Detailed Narrative
Q1 FY26 Financial Performance Highlights
Shilpa Medicare reported a robust Q1 FY26, achieving its highest ever quarterly EBITDA of ₹98 crores, marking an 18% year-on-year growth with EBITDA margins at 30%. Total revenues for the quarter stood at ₹328 crores, a 9% increase YoY. Gross margins significantly improved by 700 basis points to 76%, primarily driven by a favorable product mix, profit sharing, and licensing fees. The company also saw its effective tax rate drop to 5.5% due to the amalgamation of INM Technologies, which allowed for the utilization of unabsorbed losses.
API Business Progress and Pipeline
The API division contributed ₹187 crores to revenue, growing 8% YoY. The company is actively working on two main NCE programs in oncology, with the first expected to commercialize in the next financial year and the second in Phase III studies. Two new oncology products were validated, with DMF/CEP filings planned within six months. Capacity expansion for Tranexamic acid and Ursodeoxycholic acid has led to increased sales turnover, and commercial supplies for Nor-Ursodeoxycholic acid are expected to begin in Q2 FY26.
CDMO, Peptides, and Polymers Growth
The CDMO segment has over 25 active projects, with two expected to commercialize next year. Commercial supplies for a polymer project started in Q1 and are anticipated to complete by 2HFY26, with replenishment orders expected. In peptides, liraglutide is ready for manufacturing validation, with formulation batches expected to complete by end of September. Semaglutide registration batches are planned for Q3 FY26, with completion by end of Q4 FY26, and tirzepatide scale-up will commence in Q3 FY26.
Formulations and Biologics Strategic Advancements
In formulations, Shilpa launched Nor-Ursodeoxycholic acid, its first NCE, in India by October, marking a significant milestone. The Rotigotine transdermal patch is expected to receive European approval in 2HFY26, with US filing planned for Q3 FY26. The Biologics division saw ₹73 crores in revenue, driven by new CDMO deals and licensing income from the Orion albumin deal. Two NBE programs (Alveolus Bio and mAbTree) are slated to enter human studies next year, and the biosimilar Nivolumab will enter human studies by the end of this year.
Capital Allocation and Shareholder Returns
Capital expenditure for the quarter was ₹70 crores, primarily directed towards a fermentation plant in Kadechur. The company's net debt stood at ₹550 crores as of June 30th, having refinanced ₹75 crores of high-cost NCD with lower-cost debt. The Board has proposed a 1:1 bonus issue to improve stock liquidity and reward long-term shareholders. Management indicated that future clinical studies would be funded through partnerships and licensing fees, minimizing the need for significant additional capex.