Granules India Limited — Q1 FY27 earnings call

Call held 21 Jul 2026

Management summary

Granules India Limited delivered its strongest Q1 FY27 performance with revenue up 22% and PAT up 60%, driven by a strategic shift towards complex generics and strong margin expansion. The company achieved a near debt-free status with robust operating cash flow. While facing raw material pressures and awaiting FDA clearance for its Gagillapur facility, Granules is scaling its Peptide CDMO platform and investing in a differentiated product pipeline for future growth.

Highlights

  • Revenue grew 22% YoY to ₹1,477 crores, marking the strongest first quarter ever.

  • EBITDA grew 37% YoY to ₹339 crores, with margin expanding 256 bps to 22.9%.

  • Profit after tax (PAT) grew 60% YoY to ₹180 crores.

  • Net debt to EBITDA improved significantly to 0.07x, indicating the company is virtually debt-free.

  • Generated over ₹387 crores of operating cash this quarter, supported by strong profitability and disciplined working capital management.

  • GPI (US manufacturing) moved up to the 27th position among all US generic companies from 74th just 5 years ago.

Concerns

  • Raw material pressures and geopolitical tensions in West Asia are impacting raw materials, packing inputs, and freight costs.

  • Gagillapur facility is still awaiting FDA clearance, which is holding back the launch of 9 applications.

  • Peptide CDMO business reported a negative EBITDA of ₹12 crores this quarter due to project mix and long cycle times, with value realization expected in later quarters.

  • Sequential softness in Europe was observed due to cost pressures on legacy products, leading the company to hold back supply rather than compromise on pricing.

Key financials

  1. Revenue ₹1,477 Cr +22%YoY
  2. Gross Margin 65.6% +0.74%YoY
  3. EBITDA ₹339 Cr +37%YoY
  4. EBITDA Margin 22.9% +2.6%YoY
  5. PAT ₹180 Cr +60%YoY
  6. R&D Expenses ₹88 Cr +30%YoY
  7. ROCE 18%

What they filed

Q1 FY27: revenue up 22.1%, net profit up 59.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue967 1,138 1,197 1,210 1,297 +34%1,388 +22%1,471 +23%1,477 +22%
EBITDA203 230 252 247 278 +37%308 +34%352 +40%339 +37%
Net profit97 118 152 113 131 +35%150 +27%202 +33%180 +59%
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

  • Complex Generics
    50% Share of Finished Dosages39% Share a year ago
  • Peptide CDMO
    5 Mn Revenue1% YoY Growth₹-12 Cr EBITDA

Capital allocation

high confidence
  • Capex ₹890 Mn this quarter · ₹600 Cr (FY27) planned
    • Digitalization and modular growth projects at existing facilities
    • Peptide intermediate plant in India (initial estimate) ₹100 Cr
    • Peptide API side (initial estimate) ₹200 Cr
    Capex spent on Q1 FY27 is INR890 million compared to INR1,000 million in Q4 FY26. Capex moderated in Q1 FY27 as the Genome Valley investment completed, investment activity is expected to pick up gradually driven by digitalization and modular growth projects at existing facilities. (Mukesh Surana, page 6) Our initial estimates suggest roughly about INR100 crores numbers on the intermediate side, and if you take it forward to the API side, we are starting with INR200 crores of investment plan.
  • Debt Net ₹1,012 Mn · 0.1× EBITDA
    Our net debt to EBITDA is now almost nothing, 0.07x. (K.P. Chigurupati, page 4) Net debt stands at INR1,012 million in Q1 FY27 from INR4,021 million at FY26 close.
  • Liquidity Liquidity disclosed Healthy balance sheet gives us the comfort to fund our growth, capacities and R&D.
    This healthy balance sheet gives us the comfort to fund our growth, capacities and R&D.

Guidance & targets

Revenue

  • Overall Growth Revenue · FY27 · High confidence will continue
    Nishita, we are quite excited and positive that the growth will continue. It's - yes, we are confident it will continue.

    — K. P. Chigurupati

Margin

  • Gross Margins Margin · Going forward · High confidence 22-23%
    Yes, Nishita. We expect that to continue.

    — K. P. Chigurupati

Capex

  • Total Capex Capex · FY27 · High confidence ₹600 crores
    So rest of the year, we have guided earlier INR600 crores. We still remain INR600 crores, INR89 crores is already spent.

    — Mukesh Surana

Peptide CDMO

  • Intermediate Revenue Milestone Peptide CDMO · mid-journey of 5 years · Medium confidence $50 million
    But I think the intermediate milestone, if I had to answer your question directly, would be a $50 million revenue and delivering it with an EBITDA margin, which is consistent with such play would be the first proof point, and we see somewhere in the mid of this journey of 5 years.

    — Sanjay Kumar

  • EBITDA Margin Peptide CDMO · mid-journey of 5 years · Medium confidence 30%+
    So that's very clear, USD 50 million revenue with 30% plus EBITDA, somewhere in the third year from now, mid of third year from now, should be our run rate.

