Detailed Narrative
Q2 & H1 FY26 Financial Performance Overview
Mankind Pharma reported a 21% YoY increase in overall revenue to INR 3,697 crores for Q2 FY26, contributing to a 23% YoY growth in H1 FY26 revenue to INR 7,268 crores. However, EBITDA margin contracted by 280 bps YoY to 25% in Q2, leading to an 8.7% YoY increase in EBITDA to INR 924 crores. Net profit for Q2 FY26 decreased by 21.3% YoY to INR 520 crores, primarily due to higher finance costs and depreciation related to BSV assets. The effective tax rate for H1 FY26 improved to 17.1% from 20.7% in H1 FY25.
Domestic Business Performance and Challenges
Domestic business revenue grew 15% YoY to INR 3,184 crores in Q2 FY26, with organic growth around 6% (6.6% excluding OTC). Secondary sales grew 6.3% YoY, which was lower than the IPM growth of 7.2%. This underperformance was attributed to supply chain disruption🌐s from new GST rates and a higher presence in Tier 2-6 cities. The chronic share of the domestic business increased by 200 bps YoY to 37.1%, driven by strong outperformance in cardiac (1.3x) and anti-diabetics (1.2x) segments. Prescriber penetration also improved by 30 bps to 84.2%.
Export and OTC Business Dynamics
Export revenue demonstrated robust growth, increasing 83% YoY to INR 513 crores in Q2 FY26, with H1 FY26 exports up 82% to INR 982 crores. Organic export growth was in the mid-single digits (around 5%). In contrast, the OTC business faced headwinds, with revenue declining 3% YoY to INR 226 crores in Q2 FY26. This decline was primarily due to supply chain disruption🌐s from new GST rates and the impact of uneven monsoons. Management expects a recovery in the OTC segment in H2 FY26.
Strategic Initiatives and Internal Transformation
The company is scaling digital capabilities, including a partnership with OpenAI for insight-led decisions. R&D expenses increased to 2.9% of sales in Q2 FY26, in line with the FY26 guidance of 2.5-3%. Management acknowledged that significant internal transformations, including changes in personnel, BSV integration, and OTC restructuring, led to performance below expectations. These changes, though impacting short-term results, are viewed as crucial for long-term sustainable growth and future outperformance.
Capital Allocation and Financial Health
Mankind Pharma spent INR 163 crores on capex in Q2 FY26, which is 4.4% of revenue and within the FY26 guidance of 5%. The company successfully retired commercial papers worth INR 5,000 crores, with the final INR 1,500 crores tranche paid in October 2025. Net debt reduced to INR 4,791 crores as of September 30, 2025, bringing the net debt to adjusted EBITDA ratio to 1.4x. The company maintains its target to achieve a net debt to adjusted EBITDA ratio of 1.2x by March 31, 2026.