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Kwality Pharmaceuticals Limited — Q4 FY26 earnings call

Call held 19 May 2026

Management summary

Kwality Pharmaceuticals Limited reported a landmark FY26 with robust revenue growth of 35.9% to ₹503 crores and a 67.5% increase in PAT to ₹67 crores, driven by strong execution and margin expansion. The company provided ambitious FY27 and FY29 targets, focusing on regulated markets, oncology, and biosimilars, while actively managing working capital challenges and planning significant capex for future growth.

Highlights

Q4 FY26 revenue increased by 35.8% to ₹157.1 crores compared to ₹116 crores in the same quarter last year.
Full year FY26 revenue increased by 35.9% to ₹503 crores from ₹370 crores in FY25.
EBITDA margins expanded from 22% to 24% in FY26, and PAT grew 67.5% to ₹67 crores from ₹40 crores last year.
PAT margins improved from 10.8% to 13.4% due to better operational efficiencies, improved realization, and disciplined cost management.
Cash conversion cycle improved significantly from 208 days to 170 days, with nearly 30% of delayed receivables from Middle Eastern markets already recovered.

Concerns

Temporary geopolitical disruptions impacted working capital cycles, leading to increased payment cycles, particularly from the Strait of Hormuz region.
Change in Annexure 1 European guidelines led to a temporary decrease in capacity utilization from 35-40% to 65% in the oncology segment.
Delays in registrations, specifically in LatAm regions, have been a factor in conservative guidance.

Key financials

2 periods

Headline

Revenue
₹157.1 Cr
YoY +35.4%
Cash Conversion Cycle
170 days

FY26

Revenue
₹503 Cr
YoY +35.9%
EBITDA Margin
24%
PAT
₹67 Cr
YoY +67.5%
PAT Margin
13.4%

What they filed

Q1 FY27: revenue up 45.9%, net profit up 116.7% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	90	84	116	111	111 +23%	123 +46%	157 +35%	162 +46%
Expenses	70	67	90	87	86	93	118	121
EBITDA	20	18	26	24	25 +25%	30 +67%	39 +50%	41 +71%
Margin	22%	21%	22%	22%	23%	24%	25%	25%
Other income	0	1	1	0	1	0	1	1
Interest	3	2	2	3	3	2	3	3
Depreciation	5	5	5	5	5	5	5	5
Profit before tax	13	11	19	17	18 +38%	22 +100%	32 +68%	34 +100%
Tax rate	33%	25%	24%	30%	23%	28%	20%	25%
Net profit	8	9	14	12	14 +75%	16 +78%	25 +79%	26 +117%
EPS	8.18	8.23	13.97	11.50	13.61	15.43	24.37	24.70

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

Oncology (FY26)
₹100 Cr Revenue

Capital allocation

high confidence

Capex ₹260 Cr Existing working capital and re-utilizing bank loans (without increasing borrowings)
- Oncology expansion (Unit 6) ₹50 Cr
- Hormones (Unit 6) ₹65 Cr
- Biosimilar with clinical trials, R&D, bioequivalence ₹260 Cr
- Outsourced R&D ₹13 Cr
- Clinical trials (biosimilar) ₹60 Cr
So, sir, as I told that the INR46 crores to INR50 crores what we have made up till now was very much financed with the existing working capital and the bank loans whatever we were returning to the banks, we were re-utilizing. So, there was no decline in the loan repayment and no increase in the loans and the limits also
Debt Debt disclosed

Annual interest cost will roughly remain the same, sir, it won't change because we have not increased our borrowings. Even the borrowings have almost remained the same.
Liquidity Liquidity disclosed Working capital cycle is expected to improve quarter-on-quarter, reducing the need for increased borrowings.

And working capital probably shouldn't be increasing considering that the cash conversion cycle is going to improve quarter-on-quarter. So, we believe that it is not going to increase much.

Guidance & targets

Revenue

FY27 Revenue Revenue · FY27 · High confidence ₹650 crores

Looking ahead, we remain confident of achieving our FY27 goals of INR650 crores in revenue and INR100 crores PAT in FY27

— Aditya Arora
FY29 Revenue Revenue · FY29 · High confidence ₹1,000 crores

while continuing our journey toward long-term aspiration of INR1,000 crores revenue by FY29.