    — Sanjay Kumar

  • Profitability Peptide CDMO · FY27 · High confidence PAT positive
    So our objective is a very single force. Turn PAT positive for this year is the target that we have taken.

    — Sanjay Kumar

Capacity

  • Genome Valley Facility Utilization Capacity · by year-end · High confidence cross 50%
    And Yashika on the second question onGLS, currently, the utilization levels are very low. By the year-end, we are expecting it will cross 50%.

    — Mukesh Surana

R&D

  • R&D Expenses as % of Sales R&D · Going ahead · High confidence 5.5% to 6%
    This will be around 5.5% to 6% as we go ahead.

    — K. P. Chigurupati

Product Launches

  • US Launches (pending FDA approval) Product Launches · this year · High confidence 9
    This year, if -- pending the FDA approval, we are expecting about 9 launches.

    — Priyanka Chigurupati

  • Total Approvals Pending Product Launches · High confidence 18
    And overall, we have about 18 approvals that are still pending, 9 of which will be launched immediately after the FDA clear GGP and plus another 1 product from GPI and the remaining are IP-based. So we have about 18 products that are pending approval.

    — Priyanka Chigurupati

  • Oncology First Self-Developed Product Product Launches · FY28-29 · High confidence launched
    Going forward, though, starting in FY28, '29, we launched our first self-developed product, which is fully backward integrated, and it will have geographical presence – geographical expansions. So we'll be launching it across many countries.

    — Priyanka Chigurupati

  • Controlled Substance Launches Product Launches · next 1.5-2 years (starting FY28) · High confidence 1-2 products
    On controlled substances, we have about 1 to 2 launches coming up in the next year, 1.5 years to 2 years. But in total, we have about 4, 5 launches that are IP-based.

    — Priyanka Chigurupati

Working Capital

  • Working Capital to Sales Working Capital · Going forward · High confidence in the range
    Yes, Vignesh, thanks for the question. So what we've said in the last earning call is in the range. So we would be in the range is what we have said.

    — K. P. Chigurupati

What to watch in Q2 FY27

Gagillapur FDA Clearance

Immediately after FDA visit
Current Remediation complete, 9 applications pending launch
Target FDA clearance received, launches initiated

Why it matters

Unlocks significant product launches and reduces regulatory overhang, crucial for revenue growth.

And waiting behind that clearance are 9 applications ready to launch.

Risks & concerns

  • FDA Warning Letter (Gagillapur)

    medium

    Gagillapur facility still awaiting FDA clearance, holding back 9 application launches, despite remediation work being complete and responses submitted.

    Management acknowledged

  • Raw Material & Supply Chain Inflation

    medium

    Geopolitical tensions in West Asia are causing inflation in select raw materials, packing inputs, and freight, though mitigated by product mix and pricing actions.

    Management acknowledged

  • Project-driven CDMO Variability

    low

    Inherent quarter-to-quarter variability in the project-driven CDMO business, leading to lumpy profitability, but annual PAT positive performance is targeted.

    Management acknowledged

Q&A highlights

8 direct
Overall FY27 growth outlook Direct
Nishita, we are quite excited and positive that the growth will continue. It's - yes, we are confident it will continue.

Confirms management's positive outlook on sustained growth for the full fiscal year.

Asked by Nishita Shanklesha

Gross margins sustainability given RM pressures and mix change Direct
Yes. You've got it right. Shashank, the RM pressures are quite high. There's a lot of challenges we are facing. But like you said, the mix is really helping us. Move towards more complex generics is helping us. And we have every reason to believe that it will continue.

Explains how product mix shift towards complex generics is helping mitigate raw material cost pressures and supports margin sustainability.

Asked by Shashank Krishnakumar

Proof of Granules winning business based on capability rather than just cost/scale Direct
Yes, Sajal. Most of the complex products that we have today, we think the benefit from are difficult to make products very, very difficult. These are and also the some of the ADHD products in the U.S., the each product comes with a strength and very low dosages and consistency in manufacturing is very difficult.

Highlights the company's strategic shift towards complex, difficult-to-manufacture products where capability and consistency are key differentiators.

Asked by Sajal Kapoor

Peptide CDMO platform becoming structurally self-sustaining Direct
But I think the intermediate milestone, if I had to answer your question directly, would be a $50 million revenue and delivering it with an EBITDA margin, which is consistent with such play would be the first proof point, and we see somewhere in the mid of this journey of 5 years.

Provides a clear, quantifiable intermediate milestone ($50M revenue with 30%+ EBITDA) for the peptide CDMO business, indicating its path to self-sustainability.

Asked by Sajal Kapoor

Significant rise in cash flow from operations Direct
One, the sequential revenue growth is not there. That means there is no additional investment in working capital. In fact, we have not only increased little inventory, but actually substantially reduced the receivables with the higher sales in U.S.A. So the receivable days of U.S.A is better. So that has been improving the working capital. And with no increase in working capital and lesser increase in capex, overall, Free cash flow has been better with the EBITDA.

