Granules India Limited — Q4 FY26 earnings call

Call held 29 Apr 2026

Management summary

Granules India reported a strong Q4 and FY26, marked by significant revenue growth, margin expansion, and debt reduction. The Peptide CDMO business turned EBITDA positive, and the company made strategic progress in its U.S. generics and controlled substances portfolio. However, external cost pressures and regulatory uncertainties, particularly regarding the Gagillapur FDA re-inspection and DCDA project, remain areas of concern.

Highlights

  • FY26 Revenue of ₹53,656 million, up 20% YoY, crossing the ₹50,000 million mark.

  • Q4 EBITDA margin expanded to 23.9%, up 233 bps YoY and 186 bps QoQ, demonstrating improved earnings quality.

  • Peptide CDMO business (Senn) turned EBITDA positive in Q4, contributing ₹1,593 million in FY26 revenue.

  • Net debt significantly reduced to ₹4,021 million, with Net Debt to EBITDA improving to 0.34x from 0.75x in FY25.

  • GPI facility in Virginia reached targeted operating potential and moved to 27th position in U.S. generics market by sales value, and 4th in controlled substances.

Concerns

  • Raw material, packing material, and freight prices have increased, leading to uncertainty in gross margin outlook for FY27.

  • Chinese competition has drastically reduced DCDA prices, impacting the commercialization timeline for Granules' DCDA project.

  • Regulatory timelines, particularly for Gagillapur FDA re-inspection, remain uncertain with no specific timeline from the FDA.

Key financials

2 periods

Headline

  • Revenue
    53,656 Mn
    YoY +20%
  • EBITDA
    11,851 Mn
    YoY +25%
  • EBITDA Margin
    22.1%
  • PAT (post exceptional)
    5,950 Mn
    YoY +19%
  • Net Debt
    4,021 Mn
  • Net Debt to EBITDA
    0.34×
  • ROCE
    17.6%

Q4

  • Revenue
    14,706 Mn
    YoY +23% QoQ +6%
  • EBITDA Margin
    23.9%

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

  • Finished Dosages
    74% Contribution to Revenue
  • Europe
    81% Revenue Growth15% Contribution to Revenue49% Revenue Growth (without Senn)
  • Peptide CDMO (Senn)
    1,593 Mn FY26 Revenue3% Contribution to Revenue— Q4 EBITDA

Capital allocation

high confidence
  • Capex ₹1,000 Mn this quarter · ₹5,547 Mn (FY26) planned
    • New API facility
    • IT investments
    • Distribution center in U.S.A. ₹200 Mn
    So next year, the capex will be broad-based. There is a new API facility, which we are doing. In addition to that, we are also investing on the IT side. And we are also planning for as part of Chairman's speech also, it was covered -- the distribution center -- warehouse distribution center in U.S.A. So it will be broad-based in multiple capex projects in the coming year. / So we are talking about in the similar range of INR600-odd crores in the upcoming year.K.P.Chigurupati: INR200 crores plus will be for distribution.
  • Debt Net ₹4,021 Mn · 0.3× EBITDA
    Net debt reduced to INR4,021 million from INR7,061 million in FY '25. Net debt to EBITDA improved to 0.34x from 0.75x. The reduction in net debt was supported by an additional equity infusion of INR6,656 million during FY '26, in addition to EBITDA growth in FY '26.
  • Liquidity Liquidity disclosed Equity infusion of INR6,656 million during FY '26 strengthened the balance sheet and is available for organic and inorganic growth.
    The reduction in net debt was supported by an additional equity infusion of INR6,656 million during FY '26, in addition to EBITDA growth in FY '26. / Yes. Thanks for the question, Ritwik. We have clarified in our EGM as well as last earnings call, this is to strengthen the balance sheet and also invest for organic as well as inorganic growth. Organic growth is capex, as well as working capital and R&D. And inorganic, if there are any good opportunities, we're continuously exploring. That money is also available based on the balance sheet strength.

Guidance & targets

Profitability

  • PAT performance Profitability · FY27 · High confidence positive performance on an annual basis
    For FY '27, though, our focus is to deliver a PAT positive performance on an annual basis, while recognizing quarter-to-quarter variations inherent in a project-driven CDMO business like ours.

    — Sanjay Kumar

Capex

  • Total Capex Capex · FY27 · Medium confidence similar range of INR600-odd crores
    So we are talking about in the similar range of INR600-odd crores in the upcoming year.

    — Mukesh Surana

  • Capex for Distribution Center Capex · FY27 · Medium confidence INR200 crores plus
    INR200 crores plus will be for distribution.

    — K.P. Chigurupati

Debt

  • Net Debt Debt · FY27 · Medium confidence flattish net debt or a slight increase
    There can be a flattish net debt or a slight increase, depending upon the timing of the capex and increase in the growth.

    — Mukesh Surana

Working Capital

  • Working Capital to Sales Ratio Working Capital · FY27 · High confidence 33% range
    But considering that, we would want to maintain our working capital to sales ratio of 33% range.