— Aditya Arora
FY28 Revenue Revenue · FY28 · High confidence ₹800-850 crores

Roughly around INR800 crores to INR850 crores, sir.

— Aditya Arora
Q1 FY27 Revenue Revenue · Q1 FY27 · High confidence ₹150-160 crores

So, probably the Q1 for FY27 will be the same as Q4 of FY26. It will be around INR150 crores between INR150 crores to INR160 crores.

— Aditya Arora
Q2 FY27 Revenue Revenue · Q2 FY27 · High confidence ₹160-170 crores

But the second quarter of FY27, we believe the numbers would increase to INR160 crores, INR170 crores.

— Aditya Arora
Q4 FY27 Revenue Revenue · Q4 FY27 · High confidence cross ₹200 crores mark

And quarter four, our target is that we should cross INR200 crores mark.

— Aditya Arora

Net Profit

FY27 PAT Net Profit · FY27 · High confidence ₹100 crores

Looking ahead, we remain confident of achieving our FY27 goals of INR650 crores in revenue and INR100 crores PAT in FY27

— Aditya Arora

Margin

FY27 EBITDA Margin Margin · FY27 · High confidence 26-27%

So, probably the EBITDA margins at INR650 crores should be around 26% to 27%

— Aditya Arora
FY28 EBITDA Margin Margin · FY28 · High confidence 28%

and INR800 crores to INR850 crores, it should be around 28%.

— Aditya Arora
FY29 EBITDA Margin Margin · FY29 · High confidence 30%

Our target is around FY29 INR1,000 crores mean 30% EBITDA margins.

— Aditya Arora
FY27 Gross Margin Margin · FY27 · High confidence 52-53%

Previously 49% → 52-53%

So, when we talk about FY27, we believe that this number should be around -- the gross cost should be around 46% to 47% compared to 49% in the last year. Gross profit should be 52% to 53%

— Aditya Arora

Oncology Revenue

FY27 Oncology Revenue Oncology Revenue · FY27 · High confidence ₹150 crores

So, this number we are projecting to increase by up to INR300 crores by FY29. And next year the contribution will increase to INR150 crores.

— Aditya Arora
FY29 Oncology Revenue Oncology Revenue · FY29 · High confidence ₹300 crores

So, this number we are projecting to increase by up to INR300 crores by FY29.

— Aditya Arora

Oncology Margin

Oncology Product EBITDA Margins Oncology Margin · Ongoing · High confidence 30-32%

So, overall, you can say the EBITDA margins will be roughly around 30% to 32% in case of onco products.

— Aditya Arora

Hormone Revenue

Unit 6 Hormone Sales Revenue Hormone Revenue · before FY29 · Medium confidence ₹150 crores

we target at achieving INR150 crores before FY29.

— Aditya Arora

Biosimilar Revenue

Biosimilar Erythropoietin Revenue (India) Biosimilar Revenue · Ongoing · Medium confidence ₹80-100 crores

biosimilar erythropoietin, this we, I think in India itself we can do a number of INR80 crores to INR 100 crores.

— Aditya Arora

R&D Spend

R&D Spend as % of Revenue R&D Spend · Coming years · High confidence 5-6%

Previously 2% → 5-6%

current R&D spend we want to increase from 2% to 5% to 6% of our revenues

— Aditya Arora

Working Capital

Cash Conversion Cycle Working Capital · Ongoing · High confidence Improve quarter-on-quarter

And working capital probably shouldn't be increasing considering that the cash conversion cycle is going to improve quarter-on-quarter.

— Aditya Arora

Debtor Days

Debtor Days Debtor Days · Ongoing · High confidence 150-160 days

Previously 170 days → 150-160 days

But this number has increased because of the disruptions, which has been happened in the Strait of Hormuz, probably it is going to come down it has already come down to 170 days, but it will be maintained between 150, 160 days.

— Aditya Arora

Inventory Days

Inventory Days Inventory Days · Ongoing · High confidence 80-90 days

So, it will be roughly 80, 90 days.

— Aditya Arora

Registrations

Regulated Market Registrations Registrations · by end of calendar year 2027 · High confidence 7-8 registrations

So, now we are slowly moving towards the regulated markets and we expect at least seven, eight registrations before end of calendar year 2027.

