Mankind Pharma Limited — Q1 FY26 earnings call

Call held 1 Aug 2025

Management summary

Mankind Pharma reported a healthy start to FY26 with overall revenues growing 24.5% YoY, driven by strong domestic and international performance, including BSV consolidation. Despite a decline in PAT due to higher finance and depreciation costs, and gross margin compression from sales mix and inventory accruals, the company maintained its full-year guidance for EBITDA margins and is actively reducing debt. Strategic initiatives in R&D and BSV integration are progressing, with expectations for improved performance in subsequent quarters.

Highlights

  • Overall revenues of ₹3,570 crores, registering a growth of 24.5% YoY.

  • Domestic revenue grew by 19% YoY, primarily driven by volume recovery, consistent chronic outperformance, and BSV consolidation.

  • Chronic share (excluding BSV) increased by 190 bps YoY to 38.8% in Q1 FY26.

  • OTC business revenue increased by 15% YoY to ₹237 crores, with modern trade and e-commerce channels growing by approximately 50% YoY.

  • International business revenue increased by 81% YoY to ₹469 crores.

  • Net operating working capital days decreased to 48 days from 50 days in Q4 FY25, and cash flow from operations increased by 54% YoY to ₹840 crores.

  • Net debt to EBITDA improved to 1.6x on a trailing 12-month basis, down from 1.8x in FY25.

Concerns

  • EBITDA margin declined by 120 bps YoY to 23.8% (compared to adjusted 25.0% in Q1 FY25).

  • Gross margins declined by 130 bps YoY to 70.5% due to unfavorable sales mix and inventory-related accruals.

  • PAT decreased by 17.4% YoY to ₹445 crores, attributed to higher finance costs and depreciation from BSV consolidation.

  • Other expenses increased meaningfully QoQ, primarily due to front-loaded S&D expenses and BSV expenses, though expected to normalize.

Key financials

  1. Revenue ₹3,570 Cr +24.5%YoY
  2. EBITDA ₹850 Cr +25.8%YoY
  3. EBITDA Margin (Adjusted) 23.8% -1.2%YoY
  4. Gross Margin 70.5% -1.3%YoY
  5. PAT ₹445 Cr -17.4%YoY
  6. EPS ₹10.6
  7. Cash EPS ₹15.9
  8. R&D Expenses ₹79 Cr
  9. R&D as % of Sales 2.2%
  10. Finance Cost ₹171 Cr -10.5%QoQ
  11. Depreciation & Amortization ₹219 Cr +112.6%YoY
  12. Effective Tax Rate 17.7% +5.4%QoQ
  13. Net Operating Working Capital Days 48 days
  14. Cash Flow from Operations ₹840 Cr +53.8%YoY
  15. CFO-to-EBITDA Ratio 99%

What they filed

Q1 FY27: revenue up 12.9%, net profit up 29.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,061 3,199 3,079 3,570 3,697 +21%3,567 +12%3,443 +12%4,031 +13%
EBITDA847 816 683 847 921 +9%919 +13%930 +36%1,056 +25%
Net profit659 385 425 445 520 −21%414 +8%559 +32%574 +29%
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

  • Domestic Business
    19% Revenue Growth10% Organic Growth9.2% Secondary Sales Growth38.8% Chronic Share (excl. BSV)
  • OTC Business
    ₹237 Cr Revenue15% Revenue Growth
  • International Business
    ₹469 Cr Revenue81% Revenue Growth— Organic Growth
  • BSV Portfolio
    25% Panacea Growth35% FSH (Foligraf) Secondary Growth10% Humog, Hucog Growth

Capital allocation

high confidence
  • Capex ₹127 Cr
    • Biosimilar plant (Baroda) Phase 1 ₹100 Cr
    Our CAPEX spend during the quarter has increased moderately to Rs. 127 crores in Q1 FY'26 as compared to Rs. 125 crores in Q1 FY'25. The CAPEX as a percentage of revenue is 3.6%, which is lower than our guidance of 5% of revenue for FY'26. So, in FY26, the estimated cash outflow will be close to Rs 100 crores for this facility.
  • Debt Net ₹5,249 Cr · 1.6× EBITDA
    • Repayment Repayment of commercial papers ₹500 Cr
    • Repayment Balance acquisition-related debt targeted for repayment ₹1,500 Cr
    In line with our prudent financial strategy, we continue to strengthen our balance sheet and have reduced our net debt position to Rs. 5,249 crores as of 30th June 25, resulting in further improving our net debt to EBITDA ratio to 1.6x in Q1 FY'26 on trailing 12-month basis as compared to net debt to adjusted EBITDA ratio of 1.8x in FY'25. And the total interest cost towards this acquisition debt for this year would be in the range of Rs. 450 crores - Rs. 475 crores.
  • Dividend ₹1/share (interim)
    As we celebrate 30 years of our operations, we would like our shareholders to be part of this milestone; therefore, the Company's Board has approved an interim dividend of Rs. 1 per share.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · full year · High confidence 25-26%
    And we continue to maintain our EBITDA guidance of 25% to 26%.

