Granules India Limited — Q3 FY26 earnings call

Call held 23 Jan 2026

Management summary

Granules India delivered a strong Q3 FY26, reporting a 22% YoY revenue growth to INR1,388 crores and a 34% YoY EBITDA increase to INR308 crores, despite a temporary INR248 million loss in its Peptide CDMO business. The company made substantial regulatory progress across its facilities, including a post-warning letter meeting for Gagillapur and multiple GMP certifications/approvals. Granules is strategically focusing on higher complexity generics and anticipates new product launches from its Genome Valley facility and in controlled substances, aiming for continued growth and profitability.

Highlights

  • Revenue grew 22% year-on-year to INR1,388 crores, with sequential growth of 7% from Q2 FY26.

  • EBITDA increased 34% year-on-year to INR308 crores, and EBITDA margin improved by 196 basis points YoY to 22.2%.

  • Net debt reduced to INR10,151 million from INR10,241 million in Q2 FY26, and ROCE improved to 16.8% from 16.2% QoQ.

  • Significant regulatory progress with ANVISA Brazil GMP certification for Gagillapur, PAS approval and EIR for GLS, and clean GMP inspections for GPI USA and GCH.

  • Preferential issue completed, strengthening the balance sheet and enhancing financial flexibility for capacity expansion.

Concerns

  • Temporary EBITDA loss of INR248 million from Ascelis Peptides CDMO business due to planned maintenance and higher execution activities.

  • Gross margin decreased by 183 basis points sequentially, although it improved 216 basis points year-on-year to 63.9%.

  • Observed some amount of price erosion in paracetamol in certain markets despite increased demand.

Key financials

  1. Revenue 13,880 Mn +22%YoY
  2. EBITDA 3,080 Mn +34%YoY
  3. EBITDA Margin 22.2%
  4. Gross Margin 63.9%
  5. R&D Expenses 689 Mn
  6. Net Debt 10,151 Mn
  7. ROCE 16.8%

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.

Capital allocation

high confidence
  • Capex ₹1,298 Mn
    • System enhancements (capex and opex)
    • Capacity expansion (general)
    • New API plant in Vizag (DCS driven)
    The proceeds from this issue enhance our financial flexibility and will be deployed prudently to support capacity expansion, drive efficiency and pursue value-accretive opportunities while maintaining our focus on governance and capital discipline. We believe this capital raise positions the company well to accelerate growth and create sustainable long-term value for all shareholders. | Let me clarify, Sucrit. The existing plant, there is a level of automation already. But any new plants that are coming up, including one API plant with a different type of differentiated technology in Vizag, this is going to be totally DCS driven and very few people on the site. So even that will happen in addition to paperless documentation.
  • Debt Net ₹10,151 Mn
    Our net debt stood at INR10,151 million as compared to INR10,241 million in Q2 FY '26.
  • Liquidity Liquidity disclosed Preferential issue enhanced financial flexibility.
    The proceeds from this issue enhance our financial flexibility and will be deployed prudently to support capacity expansion, drive efficiency and pursue value-accretive opportunities while maintaining our focus on governance and capital discipline.

Guidance & targets

Revenue

  • US Revenue Growth Revenue · every year (coming couple of years) · Medium confidence $40-50 million
    And one last question on the U.S. If I look at your U.S. revenues in dollar terms, the last couple of years, we have added like $40 million to $50 million, somewhere between $40 million and $50 million every year to the US revenue. Is that something which we can kind of look forward to in the coming couple of years as well? That's what we aspire for and we are confident of that.

    — K. P. Chigurupati

Capacity

  • Gagillapur Capacity Capacity · next couple of quarters · High confidence increasing capacities
    Yes. Tushar, I'll answer that. A few things, well, the last couple of quarters like we mentioned in our past con calls also, we while we were producing, we weren't producing to the full of our capability. So right now, we are going to be increasing capacities and catering to all the awards that we have in the U.S. and to the other markets.

    — Priyanka Chigurupati

Product Launches

  • Genome Valley Product Launches Product Launches · next couple of - next two quarters (starting this quarter) · High confidence at least 1, if not 2 products
    I'll take that question. Yes. We are going to be launching at least 1 product, if not two products, which are existing products from the Gpp sites to cater to additional demand that we have. So these two products will be launched over the next couple of -- next two quarters, one to two quarters. We'll start this quarter, and we'll see an incremental revenue coming up.

    — Priyanka Chigurupati

  • Controlled Substances Launches Product Launches · within the next year, 1.5 years · High confidence 3 to 4 launches
    So going forward, as immediate launches -- well, immediate launches, meaning within the next year, 1.5 years, we have about 3 launches, and they will 3 to 4 launches, and they will contribute to a very meaningful percentage of our overall growth story.