— Aditya Arora
Biosimilar Erythropoietin Registration Registrations · Q4 of next calendar year · Medium confidence Registration

Probably by end of this calendar year or Q1 of next Q4 of the next calendar year, we'll be able to get the registration of Erythropoietin.

— Aditya Arora

Commercialization

Unit 6 Hormones Commercialization Commercialization · before November · High confidence WHO GMP and commercialization

So, we believe that before November, we'll try to get the WHO GMP and do the commercialization in the ROW market.

— Aditya Arora

Approvals

First MAB Pre-clinical Approval Approvals · October · Medium confidence Pre-clinical approval

So probably for the first MAB which we have mentioned in the presentation, we'll be, you know, submitting the data in October month for getting the pre-clinical approval.

— Aditya Arora

Domestic Market Growth

Domestic Market Revenue Growth Domestic Market Growth · Ongoing · High confidence 10-15%

so we believe this number can increase only by 10% to 15%.

— Aditya Arora

Geographic Contribution

LATAM Contribution to ₹1000 Cr Revenue Geographic Contribution · FY29 · High confidence 30%

So, overall, LATAM will contribute roughly around 30% in INR1,000 crores revenue

— Aditya Arora
Algeria & MENA Contribution to ₹1000 Cr Revenue Geographic Contribution · FY29 · High confidence 15%

15% shall be from Algeria and other MENA countries

— Aditya Arora
French West Africa Contribution to ₹1000 Cr Revenue Geographic Contribution · FY29 · High confidence 10%

French West Africa will have a 10% contribution

— Aditya Arora
GCC Contribution to ₹1000 Cr Revenue Geographic Contribution · FY29 · High confidence 10-15%

and GCC shall have a roughly around 10% to 15% contribution.

— Aditya Arora
Russia Contribution to Total Sales Geographic Contribution · Ongoing · High confidence 5-7%

and we expect to have at least 5% to 7% contribution in total sales from Russia itself.

— Aditya Arora

Product Mix

Oncology Contribution to FY29 Revenue Product Mix · FY29 · High confidence 30%

So, 25% to 30% contribution will be from onco, and 70% will be contribution from beta-lactam, cephalo, general injectables, and other oral solids

— Aditya Arora
Non-Oncology Contribution to FY29 Revenue Product Mix · FY29 · High confidence 70%

— Aditya Arora

Biosimilar Margin

Initial Biosimilar Product EBITDA Biosimilar Margin · Initial cases · Medium confidence 40-45%

So, probably we can have an EBITDAs of 40%, 45% in the initial cases.

— Aditya Arora
Long-term Biosimilar Product EBITDA Biosimilar Margin · 2028-2029 · Medium confidence 25-30%

But that substantially will get reduced and it will come down to 25%, 30% over in 2028, 2029.

— Aditya Arora

Biosimilar Submissions

Erythropoietin Submissions Biosimilar Submissions · Q4 FY27 · High confidence Submission in 50 countries

But with respect to the filing, the next Q4 of FY27 we are going to make submission in almost 50 countries of erythropoietin.

— Aditya Arora

What to watch in Q1 FY27

Top Auditor Onboarding Announcement

next one or two quarters

Current Decision made, awaiting announcement

Target Announcement of KPMG as auditor

Why it matters

Signals enhanced corporate governance and transparency, important for investor confidence.

Yes, sir, probably in the next quarter we'll make the announcement for getting the audit firm. I think the decision has already been made, I mean for the next one or two quarters you'll definitely hear that news from us.

Risks & concerns

Temporary geopolitical disruptions impacting working capital cycles
medium

Geopolitical events, particularly in the Strait of Hormuz, have increased payment cycles and caused delays in receivables from Middle Eastern markets.

Despite temporary geopolitical disruptions impacting working capital cycles, we improved our cash conversion cycle from 208 days to 170 days and have already recovered nearly 30% of delayed receivables from Middle Eastern markets.

Management acknowledged
Regulatory changes impacting manufacturing and capacity utilization
medium

Changes in Annexure 1 European guidelines led to increased timelines for changeovers and validation, temporarily reducing oncology capacity utilization from 35-40% to 65%.

