H2 performance to compensate for the H1 growth of 13%.

Working Capital and Margin Dynamics

The company experienced a marginal increase in working capital days (from 92 to 95) and receivables days (from 103 to 108), attributed to higher sales volumes. Consolidated gross profit margins saw a 1.5% decline YoY, primarily due to product mix shifts within the CDMO segment towards lower-margin Platin group products, which constitute less than 7% of overall revenue. However, overall EBITDA margins improved, and management expects this trend to continue, with standalone Beta margins improving as regulated market export sales commence.

Regulatory and Operational Updates

Beta Drugs received principal approval from NSE to migrate to the main board within 10 days, enhancing its market visibility. The long-delayed Europe approval for its cytotoxic suspension plant is now expected in Q1 FY27 (Jan-Mar 2026), following audit confirmation by mid-December. The company is also actively exploring entry into the biosimilars segment, with launches anticipated in 3-4 years, and plans to file 150-plus doses in regulated markets over the next two years.

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