Explains the drivers behind strong operating cash flow, primarily improved working capital management through reduced receivables in the US.

Asked by Tushar Manudhane

Negative EBITDA in Peptide business this quarter Direct
It's more a question of project to product mix. And within the product, the product mix itself. The opex component obviously have a quarter-to-quarter variation. It's not even across all the quarters. So that's the 2 factors. And the third factor is some of the projects that we do is fairly long in its cycle time and lead time. So some of the projects that we do does not get monetized during the current quarter, it gets carried forward and the project value is realized later in H2 or later in the time.

Clarifies that the negative EBITDA in Peptide CDMO is due to project mix and long cycle times, with value realization expected in later quarters, not a fundamental issue.

Asked by Krisha Kansara

Sequential softness in Europe market Direct
It was not really a demand trend. But I would say it's a mix of both. We do have demand. But one big aspect that played out here is the cost pressures on the legacy 5 business. As you can imagine, Granules has always been a long-term partner for our players. So there have been situations where we couldn't pass on very much of the pricing. So we held some of the demand in conversation with our customers.

Explains that Europe's sequential softness was due to cost pressures on legacy products and the company's decision to hold back supply rather than compromise on pricing, not a lack of demand.

Asked by Suhani Singh

GPI (US facility) current utilization and growth potential Direct
We are currently at around 70% capacity utilization. And we have quite a large leeway to go ahead. We are also doing a little bit of expansion, which we think we will need by end of '28. ... I just want to add to what CMD said, is that the products that are made in GPI are not just pure volume-based products. These are low volume, high-value products. So in terms of capacity, 70% utilization is cannot be looked at as equal to, say, 70% utilization in the large volume facility. So we have a lot of room to play there.

Provides insight into the US manufacturing facility's utilization and clarifies that its 70% utilization for high-value products offers significant room for growth.

Asked by Sameer Baisiwala

2 min read 6 chapters

Detailed narrative

Strong Q1 FY27 Performance Driven by Complex Generics

Granules India reported its strongest first quarter ever, with revenue growing 22% year-on-year to ₹1,477 crores. Profit after tax saw a significant 60% increase to ₹180 crores. This robust performance was primarily fueled by complex generics, which now constitute 50% of finished dosages, up from 39% a year ago, demonstrating a successful shift towards a differentiated product portfolio. The company's US manufacturing arm, GPI, has climbed to the 27th position among US generic companies from 74th just five years ago.

Margin Expansion and Healthy Cash Generation

The company achieved a healthy gross margin of 65.6%, expanding by 74 basis points year-on-year, and EBITDA grew 37% to ₹339 crores, with the margin expanding by 256 basis points to 22.9%. This profitability, combined with disciplined working capital management, led to strong operating cash generation of ₹387.4 crores this quarter. The net debt to EBITDA ratio improved significantly to a near-zero 0.07x, indicating a virtually debt-free position, providing comfort to fund future growth.

Peptide CDMO Platform Scaling Up Despite Quarterly Volatility

The peptide CDMO platform, built around Senn, grew over 100% year-on-year, contributing CHF 5 million in Q1 FY27. Despite reporting a negative EBITDA of ₹12 crores this quarter, management clarified this was due to project mix and long cycle times, with value realization expected in later quarters. The company targets an intermediate milestone of $50 million revenue with 30%+ EBITDA margin within the next 3 years and is investing ₹300 crores for infrastructure upgrades and a new peptide facility at Vizag, India.

Regulatory Progress and Robust Product Pipeline

Remediation work at the Gagillapur facility is largely complete, with all FDA responses submitted on time and no concerns raised by the agency. Nine applications are ready to launch pending FDA clearance for this facility. Overall, Granules has 18 approvals still pending, with 9 expected to launch immediately post FDA clearance. The company is also developing 9-13 oncology products, with the first self-developed product slated for launch in FY28-29, aiming to be a significant growth driver.

Strategic Investments in R&D and Capacity Expansion

Capital expenditure for Q1 FY27 was ₹89 crores, with the full-year guidance remaining at ₹600 crores, focusing on digitalization and modular growth projects at existing facilities. R&D expenses increased 30% year-on-year to ₹88 crores, representing 6% of sales, reflecting continued investment in high-barrier areas like CNS, oncology, and complex formulations to build a differentiated product pipeline. The Genome Valley facility is expected to cross 50% utilization by year-end, adding significant formulation capacity.

Working Capital Efficiency and Europe Market Dynamics

The company's working capital to sales improved to 29% in Q1 FY27, down from 30% in Q1 FY26 and Q4 FY26, driven by reduced receivables, particularly in the US market. In Europe, sequential softness was attributed to cost pressures on legacy products, where Granules opted to hold back supply rather than accept unfavorable pricing, indicating a strategic decision to protect margins rather than a decline in demand.

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