    — Ashutosh Dhawan

  • Gross Margin Profitability · full year · High confidence upward of 70%
    In terms of guidance, we have maintained the guidance that our gross margins will be upward of 70% and even in this quarter as well, it is upward of 70%.

    — Ashutosh Dhawan

  • BSV Margins Profitability · FY26 · High confidence 26-28%
    So, for BSV, we are maintaining guidance. So, sales growth of 18%-20% with margins tad higher of 26%-28%.

    — Prakash Agarwal

  • OCF-to-EBITDA Ratio Profitability · longer run · Medium confidence around 80% plus level
    No, having it assumed around 80% plus level will be a fair assumption.

    — Ashutosh Dhawan

Capex

  • Capex as % of Revenue Capex · FY26 · High confidence 5%
    The CAPEX as a percentage of revenue is 3.6%, which is lower than our guidance of 5% of revenue for FY'26.

    — Ashutosh Dhawan

Sales Growth

  • BSV Sales Growth Sales Growth · FY26 · High confidence 18-20%
    So, for BSV, we are maintaining guidance. So, sales growth of 18%-20% with margins tad higher of 26%-28%.

    — Prakash Agarwal

Debt

  • Acquisition Debt Repayment Debt · FY26 · High confidence ₹2,000 crores
    For the acquisition-related debt repayment, we have scheduled Rs. 2,000 crores to be paid in FY'26, out of which Rs. 500 crores has been paid in Q1 and the balance Rs. 1,500 crores, we are targeting to pay in October 2025.

    — Ashutosh Dhawan

Project Completion

  • Biosimilar Plant Phase 1 Completion Project Completion · end of next calendar year · High confidence end of next calendar year
    The Capex for Phase 1, we are looking at around Rs.150 - Rs.200 crores and it is expected to close and completed by end of next calendar year.

    — Prakash Agarwal

Regulatory

  • BSV International Market Approvals Regulatory · by the end of this year · High confidence start coming in
    We are expecting approvals to start coming in from international markets by the end of this year.

    — Arjun Juneja

Tax Rate

  • Effective Tax Rate Tax Rate · full year · High confidence 20-21%
    We would like to maintain 20% to 21% guidance from the ETR. For this quarter, it is 17.7% and 20% to 21% will be a fair assumption for the year.

    — Ashutosh Dhawan

What to watch in Q2 FY26

BSV Performance Improvement

next quarter (Q2 FY26)
Current Flattish YoY growth in Q1 FY26
Target Improved growth and EBITDA margins for BSV (Q2 better than Q1)

Why it matters

BSV is a key acquisition, and its integration and growth are crucial for overall company performance and achieving FY26 guidance.

But at the same time, every quarter, you will start seeing improvements. So, Q2 will be better than Q1, Q3 will be better than Q2 is our expectation.

Risks & concerns

  • Gross Margin Compression

    medium

    Gross margins declined by 130 bps YoY to 70.5% due to unfavorable sales mix and inventory-related accruals for slow and long-moving items.

    Our gross margins for the quarter declined by 130 basis point year-on-year basis to 70.5% from 71.8% in Q1 FY'25, which is due to unfavorable sales mix and certain inventory-related accruals taken in the current quarter for slow and long-moving items.

    Management acknowledged

  • PAT Decline due to Finance & Depreciation Costs

    medium

    PAT decreased by 17.4% YoY due to higher finance costs and depreciation, primarily from BSV consolidation. Management expects PAT to increase as debt is liquidated.

    The profit after tax for Q1 FY'26 has decreased by 17.4% year-on-year to Rs. 445 crores, on account of higher finance costs and depreciation costs pursuant to BSV consolidation... So, that has also become negative because of the debt being taken and as we highlighted that our endeavor is to clear all the debt by FY'28. So, till FY'28 there will be interest burden and then slowly and gradually the PAT is going to increase as we are going to liquidate our debt.

    Management acknowledged

  • BSV Business Seasonality

    low

    The BSV business is more second-half skewed, leading to a flattish growth in Q1, but sequential improvements are expected.

    Your observation is right. So, it is a flattish kind of growth on an overall basis. But because we have taken some corrective actions, and if you see BSV past trends of last 2-3 years, it is more skewed towards second half.

