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RPG Life Sciences Limited — Q2 FY26 earnings call

Call held 17 Oct 2025

Management summary

RPG Life Sciences delivered a strong Q2 FY26, with revenue up 7.6% QoQ to INR181.7 crores and EBITDA reaching INR43.6 crores at a 24.0% margin. The domestic formulation business significantly outpaced market growth, expanding 17.2% YoY. Despite headwinds in the API segment due to a fire incident causing an estimated INR16 crores sales loss and contributing to gross margin compression, the company remains debt-free with a healthy cash surplus and expects API operations to be back on track by year-end.

Highlights

  • Revenue from operations grew 7.6% QoQ to INR181.7 crores in Q2 FY26.

  • EBITDA increased 7.1% QoQ to INR43.6 crores, achieving a 24.0% margin in Q2 FY26.

  • Domestic formulation business grew 17.2% YoY in Q2 FY26, significantly outperforming the Indian pharmaceutical market's 7.7% growth.

  • H1 FY26 domestic formulation business grew 13.5% YoY, outpacing the market's 7.4% growth.

  • IPM ranking improved by 6 places, from 62 to 56.

  • Cash surplus stands at approximately INR223 crores, and the company remains debt-free.

  • API plant restoration is on time and on budget, with commercialization expected by November last week/December first week.

Concerns

  • API business faced headwinds in H1 FY26 due to a fire incident in January, resulting in an estimated sales loss of INR16 crores.

  • Gross margin compression observed over recent quarters, partly attributed to the API fire incident and MABs price erosion.

  • MABs segment experiencing margin compression due to increased competition and price wars across the industry.

  • H1 FY26 EBITDA was affected by the fire impact, leading to some deliveries being postponed to H2.

Key financials

2 periods

Headline

  • Revenue from Operation
    ₹181.7 Cr
    QoQ +7.6%
  • EBITDA
    ₹43.6 Cr
    QoQ +7.1%
  • EBITDA Margin
    24%
  • PBT (before exceptional)
    —
    QoQ +7.9%

H1

  • Revenue Growth
    —
    YoY +3.8%
  • PAT (excl. exceptional)
    —
    YoY +15.6%

What they filed

Q1 FY27: revenue up 16.0%, net profit up 19.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue172 173 143 169 182 +6%180 +4%177 +24%196 +16%
EBITDA46 49 25 35 39 −15%40 −18%33 +32%44 +26%
Net profit4 35 117 26 37 +825%22 −37%30 −74%31 +19%
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

SegmentShare of BusinessQ2 FY26 Growth
Domestic Formulation70%17.2%
International Formulation20%7%
API9%—

Capital allocation

high confidence
  • Debt Debt disclosed
    RPG Life Sciences remains debt-free with high cash surplus.
  • Liquidity Cash ₹223 Cr Company is debt-free with high cash surplus.
    RPG Life Sciences remains debt-free with high cash surplus. The figure has risen to approximately INR223 crores.

Guidance & targets

Brand Performance

  • Naprosyn Brand Value Brand Performance · soon · Medium confidence INR100 crores
    Our largest brand in our pain management portfolio, Naprosyn, grew 16% Y-o-Y in H1 FY '26 and is on track to become our first INR100 crores brand soon supported by robust medical marketing initiatives, deeper doctor engagement, strong brand equity and life cycle management strategy.

    — Ashok Nair

  • Immunosuppressant Portfolio Value Brand Performance · soon · Medium confidence INR100 crores
    Beyond Naprosyn, our immunosuppressant portfolio is anchored by top brands like Azoran, Mofetil and grew by 12% in H1 with strong momentum from scientific engagement programs like PG excellent initiatives and where we engage with young specialty doctors. We are well on our way to building this into an INR100 crores franchisee as well.

    — Ashok Nair

Category Performance

  • Immunosuppressant Category Value Category Performance · Medium confidence INR100 crores
    first make this as a INR 100 crores basket and then accelerate towards building this to be a INR200 crores portfolio.

