Advanced Enzyme Technologies: Navigating Growth Amidst Global Shifts in Q2 FY26

Advanced Enzyme Technologies Limited, a prominent specialty biotech firm globally recognized for its enzyme and probiotic manufacturing, has announced its unaudited financial results for the second quarter and half year ended September 30, 2025. The company reported a robust performance, showcasing significant growth across key financial metrics despite a dynamic global economic landscape. For Q2 FY26, the consolidated revenue stood at INR 184.5 crore, marking a substantial 26% year-on-year (YoY) increase. This growth trajectory extended to profitability, with EBITDA soaring by 42% YoY to INR 60.1 crore and Profit After Tax (PAT) climbing 34% YoY to INR 44.7 crore. The company maintained healthy margins, with EBITDA at 33% and PAT at 24% for the quarter, reflecting strong operational efficiency.

The segment-wise performance further illustrates the company's diversified growth drivers. The Human Nutrition segment, which is the largest contributor, delivered a 22% YoY growth, reaching INR 121.2 crore and accounting for 66% of the total revenue. This growth was fueled by increased sales in both Pharma/API and Nutrition businesses across domestic and international markets. The Animal Nutrition segment also demonstrated positive momentum with a 6% growth, contributing INR 19.3 crore. The Bio-Processing segment recorded an impressive 52% YoY growth, reaching INR 25.5 crore, primarily propelled by a 77% YoY surge in its food business. The Specialized Manufacturing segment also outperformed, growing by 54% YoY to INR 18.5 crore. This broad-based growth across all segments underscores the company's strong market position and product demand.

Strategic Initiatives and Future Outlook

Advanced Enzyme Technologies is actively pursuing several strategic initiatives to sustain its growth momentum. A key focus is on continued investment in Research and Development (R&D). The company is making substantial investments in state-of-the-art R&D infrastructure, with plans for a new R&D center to become partially active by the end of the current fiscal year. This initiative aims to identify product gaps, develop new enzymes and probiotics, and expand competencies in discovery and genetic engineering. Management anticipates an increase in R&D spend by INR 10-12 crore next year, reflecting its commitment to innovation.

Geographical expansion is another cornerstone of their strategy. The company aims to broaden and deepen its presence in high-return applications and build strategic partnerships in key markets. Efforts are underway to expand sales and marketing teams across the USA, MENA, and Asian regions, with some pharma approvals in Asian markets expected within six to eight months. Furthermore, the company is exploring inorganic growth opportunities through strategic acquisitions to enhance front-end marketing capabilities, expand its geographical footprint, and strengthen its product portfolio. The company maintains a zero-debt status, financing its acquisitions through internal accruals, which highlights its disciplined capital allocation.

Navigating Challenges and Sustaining Margins

Despite the strong performance, management acknowledged certain headwinds, particularly the impact of US tariffs. A 50% tariff could lead to a 2% impact on EBITDA if fully absorbed, affecting US sales and indirect US business. The company has also observed a significant slowdown in the US market, evidenced by a sharp decline in new inquiries. Management is actively strategizing to mitigate these impacts and is closely monitoring market developments. Competition in specific product areas, such as serratiopeptidase in India, remains a constant challenge.

However, the company's operational efficiency and favorable product mix are driving gross margin expansion. Management expects EBITDA margins to stabilize between 30-32% and PAT margins between 21-22%. The food business, despite potential quarter-on-quarter volatility, is considered a sustainable growth area. The company's B2C business in India, under the Wellfa brand, is showing promising initial traction, aiming for INR 1-1.5 crore this year. This proactive approach to both growth and risk management positions Advanced Enzyme Technologies to navigate the evolving market dynamics effectively.

Conclusion

Advanced Enzyme Technologies Limited's Q2 FY26 results demonstrate a period of sustained growth, driven by diversified segments and strategic initiatives. The company's commitment to R&D, geographical expansion, and disciplined capital allocation provides a strong foundation for future performance. While global uncertainties and tariffs present challenges, management's transparent communication and proactive strategies indicate a focused approach to achieving its mid-double digit growth guidance. The company remains a key player in the biotech industry, poised for continued expansion and value creation.