Aarti Pharmalabs released its Q3 FY26 results presentation showing resilient standalone operational revenue growth of 1.9% QoQ to INR 4,253 Mn, with EBITDA margin strengthening to 24.22%. The company provided updates on major capex, including the Atali Greenfield Project and the Tarapur Brownfield expansion for Xanthine derivatives. The outlook remains strong, driven by a growing CDMO pipeline and expansion across all key business segments.
Q3 FY26 Performance Summary (Standalone)
Aarti Pharmalabs reported its financial results for the third quarter of FY26, demonstrating resilience amidst market pressures. Standalone Operational Revenue for Q3-FY26 stood at INR 4,253 Mn, marking a 1.9% growth Quarter-on-Quarter (Q-o-Q) against INR 4,173 Mn in Q2-FY26. EBITDA saw a strong recovery, surging by 39.0% QoQ to reach INR 1,030 Mn, which translated to an improved EBITDA Margin of 24.22% (an increase of 646 Bps QoQ).
However, year-over-year (Y-o-Y) comparisons showed a contraction, with Revenue down 9.7% and EBITDA down 10.4% compared to Q3-FY25. Profit After Tax (PAT) for the quarter was INR 438 Mn, a 41.7% improvement QoQ, but a 40.4% decline Y-o-Y. Diluted EPS for the quarter was INR 4.83.
Year-to-Date Financial Snapshot (9M-FY26)
For the nine months ending December 31, 2025 (9M-FY26), Standalone Operational Revenue was INR 12,179 Mn, showing a minor Y-o-Y decline of 1.9%. The EBITDA Margin was 22.33%, down 49 Bps Y-o-Y. PAT stood at INR 1,260 Mn, a decrease of 25.2% Y-o-Y.
Consolidated Performance and Joint Venture Impact
On a consolidated basis (which now incorporates the joint venture with Ganesh Polychem Limited via the equity method effective April 1, 2025), Q3-FY26 Operational Revenue was INR 4,323 Mn (down 19.6% Y-o-Y). Consolidated EBITDA Margin improved significantly QoQ to 23.66%, up 580 Bps. PAT for the quarter was INR 480 Mn, a decline of 35.1% Y-o-Y.
The YTD Consolidated Revenue for 9M-FY26 stood at INR 12,368 Mn (down 20.3% Y-o-Y). The consolidated EBITDA margin improved to 22.02%, up 147 Bps Y-o-Y, reflecting operational efficiencies.
Key Business Segment Updates
Xanthine Derivatives & Allied Products
The company remains the Largest Indian manufacturer of Xanthine Derivatives, serving segments like Cola Drinks (66% of sales quantity in 9M-FY26) and Energy Drinks. The manufacturing capacity is currently 5,000+ MTPA across two dedicated plants, with an ongoing expansion targeting a total capacity of 9,000+ MTPA, expected to go live in the second half of FY26. The current global market share is estimated at 15-20%, with a target of 20-25% post-expansion.
API & Intermediates
This segment focuses on specialized manufacturing, including HPAPIs. Key highlights include 60 APIs Commercialized and 59 US DMF Approvals. Geographically, the Regulated market accounts for 52% of sales in 9M-FY26. Management noted that the API business continues to face margin pressure, though early signs of recovery are visible.
CDMO & CMO Business
Aarti Pharmalabs positions itself as a leading small molecule CDMO/CMO player. CDMO sales for FY25 were INR 208 Cr. The company is projecting a significant growth rate of 30-40% for FY26E. The business is currently engaged with 21 customers on 59 active projects, with 40 projects already in the commercial stage.
Capital Expenditure Outlook
Significant investments are underway to drive future growth:
- Greenfield Capex – Atali Project (Gujarat): Estimated Investment of INR 400 crores, targeting ~450 KL (Phase 1) capacity focusing on Intermediates and CDMO/CMO. Ramp-up is targeted by Q4-FY26.
- Brownfield Capex – Tarapur (Maharashtra): Estimated Investment of INR 150 crores to expand Xanthine Derivatives capacity to 9,000 MTPA. Commissioning is expected in Q4-FY26.
Future Outlook & Growth Drivers (FY26E)
The company forecasts several key improvements for FY26E:
- Number of Sites to increase from 6 (FY25) to 7.
- Reactor Capacity expected to grow from 1,100+ kL to 1,500+ kL.
- Xanthine Capacity is projected to increase from 5,000 MTPA to 9,000 MTPA.
- CDMO Revenue is projected to grow by 30 – 40%.
Growth is underpinned by a strong pipeline, the boost from the Greenfield Atali Site, expansion of global sales presence in the US and EU for CDMO, and a focus on ESG leadership through renewable power investments.
Snapshot of Pharmaceutical Excellence
The company highlights its scale, including 220+ Products, 62 Patents Filed, 500+ Global Clients, and a leading global market share of 15-20% in Xanthine. Furthermore, the company holds an AA- Credit rating and achieved the GOLD Top 5% sustainability rating from EcoVadis in April 2025.
Source: BSE