    — Ashok Nair

  • Immunosuppressant Category Value Category Performance · Low confidence INR200 crores

    Previously INR100 crores → INR200 crores

    — Ashok Nair

API Operations

  • API Plant Commercialization API Operations · November last week, December first week · High confidence Commercialized
    So we should be able to commercialize by November last week, December, first week.

    — Ashok Nair

  • API Sales Recovery API Operations · by the year-end · Medium confidence Back on track
    And by the year-end API should be back on track.

    — Ashok Nair

What to watch in Q3 FY26

API Plant Commercialization

November last week / December first week
Current Restored, validation ongoing
Target Commercial operations started

Why it matters

Successful commercialization is key to recovering API sales and mitigating the impact of the H1 fire incident.

So we should be able to commercialize by November last week, December, first week.

Risks & concerns

  • API fire incident impact on sales and margins

    high

    Fire incident in January led to INR16 crores sales loss in H1 and contributed to gross margin compression; deliveries postponed to H2.

    Management acknowledged

  • MABs margin compression due to competition

    medium

    Increased competition in the MABs category has led to price wars and margin erosion across the industry.

    Management acknowledged

  • Challenges in US market entry

    medium

    Lengthy FDA approval process, shifting market dynamics, and high costs make US entry challenging without a significant product basket and strong capabilities.

    Management acknowledged

Q&A highlights

7 direct
API plant restoration and H2 outlook Direct
So we should be able to commercialize by November last week, December, first week. And the plant is not only restored, but we have also put new systems and new tech systems, where it ensures that we do not face any future risk in our operations. ... And by the year-end API should be back on track.

Provides specific timelines for API plant commercialization and recovery of API sales, which were impacted by a fire.

Asked by Ahmed Madha

Gross margin compression and API business impact Partial
So partially, you are right. It's part of it is because of our captive we've not yet been able to do. The second is, of course, because of the API. The fire incident has let down almost to the tune of a sales loss of INR16 crores. So all those are actually related to that.

Explains the reasons behind gross margin compression, attributing it to the API fire incident and inability to feed captive consumption.

Asked by Ahmed Madha

Gross margin difference between API and formulation business Direct
For us, all the 3 are on the similar lines. So it's not that 1 is another -- up than the other one. So it's almost on the same lines.

Clarifies that gross margins across API, domestic formulation, and international formulation are broadly similar, contrary to the analyst's assumption.

Asked by Ahmed Madha

Domestic business growth composition (volume, price, new launches) Direct
So as compared to IPM quarter 2, where the volume was minus 0.20%, we've grown by ~8%. Price against 5.50%, we have grown by 2.9% ... And if you look at our new introductions, we have grown by 5.90%, versus 2.40%. So overall, you will see quarter 2 our growth was 17.20% versus 7.70%.

Provides a detailed breakdown of domestic business growth drivers for Q2 and H1 FY26, showing strong volume and new introduction growth.

Asked by Ahmed Madha

Strategy for gross margin improvement Direct
So we have, in fact, launched a project known as the LEAP Project, where the focus is totally towards the cost optimization. Rationalization. And we are running a project where we are looking to the margin expansion. We also looked into -- and not look, we have done strategic bulk purchases, whereby we get value in that. And also the CMO optimization have been initiated.

Details specific initiatives (LEAP Project, bulk purchases, CMO optimization) aimed at improving gross margins going forward.

Asked by Sudarshan Padmanabhan

Contribution of chronic vs acute segments and M&A strategy Direct
So before that, I'll answer your first question, our chronic dependency contribution is 20%. And the acute is around 80%. Now coming to the cash surplus, which we have, we are looking into -- we are open to both. We are opened to brands. We are opened to API, we are open to formulation. But at the end of it, we need to acquire an asset which is prudent, which is value accretive to the shareholders. And we are open to it. In fact, we are already looking into it and working on it.

Clarifies the current mix of chronic vs acute business and outlines the company's open stance towards inorganic growth across brands, API, and formulations, with a focus on value accretion.

