Granules India Navigates Q2 FY26 with Strategic Growth and Regulatory Wins

Granules India Limited, a prominent player in the Indian pharmaceutical sector, has reported a robust performance for the second quarter of fiscal year 2026 (Q2 FY26), signaling a period of strategic revival and operational resilience. The company's financial results underscore its commitment to growth, even as it addresses past regulatory challenges and integrates new ventures. For Q2 FY26, Granules India recorded a significant 34% year-on-year increase in revenue, reaching ₹1,297 Crore. This growth was complemented by a 37% rise in EBITDA, which stood at ₹278.2 Crore, and a 34% jump in Profit After Tax (PAT) to ₹130.6 Crore. These figures reflect a positive trajectory, driven largely by strong performance in its formulations business across North America and Europe.

The company's segment-wise performance highlights the continued dominance of Finished Dosages (FD), which contributed ₹965.7 Crore, accounting for 74.46% of the total revenue. Active Pharmaceutical Ingredients (API) brought in ₹170.5 Crore (13.15%), while Pharmaceutical Formulation Intermediates (PFI) added ₹133.1 Crore (10.26%). A newer segment, Peptides/CDMO, contributed ₹27.6 Crore (2.13%). This diversified revenue stream, coupled with an improved product mix, played a crucial role in the company's financial health. The gross margin expanded impressively by 368 basis points year-on-year and 82 basis points sequentially, reaching 65.7%, primarily due to enhanced operational efficiency.

Navigating Regulatory Landscapes and Capacity Expansion

Granules India has been proactive in addressing regulatory matters, particularly concerning its Gagillapur facility. Following a US FDA inspection and a subsequent warning letter, the company is in the final stages of remediation. Management has secured a meeting with the FDA in January 2026 (Q4 FY26) for a re-inspection, a slight adjustment from earlier expectations. Despite this, the Gagillapur site has already achieved a GMP certificate from German authorities and successfully cleared eight customer audits, demonstrating its commitment to quality standards. Furthermore, the API Unit 1 facility at Bonthapally received an Establishment Inspection Report (EIR) with a 'Voluntary Action Indicated' (VAI) classification from the US FDA, indicating a satisfactory outcome.

A significant milestone for the company was the first US FDA approval for its Greenfield Granules Life Sciences (GLS) facility at Genome Valley, Hyderabad. This approval, following a Pre-Approval Inspection (PAI) in July-August 2025, is set to unlock an additional 10 billion doses of formulation capacity, representing a 40% increase over the existing 26 billion doses at Gagillapur. This expansion is crucial for strengthening finished dosage capabilities and enabling multi-site manufacturing, with supplies of monograph products to the US already commenced.

Strategic Ventures and Future Outlook

The company's strategic vision extends to high-value segments, notably through its peptide CDMO platform, Ascelis Peptides. While this new venture, built on Senn Chemical's Swiss legacy, incurred an EBITDA loss of ₹20 Crore in Q2 FY26, management remains confident in its long-term potential. Ascelis Peptides is expected to achieve PAT profitability by Q4 FY26 and become fully synergized and profitable in FY27. The establishment of a Peptide R&D Centre of Excellence at IIT Hyderabad further underscores the company's commitment to innovation in this segment.

Granules India's R&D expenditure stood at ₹70.5 Crore (5.4% of sales) in Q2 FY26, aligning with its long-term strategic growth objectives. The company boasts 91 US FDA approvals to date and filed three new ANDAs in Q2 FY26, indicating a robust pipeline focused on areas like CNS-ADHD, oncology, and new dosage forms. This sustained investment in R&D is expected to drive future product launches and strengthen its competitive position.

Granules India's Q2 FY26 performance reflects a company in transition, strategically expanding its capabilities and product portfolio while diligently managing regulatory compliance. The management's guidance points towards a sustained growth trajectory, driven by new facility approvals, operational efficiencies, and the promising outlook for its high-value segments. The focus on green chemistry and a vertically integrated model positions Granules India for continued success, reinforcing investor confidence in its long-term vision and disciplined execution.