Neuland Laboratories reported its financial results for the quarter and nine months ended December 31, 2025 (Q3FY26 & 9MFY26). Total Income for Q3FY26 grew 11.4% YoY to Rs. 447.8 crore. However, EBITDA margins faced pressure, closing Q3FY26 at 19.0%, down from 22.5% YoY. Management commented that increased operating expenses impacted margins despite good long-term momentum. The company continues to focus on high-margin Specialty and CMS segments.
Management Commentary on Q3 Performance
Management noted that quarterly revenues aligned with the annual outlook. However, a shift in product mix coupled with increased operating expenses led to subdued EBITDA margins. Both Sucheth Davuluri and Saharsh Davuluri highlighted strong momentum in customer engagement, particularly in the NCE drug substance manufacturing space, suggesting future growth from investments made.
Q3FY26 Standalone Financial Snapshot
The following key metrics summarize the Q3FY26 performance:
- Total Income: Rs. 447.8 crore (up 11.4% YoY).
- EBITDA: Rs. 85.0 crore (down 5.9% YoY).
- EBITDA Margin: 19.0% (decreased by 350 bps YoY).
- Profit After Tax (PAT): Rs. 40.4 crore (down 60% YoY).
- EPS: Rs. 31.5 (down 60.1% YoY).
The QoQ comparison showed significant dips across the board due to seasonality or product cycle effects, with Total Income decreasing by 13.2% QoQ.
9MFY26 Financial Highlights
For the nine months ended December 31, 2025:
- Total Income reached Rs. 1,264.4 crore (up 8.9% YoY).
- EBITDA stood at Rs. 284.0 crore (down 0.2% YoY).
- EBITDA Margin was 22.5% (decreased by 200 bps YoY).
- PAT for the period was Rs. 150.6 crore (down 35% YoY).
Business Overview: Segmental Trends
Segment Revenue Shift (Q3FY26 vs Q3FY25)
There is a clear strategic shift from lower-margin to higher-margin businesses:
- Prime Segment revenue contribution fell from 33% (Q3FY25) to 22% (Q3FY26).
- Specialty Segment revenue contribution rose from 23% (Q3FY25) to 39% (Q3FY26).
- CMS Segment revenue contribution increased from 33% (Q3FY25) to 33% (Q3FY26) (Note: 33% in Q3FY25 was split as 33% Prime + 34% Specialty + 7% CMS + 5% Others, data mapping confirms the CMS focus is driving the Specialty growth). (Corrected based on visual: Prime 33% -> 22%; Specialty 23% -> 39%; CMS 34% -> 34%; Others 5% -> 4%.) Revisiting Q3FY25: Prime 33%, Specialty 23%, CMS 34%, Others 5%. Q3FY26: Prime 22%, Specialty 39%, CMS 33%, Others 4%.
CMS Project Pipeline
The CMS segment shows steady progression:
- The total number of active CMS projects increased QoQ to 98 projects in Q3FY26 (up from 97 in Q3FY25).
- Revenue from Commercial products in CMS was Rs. 57 crore in H1FY26, compared to Rs. 116 crore in H1FY25.
Financial Health and Capex
Balance Sheet Metrics (Rs Cr)
Key balance sheet indicators as of December 2025:
- Shareholder’s Funds: Rs. 1,652.5 Cr.
- Net Debt: (Rs. 202.6 Cr) (indicating a net cash position).
- Working Capital improved to Rs. 667.4 Cr.
Key Financial Highlights:
- Working capital days decreased to 145 days in Q3FY26 from 155 days in Q2FY26, mainly due to a decrease in receivables.
- The Board approved moving the R&D facility to a 140k Sq feet leased facility at Genome Valley.
- Capex outflow for 9MFY26 was substantial at Rs. 254 Cr.
Company Foundation and Capabilities
Core Business Verticals
Neuland operates across two main verticals:
- Generic APIs (GDS): Manufacturing of generic non-exclusive APIs, leveraging over 40 years of heritage and a reactor volume capacity of 12,18,000 Liters across three cGMP facilities.
- CDMO Services (CMS): Contract development and manufacturing of NCE API, including process optimization and specialized chemistry capabilities like deuterated molecules and peptides.
Global Footprint
Revenue generation is globally diversified, with Europe accounting for 53% and North America for 41% of end-market revenues (based on 9M FY26 data).
ESG Commitments
Neuland has set ambitious long-term ESG goals, including achieving Net Zero emissions by FY 2049-50 and aiming for 100% water neutrality by FY 2049-50. The company also focuses on diversity, aiming for 10% women in management by FY 2029-30.
Source: BSE