    — Mukesh Surana

Product Pipeline

  • New Controlled Substance Products Product Pipeline · next 2 to 3 years · High confidence 1, 2 new products annually
    you have said that you plan to add 1, 2 new controlled substance products annually for next 2 to 3 years.

    — Priyanka Chigurupati

Product Launch

  • Controlled Substance Finished Dosage Revenue Product Launch · within the next couple of years, 1 or 2 years · Medium confidence start seeing revenue
    So within the next couple of years, 1 or 2 years, we'll start seeing -- not 1 or 2 years, that's 2 years, we'll start seeing revenue from those products on the finished dosage side.

    — Priyanka Chigurupati

  • Controlled Substance API Revenue Product Launch · sooner than finished dosage · Medium confidence start seeing numbers come in
    But APIs, we should be seeing the numbers come in a little bit sooner.

    — Priyanka Chigurupati

Project Commercialization

  • DCDA Commercialization Project Commercialization · in another 2 months to 2.5 months · High confidence wrap up pilot stage and get into commercialization
    So I think we are close to wrapping up the pilot stage and getting into commercialization. I think in another 2 months to 2.5 months, we should wrap up, and then we should go ahead with ordering equipment for the commercial plant.

    — K.P. Chigurupati

Project Cost

  • DCDA Project Cost Project Cost · shortly · Medium confidence somewhere around INR200 crores
    So the project should cost somewhere around INR200 crores, and we'll freeze the numbers shortly.

    — K.P. Chigurupati

What to watch in Q1 FY27

Gagillapur FDA Re-inspection Status

next quarter
Current Ready for audit, no communication from FDA
Target FDA re-inspection scheduled or completed, or warning letter lifted

Why it matters

Resolution of the FDA warning letter is crucial for full operational capacity and new product approvals from the site.

And it really depends on when the FDA wants to come in at this point. From our side, we've notified them that the activities are essentially complete. But now, I don't think we can estimate when they would walk in, but we're ready for an anytime audit.

Risks & concerns

  • Regulatory timelines for FDA re-inspection (Gagillapur)

    high

    Company is ready for audit, but FDA has not provided a timeline, creating uncertainty for resolution.

    Management acknowledged

  • Raw material, packing material, and freight price volatility

    medium

    Prices have gone up, creating uncertainty in the market, though the company aims to pass on increases.

    Management acknowledged

  • Competition in DCDA market

    medium

    Chinese competitors have drastically reduced prices, impacting Granules' DCDA project commercialization.

    Management acknowledged

  • Quarter-to-quarter variations in project-driven CDMO business

    low

    While aiming for annual PAT positive, individual quarters may vary based on customer milestones and shipment timing.

    Management acknowledged

Q&A highlights

4 direct, 1 evasive
Senn Peptides business outlook and sustainability of EBITDA breakeven Direct
our objective is very clear, to move towards sustainable profitability from FY '27 onwards. Individual quarters may vary, depending on customer milestone and shipment timing, but the platform is now far more execution-led and operationally aligned than before. So the direction of travel is firmly towards annual EBITDA and PAT positivity.

Analyst sought clarity on whether the Q4 EBITDA positive performance for Senn was sustainable, and management confirmed a focus on annual PAT positivity for FY27, acknowledging quarterly variations.

Asked by Harith Ahamed

Granules CZRO (DCDA) project scale-up, progress, and capex plans Direct
I think in another 2 months to 2.5 months, we should wrap up, and then we should go ahead with ordering equipment for the commercial plant. So the project should cost somewhere around INR200 crores, and we'll freeze the numbers shortly.

Management provided a clear timeline for pilot stage completion and an estimated capex for commercialization, indicating progress despite earlier competitive challenges.

Asked by Harith Ahamed

Gross margin expansion drivers in Q4 and outlook for FY27 Partial
So quarter-on-quarter, sequential gross margin improvement is primarily because of CDMO business, which has significantly grown from INR33 crores to INR70 crores, where the VA percentage gross margin percentage is significantly higher. That has helped the margin expansion for the quarter. With respect to your second question, Chairman has elaborated, and also current war situation, cost escalation situations, It is a little uncertain in terms of giving margins clarity in terms of percentage. But of course, we are trying our best to get the raw material cost escalations pass through.

Management attributed Q4 GM expansion to the high-margin CDMO business but expressed uncertainty about FY27 margins due to ongoing raw material and war-related cost escalations, indicating potential pressure.

Asked by Shashank Krishnakumar

Gagillapur facility FDA re-inspection timeline and confidence Evasive
And it really depends on when the FDA wants to come in at this point. From our side, we've notified them that the activities are essentially complete. But now, I don't think we can estimate when they would walk in, but we're ready for an anytime audit. But that said, just we are actually confident in getting through with the FDA because we've had almost -- if you look at the investor presentation also, we've had a lot of audits in the last year across several regulatory bodies and many, many customers. And every -- there is nothing critical that came out of them. So we're very positive about getting through.