    Management acknowledged

  • Front-loading of Expenses

    low

    Q1 saw a bump in other expenses due to front-loaded S&D expenses and BSV expenses, which is expected to normalize over the full year.

    So, it's more on the timing difference and the front-loading of expenses that you are seeing a bump. Overall, during the full year basis, they will normalize.

    Management acknowledged

  • GLP-1 Genericization Impact on Anti-Diabetic Portfolio

    low

    Analyst concern about the impact of GLP-1 genericization on the existing anti-diabetic portfolio. Management believes older molecules sustain and Mankind's broad presence will mitigate the impact.

    Coming to the next question, I think, Siddharth, though anti-diabetic, as you said, Mankind has been doing quite well and even with our older brands, we are in a very good space. Our matured brands also are doing well, better than the market. And coming to the newer therapies, once these newer therapies comes to the market, you have seen traditionally also that the old molecules doesn't go away.

    Analyst downplayed

Q&A highlights

7 direct
Biosimilar Plant Capex and Timeline Direct
So, for the biosimilar facility, this is the facility which is started in Baroda largely to scale up as well as de-risk the operations of BSV. The Capex for Phase 1, we are looking at around Rs.150 - Rs.200 crores and it is expected to close and completed by end of next calendar year. So, in FY26, the estimated cash outflow will be close to Rs 100 crores for this facility. It is part of that [5% CAPEX guidance].

Clarified the location, specific Capex for Phase 1, FY26 cash outflow, and timeline for a new biosimilar facility, confirming it's within existing Capex guidance.

Asked by Chintan Sheth

Debt Repayment and Interest Cost Outlook Direct
For the acquisition-related debt repayment, we have scheduled Rs. 2,000 crores to be paid in FY'26, out of which Rs. 500 crores has been paid in Q1 and the balance Rs. 1,500 crores, we are targeting to pay in October 2025. And the total interest cost towards this acquisition debt for this year would be in the range of Rs. 450 crores - Rs. 475 crores.

Provided a clear roadmap for debt reduction in FY26 and quantified the expected interest cost, indicating a path to improved PAT.

Asked by Chintan Sheth

Gross Margin Decline and Inventory Write-off Partial
So, I understand there is a drop in the gross margin of 1.3% year-on-year basis and 1.1% is on a Q-on-Q basis. So, inventory-related accrual is forming part of this.

Addressed the reasons for gross margin decline (sales mix, inventory accruals) but did not quantify the specific impact of inventory write-offs, leaving some ambiguity.

Asked by Chintan Sheth

Dydrogesterone Facility Capacity Utilization and Export Plans Direct
So, for Dydrogesterone facility, the capacity utilization is approximately 60%. We are expecting approvals to start coming in from international markets by the end of this year. So, once the approvals start coming in, this capacity utilization will start increasing. So, most of the activities are in the last leg in terms of qualifications etc. And in the next two months, we will start producing the KSM also in-house.

Provided specific operational details on a key product, indicating future growth drivers from international expansion and backward integration.

Asked by Rashmi

Return to Industry-Leading Growth Post Sales Force Changes Direct
Madhav, this process started, I mean, approximately 12 months back and almost completed 99% in the month of March 2025. And now, basically, some changes happened in 1st Quarter in two of the divisions. Some happened in second, some in third and fourth. So, it is done last year. And as you can see that for good number of quarters our growth was single digit. Now, in the 1st Quarter, the growth is 10%. That itself talks about that changes are appearing. And as time will pass, we will see better things will happen.

Addressed concerns about past growth slowdown, confirming that internal changes are largely complete and Q1's 10% growth signals a return to stronger performance, aligning with long-term strategy.

Asked by Madhav

BSV Performance and Seasonality Direct
Your observation is right. So, it is a flattish kind of growth on an overall basis. But because we have taken some corrective actions, and if you see BSV past trends of last 2-3 years, it is more skewed towards second half. But at the same time, every quarter, you will start seeing improvements. So, Q2 will be better than Q1, Q3 will be better than Q2 is our expectation. And the performance which is delivered is as per our budget expectations. So, we are on line.

Acknowledged the flat Q1 BSV growth but reassured investors that it's seasonal and sequential improvements are expected, reinforcing the full-year guidance for BSV.

Asked by Neha Manpuria

Increase in Other Expenses Direct
You are right, Neha, in your observation. If you take Q1 FY26 year-on-year basis, there is a bump of Rs.131 crores in the other expenses. Out of this Rs.131 crore, approximately Rs.125 is coming from BSV and rest all is the inflationary adjustment. If you look at it quarter-on-quarter basis, the jump is around Rs. 82 crores, which is primarily driven because of increase in S&D expenses because they are front-loaded and BSV expense base has been constant in this quarter. So, it's more on the timing difference and the front-loading of expenses that you are seeing a bump. Overall, during the full year basis, they will normalize.