Asked by Sudarshan Padmanabhan

Naprosyn's competitive positioning and research Direct
So first, let me talk about the safety, efficacy and the side effect. So Naprosyn is one of the most efficacious Nonsteroidal Anti-Inflammatory Drug. And comparatively has got lesser gastric irritation as compared to ibuprofen and others. ... So in fact, we are doing some trials, which will be published once the trials are getting over.

Explains Naprosyn's unique selling proposition (efficacy, safety profile) and confirms ongoing trials to support its positioning, which will be published.

Asked by Aditya Khemka

US market exposure and future plans Direct
So see, while our plants are at a level that would be U.S. FDA approvable. But we would seek approval only when there is a significant basket of products with strong market share visibility in the U.S. The rationale is that the approval process is lengthy and the market dynamics often shift by the time the approval is secured. ... So if you ask me, do we want to? Of course, we want to go, but first we need to strengthen our own product portfolio and our capabilities to get into that place.

Details the company's cautious approach to entering the US market, prioritizing a strong product portfolio and capabilities over immediate entry due to regulatory complexities and market dynamics.

Asked by Aditya Goyal

3 min read 7 chapters

Detailed narrative

Q2 FY26 Performance Overview

RPG Life Sciences reported a robust Q2 FY26, with revenue from operations increasing by 7.6% QoQ to INR181.7 crores. EBITDA also saw a 7.1% QoQ rise to INR43.6 crores, maintaining a healthy EBITDA margin of 24.0%. PBT before exceptional items grew by 7.9% over the previous quarter. For H1 FY26, revenue grew by 3.8% YoY, and PAT (excluding exceptional items) stood at 15.6% YoY, despite the impact of a fire incident on EBITDA.

Domestic Formulations Business Outperforms Market

The domestic formulations business, contributing over 70% of total business, demonstrated strong growth. In Q2 FY26, it grew by 17.2% YoY, significantly outpacing the Indian pharmaceutical market's growth of 7.7%. For H1 FY26, the segment grew 13.5% YoY against the market's 7.4%. This strong performance led to an improvement in IPM ranking by 6 places, moving from 62 to 56.

International Formulations and API Business Update

The international formulations business, accounting for 20% of revenue, grew by 7.0% in Q2 FY26. The API business, which contributes 9%, faced headwinds in H1 due to a fire incident in January, resulting in an estimated sales loss of INR16 crores. However, the API plant restoration is on time and on budget, with commercialization expected by November last week or December first week, and API sales are projected to be back on track by year-end.

Strategic Initiatives and Digital Transformation

RPG Life Sciences is undergoing transformation through initiatives like the LEAP Project for cost optimization and margin expansion, Project Velocity for international business expansion, and Project Elevate for portfolio optimization. Digital initiatives include automating the field force, enhancing the RPGserv 2.0 doctor engagement platform with AI, and digitizing finance processes. The company also has 3 R&D setups for formulations, API, and analytical R&D, with a good pipeline of new products.

Product Portfolio and Growth Drivers

Key brands like Naprosyn, the largest in pain management, grew 16% Y-o-Y in H1 FY26 and is on track to become an INR100 crores brand. The immunosuppressant portfolio, including Azoran and Mofetil, grew 12% in H1 and is targeted to reach INR100 crores, then INR200 crores. The 'hidden gem' strategy is revitalizing legacy brands like Norpace, which grew 62% in H1, and Serenace, with efforts focused on increasing awareness and detection for conditions like ventricular hypertrophy.

Capital Allocation and Financial Health

The company maintains a strong balance sheet, remaining debt-free with a cash surplus that has grown to approximately INR223 crores. This financial strength, coupled with an ICRA rating of A+ (stable outlook), empowers the pursuit of both organic and inorganic growth opportunities across formulations and APIs. The company is actively exploring value-accretive acquisitions while being prudent about valuations.

Gross Margin Dynamics and MABs Segment

Gross margins have seen some compression, partly due to the INR16 crores sales loss from the API fire incident and the inability to feed captive consumption. Additionally, the MABs (Monoclonal Antibodies) segment is experiencing margin pressure due to increased competition and price wars as more companies enter the biological space. The strategy for MABs is to accelerate volume-backed growth to offset pricing pressure.

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