    — Priyanka Chigurupati

Market context

  • Peptide CDMO EBITDA Profitability · next financial year (FY27) · Medium confidence positive
    So our target is always to turn positive from next financial year. But again, I keep on saying the quarter-to-quarter variation will remain a characteristic of this business. But on a year basis, we are turning towards neutrality and profitability for sure.

    — Sanjay Kumar

What to watch in Q4 FY26

Gagillapur FDA Warning Letter Resolution

next quarter
Current Post-warning letter meeting held, documentation submission underway
Target Formal feedback received, progress towards resolution

Why it matters

Resolution of the FDA warning letter is crucial for full operational flexibility and market confidence.

We held a post-warning letter meeting with the FDA in early January. We will be submitting the requested documentation shortly. Importantly, to date, the agency has not raised any concerns regarding the adequacy or pace of our corrective action. We expect a formal feedback after our submission and remain confident about the pathway to resolution.

Risks & concerns

  • Gagillapur FDA Warning Letter

    medium

    Ongoing remediation plan, post-warning letter meeting held, documentation being submitted, but no timeline for final resolution.

    Management acknowledged

  • Peptide CDMO Business Losses

    medium

    Temporary EBITDA loss of INR248 million in Q3 FY26 due to planned maintenance and higher execution activities, expected to improve in Q4 and turn positive in FY27.

    Management acknowledged

  • Amphetamine (generic Adzenys) Litigation Delay

    medium

    Tentative FDA approval for generic Adzenys, but launch is dependent on resolution of ongoing litigation, expected to take 'a year'.

    Management acknowledged

  • Paracetamol Price Erosion

    low

    Some amount of price erosion observed in paracetamol in certain markets despite increased demand.

    Management acknowledged

Q&A highlights

6 direct
Gagillapur FDA Warning Letter Resolution Timeline Partial
We cannot put a timeline to that, but we will be submitting the response quite early in the very near future. But we'll have to see how the agency and then what timelines are going to come out. But again, like I mentioned, we have also been de-risking. Some of the filings have been happening in our U.S. facility and also at our GLS facility.

Analyst sought a timeline for FDA warning letter resolution, a key overhang. Management confirmed progress and de-risking but could not provide a specific timeline, indicating continued uncertainty.

Asked by Krisha Kansara

Peptide CDMO Business Profitability Outlook Direct
Q4 is tracking towards a meaningful improvement in performance, supported by ongoing project deliveries. Our focus remains on disciplined execution, predictable delivery and strengthening customer confidence. ... So our target is always to turn positive from next financial year.

Analyst questioned the INR25 crore loss in the peptide franchise. Management provided a clear outlook for Q4 improvement and profitability by the next financial year, addressing concerns about this segment's drag.

Asked by Bino Pathiparampil

US Revenue Growth Trajectory Direct
If I look at your U.S. revenues in dollar terms, the last couple of years, we have added like $40 million to $50 million, somewhere between $40 million and $50 million every year to the US revenue. Is that something which we can kind of look forward to in the coming couple of years as well? That's what we aspire for and we are confident of that.

Analyst inquired about the sustainability of historical US revenue growth. Management expressed confidence in continuing to add $40-50 million annually, signaling strong future prospects in a key market.

Asked by Bino Pathiparampil

Ascelis Peptide Revenue and EBITDA Breakeven Direct
this quarter is INR33 crores, Tushar. ... Primarily, we have taken higher execution activities, both on the some of the active projects where the revenue will further come in Q4. And also, we have taken up regular and preventive maintenance cost in December. ... So effectively, that maintenance cost will reduce and then there will be scale up in the revenue, which is why the EBITDA breakeven for Ascelis Peptides... You are right, Tushar, yes.

Analyst sought clarification on Ascelis Peptide's Q3 revenue (INR33 crores) and increased loss. Management explained the Q3 loss was due to front-loaded execution and maintenance, with revenue expected in Q4, leading to EBITDA breakeven.

Asked by Tushar Manudhane

Lisdexamfetamine Revenue Contribution and Market Share Partial
It's been four quarters since we've launched lisdexa caps and tabs and it provides a meaningful revenue addition to our U.S. business. ... we were a late entrant to the market, but because of our quota history and our compliance history with the DEA, we were able to get meaningful share, and we plan on increasing it as we keep going further.

Analyst asked for specific revenue numbers for lisdexamfetamine. Management confirmed it's a meaningful revenue contributor and they are gaining market share due to DEA compliance, but did not disclose specific figures.

