Windlas Biotech Limited

Windlas Biotech reported a strong financial performance for Q2 and H1 FY26, with revenue from operations reaching INR222 crores and INR432 crores, respectively, marking a 19% year-on-year growth for both periods. The company achieved an EPS of INR16.91 for H1 FY26, reflecting a 21% YoY growth. Gross margins expanded by 68 bps in Q2 and 70 bps in H1 YoY, supported by a favorable business mix and scale benefits, with Q2 EBITDA at INR29 crores and PAT at INR18 crores.

Growth was driven by balanced contributions from all three business verticals. The Generic Formulation CDMO vertical delivered an 18% YoY growth in H1 FY26, while the Trade Generics & Institutional business gained momentum with 25% YoY growth in H1 FY26 and 24% in Q2 FY26. The Exports vertical also contributed with 23% YoY growth in H1 FY26 and 13% in Q2 FY26, expanding the company's footprint in semi-regulated geographies.

In mid-September FY26, ESOP grants related to the ESOP 2025 scheme were awarded, resulting in a non-cash expenditure impact of INR1.2 crores (INR12 million) reflected in the Q2 FY26 financials. Management clarified that the ESOP scheme, covering nearly 100 key personnel, is a strategic investment aimed at talent retention and aligning employee performance with long-term company goals, linked to both financial and operational KPIs.

The Plant-2 extension, operational since Q4 FY25, is now contributing meaningfully to the business. The Plant-6 expansion, primarily for oral solids, is advancing well and remains on track for commissioning within FY26, with INR24 crores in CWIP largely related to this facility. However, the injectable facility is running 'a little bit behind' its planned timeline for full capacity utilization and profitability, though it has gained customer approvals and commercial supplies have begun.

The Indian pharmaceutical market experienced a subdued volume growth, with a 0.2% decline in Q2 FY26, despite a 7.7% overall market growth. Management noted increased regulatory scrutiny and strong inspections, particularly for liquid product licenses, following recent incidents, emphasizing the tightening regime for Schedule M compliance. The company believes its focus on quality and compliance provides an advantage in this evolving market.

Windlas Biotech improved its liquidity position to INR237 crores and generated a healthy net operating cash flow of INR56 crores. The company paid a dividend of INR12.2 crores, equivalent to INR5.8 per share, related to FY25, in line with its dividend policy. Management continues to strengthen manufacturing infrastructure through sustained investments in capacity enhancement and is open to inorganic growth for new dosage forms, prioritizing synergistic assets.