So, probably the challenges which we faced in the last year was that because of the change in the guidelines of Annexure 1, European guidelines, so the timeline of manufacturing and the process of manufacturing change controls and changeovers as per those guidelines, the capacity utilization came down from, I mean, from 35% to 40% to 65%.

Management acknowledged
Uncertainty in biosimilar registration timelines
medium

The biological guideline for analysis and registration takes time, making timelines for biosimilar Erythropoietin registration uncertain.

because normally the biological guideline for any country to analyse, evaluate and then give a registration, it takes time. So, we are not sure about the timelines for registration.

Management acknowledged
Delays in registrations for LatAm regions
low

Timelines for registrations, especially in LatAm regions, have caused delays, leading to a slightly conservative FY27 revenue guidance.

Yes, it's a bit on the conservative side, but we believe that it should be around INR650 crores to INR700 crores, considering the timelines for registrations, specifically in the LatAm regions and the delays which we have faced in the previous quarters.

Management acknowledged
Difficulty in patient recruitment for certain products (e.g., Alteplase)
low

Alteplase, used in brain stroke, was dropped due to the difficulty in getting patients for clinical trials, replaced by Pembrolizumab.

And Alteplase being a being a very critical product because it is used in brain stroke, so the chances of getting the patients was very difficult.

Management acknowledged

Q&A highlights

8 direct

Conservatism in FY27 guidance Direct

So, Deepakji, regarding the numbers what we have given, INR650 crores, Yes, it's a bit on the conservative side, but we believe that it should be around INR650 crores to INR700 crores, considering the timelines for registrations, specifically in the LatAm regions and the delays which we have faced in the previous quarters.

Analyst questioned if guidance was too conservative given Q4 performance, management confirmed it was slightly conservative due to registration delays but could exceed targets.

Asked by Deepak Chokhani

Oncology revenue mix and margins Direct

So, Deepakji, the revenue was roughly close to INR100 crores in FY26 for oncology. So, this number we are projecting to increase by up to INR300 crores by FY29. And next year the contribution will increase to INR150 crores. ... So, overall, you can say the EBITDA margins will be roughly around 30% to 32% in case of onco products.

Clarified current and future oncology revenue contribution and margin profile, highlighting the higher profitability of this segment.

Asked by Deepak Poddar

Unit 6 hormones capex and revenue potential Direct

So, roughly around INR65 crores of capex was to be done and roundabout we have already spent 50% of the total capex in FY26. So, we believe that before November, we'll try to get the WHO GMP and do the commercialization in the ROW market. ... we target at achieving INR150 crores before FY29.

Provided specific capex details and timeline for the new hormone unit, along with its revenue potential, which is incremental to the ₹1000 crore target.

Asked by Deepak Poddar

Overall capex plan for FY27/28 and working capital management Direct

So, sir, for hormones, oncology expansion, biosimilar with clinical trials and the R&D and the bioequivalence what we have to do, all these four projects roughly the capex was around INR260 crores to INR270 crores, out of which INR46 crores capex we have already done in FY26. So, FY27, we would do roughly around INR90 crores and another INR90 crores to INR100 crores in FY28. ... Annual interest cost will roughly remain the same, sir, it won't change because we have not increased our borrowings.

Detailed the multi-year capex plan for various growth initiatives and reassured that working capital improvements would prevent increased borrowings and interest costs.

Asked by Utkarsh Somaiya

Drivers for margin expansion and product profile shift Direct

So, now we are slowly moving towards the regulated markets and we expect at least seven, eight registrations before end of calendar year 2027. So, that -- the margins in those products are roughly around 40% EBITDA margins and those are fresh registrations, not site variations. ... So, that's why we believe that this INR150 crores, INR160 crores number can increase to INR200 crores to INR250 crores in FY27 and FY28.

Explained that margin expansion is driven by a shift towards higher-margin regulated markets and new registrations, which will also increase revenue from existing product categories.

Asked by Dhruvesh Sanghvi

R&D expenditure increase and its impact on future margins Direct

So, probably we can have an EBITDAs of 40%, 45% in the initial cases. But that substantially will get reduced and it will come down to 25%, 30% over in 2028, 2029. However, in every year, we shall keep on adding new products in portfolio, new bioequivalence products in our portfolio.

Management clarified that increased R&D for off-patent/about-to-be-off-patent products will yield high initial margins (40-45%) which will normalize to 25-30% long-term, and continuous new product additions will sustain growth.