Provided a detailed breakdown of the increase in other expenses, attributing it to BSV and front-loaded S&D costs, with an expectation of normalization, which is crucial for operating leverage.

Asked by Neha Manpuria

Impact of GLP-1 Genericization on Anti-Diabetic Portfolio Direct
So, as I said, like there are certain categories like Sulfonylurea, if you see, or maybe the other categories of old anti-diabetes, it will not be a flat therapy, because even when empagliflozin or maybe dapagliflozin, when they have also been launched, it has not impacted so much on the existing therapy. So, if you see the overall anti-diabetes space, there are different categories of HCPs, where these molecules are still steady. So, Mankind, as you know, has been strong in most of the specialties. So, in this case also, wherever the therapy goes, suppose it goes top to bottom, then we will be also very steady at the bottom space. So, I don't think there'll be a significant impact in terms of overall business in anti-diabetes.

Addressed a key sector-wide concern about the impact of new GLP-1 drugs, with management expressing confidence in the resilience of older molecules and Mankind's diversified portfolio.

Asked by Siddharth Neghandi

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Detailed narrative

Q1 FY26 Overall Performance

Mankind Pharma reported a robust start to FY26, with overall revenues increasing by 24.5% year-on-year to ₹3,570 crores. This growth was primarily fueled by strong domestic performance, chronic segment outperformance, and the consolidation of BSV's results. The company's reported EBITDA grew by 25.8% to ₹850 crores, resulting in a reported EBITDA margin of 23.8%. However, when compared to the adjusted EBITDA margin of Q1 FY25 (25.0%), there was a 120 basis point decline, mainly due to a reduction in gross margins.

Domestic and International Business Growth

The domestic business registered a healthy 19% year-on-year growth, with organic growth contributing 10%. Secondary sales increased by 9.2% year-on-year, outperforming the IPM growth of 8.6%. The chronic segment, excluding BSV, saw its share increase by 190 basis points year-on-year to 38.8%. The international business demonstrated exceptional growth, with revenue soaring by 81% year-on-year to ₹469 crores, although organic growth was in the single digits. The OTC business also contributed positively, growing 15% year-on-year to ₹237 crores, with modern trade and e-commerce channels growing approximately 50% year-on-year and now accounting for 11% of OTC sales.

R&D and BSV Integration Updates

Mankind is strengthening its R&D pipeline, focusing on candidates for autoimmune disease, anti-microbial resistance, and a recombinant biosimilar in the IVF segment, including GPR-119 for anti-obesity and anti-diabetes. The BSV acquisition is progressing well, with integration initiatives underway. A new biological facility is being set up at Ambernath to scale up and de-risk operations, with Phase 1 Capex of ₹150-200 crores and an estimated cash outflow of ₹100 crores in FY26, expected to complete by the end of next calendar year. BSV's Dydrogesterone facility is operating at approximately 60% capacity, with international market approvals anticipated by year-end.

Financial Performance and Margins

Gross margins for the quarter declined by 130 basis points year-on-year to 70.5%, primarily due to an unfavorable sales mix and inventory-related accruals for slow-moving items. Profit after tax (PAT) decreased by 17.4% year-on-year to ₹445 crores, largely due to higher finance costs and increased depreciation from BSV consolidation. R&D expenses stood at ₹79 crores, representing 2.2% of sales. The effective tax rate for Q1 FY26 was 17.7%, up from 16.8% in Q4 FY25.

Capital Allocation and Debt Management

The company's CAPEX spend for Q1 FY26 was ₹127 crores, representing 3.6% of revenue, which is below the full-year guidance of 5%. Net debt reduced to ₹5,249 crores as of June 30, 2025, improving the net debt to EBITDA ratio to 1.6x from 1.8x in FY25. Mankind repaid ₹500 crores of commercial papers in Q1 FY26 and plans to repay an additional ₹1,500 crores of acquisition-related debt by October 2025, out of a total scheduled repayment of ₹2,000 crores for FY26. The total interest cost for acquisition debt for the year is estimated at ₹450-475 crores. The board also approved an interim dividend of ₹1 per share.

Outlook and Strategic Priorities

Mankind Pharma reiterated its full-year guidance for EBITDA margins at 25-26% and gross margins upward of 70%. The company expects BSV sales to grow 18-20% with margins of 26-28% for FY26. Management expressed confidence in the ongoing sales force changes, which are expected to drive better performance in subsequent quarters, with Q2 and Q3 anticipated to be stronger than Q1. The company also believes its diversified anti-diabetic portfolio will remain resilient against new entrants like GLP-1s, as older molecules continue to sustain market presence.

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