Despite repeated questions, management could not provide a tentative timeline for the FDA re-inspection, stating it's up to the FDA, which is a key regulatory overhang for the company.

Asked by Krisha Kansara

Deployment of funds from promoter and QIP equity infusion Direct
this is to strengthen the balance sheet and also invest for organic as well as inorganic growth. Organic growth is capex, as well as working capital and R&D. And inorganic, if there are any good opportunities, we're continuously exploring. That money is also available based on the balance sheet strength.

Management clarified that the equity infusion was used for debt reduction, strengthening the balance sheet, and will be deployed for both organic growth (capex, R&D, working capital) and potential inorganic opportunities.

Asked by Ritwik Sheth

Medium-to-long term view on Senn Chemicals (Peptide CDMO) growth and margins Partial
Ritwik, we cannot comment on the growth I mean, percentages of growth. But all I can tell you is, that's a key pillar for our growth, and that is what will also drive a good percentage of the company's growth. I can't go into specifics. But it's very, very important for us. We see a great future there.

Management emphasized the strategic importance and future potential of the Senn business as a key growth pillar but refrained from providing specific growth percentages or margin targets, maintaining some ambiguity.

Asked by Ritwik Sheth

Controlled substances product launch pipeline and addressable market size Direct
Amongst all the controlled substances or, let's just say, medication for ADHD primarily I don't want to say controlled substances -- medication for ADHD, there's 2 that are globally prevalent -- sorry, globally relevant in terms of size, etc. So out of the 2 products, one has already been tech transferred and we started filings across the globe. So within the next couple of years, 1 or 2 years, we'll start seeing -- not 1 or 2 years, that's 2 years, we'll start seeing revenue from those products on the finished dosage side. But APIs, we should be seeing the numbers come in a little bit sooner.

Management provided insight into the strategic focus on ADHD medications within controlled substances, indicating specific products are in the pipeline with tech transfers and filings underway, expecting revenue contribution in the next 1-2 years.

Asked by Preet Jain

3 min read 6 chapters

Detailed narrative

Strong Financial Performance and Strategic Repositioning

Granules India delivered robust financial results in Q4 and FY26, with full-year revenue reaching ₹53,656 million, a 20% YoY increase. Q4 revenue grew 23% YoY to ₹14,706 million. The company's EBITDA for FY26 stood at ₹11,851 million, up 25% YoY, with margins expanding to 22.1%. This performance reflects a year of deliberate reset, stabilizing operations, strengthening execution, and making clear strategic choices for value-led growth, including a shift towards more complex and differentiated products.

Peptide CDMO Business Turns Profitable

The acquisition of Senn Chemicals proved strategic, with the Peptide CDMO segment turning EBITDA positive in Q4 FY26. This segment contributed ₹1,593 million to FY26 revenue, representing 3% of the total. Management highlighted that the business is now more execution-led and operationally aligned, with a clear objective to achieve PAT positive performance on an annual basis from FY27, despite potential quarter-to-quarter variations inherent in a project-driven CDMO model. Investments are ongoing to expand peptide API capacity in Zurich and intermediates manufacturing in India.

Debt Reduction and Capital Deployment

The company significantly reduced its net debt to ₹4,021 million from ₹7,061 million in FY25, improving the net debt to EBITDA ratio to 0.34x from 0.75x. This reduction was largely supported by an additional equity infusion of ₹6,656 million during FY26. For FY27, Granules plans a capex in the range of ₹600 million, with over ₹200 million allocated specifically for a new distribution center in the U.S. Other capex areas include a new API facility and IT infrastructure, with net debt expected to remain flattish or see a slight increase.

Regulatory Compliance and Gagillapur Remediation

Granules continued to prioritize quality and compliance, with remediation activities at Gagillapur progressing materially. The post-warning letter engagement with the U.S. FDA was completed in January, and all action point responses were submitted in February. While the company states it is ready for an FDA audit, the timeline for a re-inspection remains uncertain as it depends on the FDA's schedule. Other facilities, including GLS and GCH, successfully completed regulatory inspections with positive outcomes.

Controlled Substances and DCDA Pipeline

Granules has strengthened its position in the controlled substances space, ranking 4th among U.S. generics companies. The company aims to launch 1-2 new controlled substance products annually over the next 2-3 years, with revenue from finished dosages expected in 1-2 years and APIs sooner. The DCDA project in Vizag is nearing commercialization, with the pilot stage expected to wrap up in 2-2.5 months, followed by equipment ordering for a commercial plant estimated to cost around ₹200 million. However, Chinese competition has led to drastic price reductions, posing a challenge.

External Headwinds and Margin Outlook

The company acknowledged ongoing external cost pressures from increased raw material, packing material, and freight prices. While Granules aims to pass on these increases, the market uncertainty makes it difficult to provide precise gross margin clarity for FY27. Despite these headwinds, the company's gross margin expanded to 65% in FY26 and 65.7% in Q4, driven by a sustained shift towards complex generics and higher contributions from the Peptide CDMO business.

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