Asked by Yashika Gogia

Amphetamine (generic Adzenys) Launch Timeline and Litigation Direct
If you're referring to the approval of generic Adzenys, it was a tentative approval. It's not an approval yet because it is an IP-based product. ... the timing of launch, I cannot confirm right now because it is a tentative approval, which is in litigation stage right now. ... It will take a year.

Analyst inquired about the launch of the tentatively approved amphetamine product. Management clarified it's IP-based and in litigation, with final approval and launch expected to take 'a year', indicating a delay in commercialization.

Asked by Ritwik Sheth

Controlled Substances Growth and Future Launches Direct
within the complex generics range itself, just from Y-o-Y growth, Q3 to Q3 FY '25 to '26, we grew from 27% as a total contribution to 49%. And Q-on-Q, we grew from 40% to 49% within the complex generics range. ... within the next year, 1.5 years, we have about 3 launches, and they will 3 to 4 launches, and they will contribute to a very meaningful percentage of our overall growth story.

Analyst asked about the growth and future of controlled substances. Management provided specific growth figures (27% YoY to 49% contribution) and committed to 3-4 launches within 1-1.5 years, highlighting this as a significant growth driver.

Asked by Saniya

Paracetamol Demand and Price Erosion Direct
Paracetamol as an absolute -- if you talk about the inventory situation, in certain markets, they have eased down. And we are seeing an increase in demand from our key customers in both APIs, PFIs and finished dosages. While we are seeing good growth, and that's what facilitated the growth in some of our regions this quarter, we do see some amount of price erosion also in paracetamol.

Analyst asked about paracetamol inventory and demand. Management noted easing inventory and increasing demand but also acknowledged 'some amount of price erosion', indicating potential margin pressure despite volume growth.

Asked by Abu Rafe

2 min read 6 chapters

Detailed narrative

Robust Q3 FY26 Performance Driven by Formulations

Granules India reported a strong Q3 FY26, with revenues reaching INR1,388 crores, marking a 22% increase year-on-year and 7% sequential growth. EBITDA grew by 34% year-on-year to INR308 crores, leading to an EBITDA margin of 22.2%, an improvement of 196 basis points YoY. This growth was broad-based, with significant contributions from the formulation business in North America and Europe, and improved operating leverage.

Significant Regulatory Milestones Achieved

The company made substantial progress on regulatory fronts across its facilities. A post-warning letter meeting for the Gagillapur facility was held with the FDA in early January, with documentation submission underway and no concerns raised by the agency. The GLS facility at Genome Valley received a PAS approval and EIR, and its US FDA inspection resulted in only five observations with no data integrity issues. Additionally, the GPI facility in the USA and GCH packaging site also received clean GMP inspections, reinforcing the company's commitment to regulatory excellence.

Peptide CDMO Business Poised for Turnaround

The Peptide CDMO business, Ascelis Peptides, experienced a temporary EBITDA loss of INR248 million in Q3 FY26, primarily due to planned maintenance activities and higher execution costs for key customer projects. However, management anticipates a 'meaningful improvement' in Q4 FY26, with the business targeted to achieve positive EBITDA from the next financial year (FY27). The India R&D setup at IIT Hyderabad is actively contributing to customer projects, focusing on advanced peptide chemistries.

Strategic Focus on Higher Complexity Generics and Market Expansion

Granules is strategically shifting towards higher complexity generics, evidenced by R&D filings including 1 EU dossier, 8 new product registrations in ROW markets, and 4 DMFs. The company secured a tentative US FDA approval for generic Adzenys and multiple approvals in Europe and ROW markets. Management highlighted strengthening market presence across key geographies and scaling operations at GLS as regulatory milestones translate into commercial execution, with plans to file more products inclined towards complex generics.

Financial Health and Future Growth Initiatives

The company's financial health remained robust, with net debt reducing to INR10,151 million and the cash-to-cash cycle improving to 202 days. ROCE increased to 16.8% in Q3 FY26. A preferential issue was successfully completed, providing financial flexibility for capacity expansion and value-accretive opportunities. Granules expects to launch at least 1-2 new products from its Genome Valley facility within the next two quarters and 3-4 controlled substances within 1-1.5 years, which are anticipated to be significant growth drivers.

Digitalization and Sustainability Efforts

Granules continues to advance digitalization of manual operations across its network, with implementation expected at Gagillapur by mid-calendar year. These system enhancements, involving both capex and opex, aim to strengthen reliability and resilience. On the ESG front, the company's CDP climate change rating improved to 'A' from 'B', and its S&P CSA score increased to 62, placing it among the top 10% of global peers. The Gagillapur facility also achieved zero waste to landfill with over 99% waste diversion.

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