Asked by Vineet

Biosimilar MAB (Keytruda generic) R&D and hormone roadmap Direct

So, basically, we will try to import the R&D from one of our partners, Hikma Pharma in Algeria. ... So, if you see our presentation, we have shown that in the three molecules, three Mabs, the clinical cost will be roughly around INR60 crores. Actually, it is around INR110 crores to INR120 crores. So, remaining amount will be invested by one of our partners.

Provided details on the strategy for biosimilar MAB development, including partnership for R&D import and cost sharing, and clarified the focus on MABs over other hormone categories like insulin.

Asked by Navin Vijay

Major challenges for FY29 business plan Direct

So, basically, sir, if there is no such war situation, because if you see neither the India-Pakistan war, neither floods, nor any other, I mean such situation has hampered Kwality's business as of now, but this international war situation has caused a little delay in the payment cycle and delivery cycle.

Management identified geopolitical stability as the primary challenge, stating that without such disruptions, the ₹1000 crore target is achievable, with biosimilars and hormones acting as a contingency.

Asked by Ashish Soni

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Detailed narrative

Strong FY26 Performance and Ambitious Growth Targets

Kwality Pharmaceuticals Limited delivered a landmark FY26, achieving its highest-ever quarterly and annual revenues. Q4 FY26 revenue grew 35.8% to ₹157.1 crores, while full-year revenue increased by 35.9% to ₹503 crores from ₹370 crores in FY25. Profitability also saw significant improvement, with EBITDA margins expanding from 22% to 24% and PAT growing 67.5% to ₹67 crores. The company has set ambitious targets, aiming for ₹650 crores in revenue and ₹100 crores PAT in FY27, with a long-term aspiration of ₹1,000 crores revenue by FY29.

Strategic Shift Towards Regulated Markets and Higher Margins

The company is strategically shifting its focus towards regulated markets, expecting 7-8 registrations by the end of calendar year 2027. Products in these regulated markets are anticipated to yield roughly 40% EBITDA margins, significantly higher than current averages. This shift is projected to drive overall EBITDA margins to 26-27% in FY27, 28% in FY28, and 30% in FY29. Gross margins are also expected to improve from 49% in FY26 to 52-53% in FY27 as regulated market sales increase.

Oncology and Biosimilar Pipeline Expansion

Oncology revenue for FY26 was approximately ₹100 crores, with a projection to increase to ₹150 crores in FY27 and ₹300 crores by FY29, contributing 30% to the total FY29 revenue. The company is investing significantly in biosimilars, with a total capex of ₹260-270 crores planned for hormones, oncology, biosimilar R&D, and bioequivalence studies over FY27-FY28. Initial biosimilar products are expected to yield 40-45% EBITDA margins, normalizing to 25-30% in the long term, with submissions for Erythropoietin in 50 countries planned for Q4 FY27.

Capex and Working Capital Management

Kwality Pharma plans a total capex of ₹260-270 crores for various projects, with ₹46 crores already spent in FY26, and ₹90 crores allocated for FY27 and ₹90-100 crores for FY28. This capex is being funded through existing working capital and re-utilization of bank loans without increasing overall borrowings. The cash conversion cycle has improved from 208 days to 170 days, and management expects further improvements, with debtor days targeted at 150-160 days, ensuring sufficient cash flows for capex from internal accruals.

Geographic Diversification and Market Focus

The company's ₹1,000 crore revenue target by FY29 is supported by a diversified geographic strategy. LATAM is expected to contribute 30% of revenue, Algeria and other MENA regions 15%, French West Africa 10%, and GCC 10-15%. Russia is projected to contribute 5-7% of total sales. The domestic market, currently focused on peptide-based products (₹40-50 crores), is expected to grow by 10-15%.

R&D Investment and Product Portfolio Strategy

Kwality Pharma is increasing its R&D spend from 2% to 5-6% of revenues, focusing on in-house R&D for oncology, general items, cephalosporin, beta-lactam, and upcoming hormone products. The strategy involves developing off-patent or soon-to-be-off-patent products to gain initial mover advantage and higher margins. The company plans to continuously add 10-20 new bioequivalence products annually to replace older molecules and sustain growth.

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