Aarti Drugs FY26: PAT up 16%, revenue tops ₹2,568 cr

Aarti Drugs Ltd, a Mumbai-based diversified pharmaceutical company, reported its audited results for the quarter and year ended 31 March 2026, showing a split trend between growth in sales and pressure on quarterly profitability. For FY26, the company reported a 7% rise in revenue to ₹2,567.7 crore and a 16% year-on-year increase in profit after tax (PAT) to ₹194.9 crore.

In Q4 FY26, revenue increased 6% year-on-year to ₹721.1 crore, but PAT fell 12% to ₹55.3 crore. Management commentary pointed to start-up losses and weaker domestic demand as near-term drags, even as a sharp sequential improvement in EBITDA reflected better operating leverage and internal cost actions.

What changed in Q4 FY26

The company described FY26 as an execution year as it moved from an investment phase toward operational scaling. By Q4 FY26, it reported a strong sequential recovery, helped by process optimisation, alternate sourcing strategies, energy efficiency measures, and tighter planning to manage cost volatility and support continuity of operations.

Pricing trends in parts of the API (active pharmaceutical ingredient) market, which had seen sharp industry-wide corrections, were cited as stabilising from September 2025, with the recovery strengthening further in Q4 FY26. Management attributed some improvement in realisations in the near term to increasing crude prices.

Aarti Drugs also highlighted the ramp-up of its new manufacturing facility, including a backward integration plant for methylamines at Sayakha, as an operational lever supporting scale-up.

Consolidated financial performance: Q4 recovery, FY26 improvement

On a consolidated basis, Q4 FY26 revenue came in at ₹721.1 crore versus ₹678.6 crore in Q4 FY25 and ₹602.9 crore in Q3 FY26. EBITDA for the quarter was ₹96.6 crore, broadly flat compared with ₹95.2 crore a year ago, but up sharply from ₹56.3 crore in Q3 FY26. EBITDA margin for Q4 FY26 stood at 13.4%.

PAT for Q4 FY26 declined to ₹55.3 crore from ₹62.8 crore in Q4 FY25, while rising from ₹40.5 crore in Q3 FY26. PAT margin for the quarter was 7.7%.

For FY26, revenue rose to ₹2,567.7 crore from ₹2,403.4 crore in FY25. Full-year EBITDA increased to ₹311.6 crore (up 3% year-on-year), with EBITDA margin at 12.1%. Full-year PAT improved to ₹194.9 crore from ₹168.2 crore in FY25, with PAT margin expanding to 7.6%.

Segment-wise performance: formulations and specialty chemicals lead growth

The API segment remained the largest contributor. In Q4 FY26, API revenue was ₹551.0 crore, flat year-on-year. For FY26, API revenue was ₹1,979.4 crore, up 2%.

Formulations posted the strongest momentum. In Q4 FY26, formulations revenue rose to ₹92.0 crore, up 42% year-on-year (management commentary also described formulations at about ₹91.3 crore for the quarter). Exports contributed 69% to Q4 FY26 formulations revenue. For FY26, formulations revenue was ₹331.2 crore (management commentary also indicated about ₹330.5 crore), up 33% year-on-year, with exports contributing 65%.

Specialty Chemicals also expanded. Q4 FY26 revenue was ₹56.8 crore, up 46% year-on-year, while FY26 revenue was ₹178.3 crore, up 37%.

Standalone snapshot: domestic vs exports in Q4

On a standalone basis, Q4 FY26 revenue was ₹631.7 crore compared with ₹623.0 crore in Q4 FY25. The standalone business accounted for about 88% of consolidated revenue.

Within standalone revenue, the domestic market contributed 63% and exports 37%. Domestic revenue grew 7% year-on-year, while export revenue declined 7% year-on-year.

Within the API business, Aarti Drugs disclosed the therapeutic mix: antibiotics contributed 37.8%, anti-diabetic 15.0%, anti-protozoal 19.6%, anti-inflammatory 11.9%, antifungal 10.0%, and the rest 5.7% of total API sales.

Exports and regulated markets: mix shift continues

The company reported a steady shift in export and regulated-market contribution over the year. Exports contribution increased from 35% in FY25 to 38% in FY26. Within exports, the regulated market contribution rose to 73% in FY26 from 66% in FY25.

Aarti Drugs linked this mix shift to higher-value opportunities and its ability to meet stringent regulatory norms and international quality requirements.

Key numbers table

What management said on operating conditions

Management pointed to macro headwinds, pricing pressure in select API segments, and raw material volatility during the year. It also said operational measures helped mitigate part of the pressure in Q4 FY26.

The company also reiterated that it has delivered positive volume growth over the last five years despite pricing corrections, and that stabilising prices from September 2025 improved conditions into Q4 FY26.

Market impact: what investors will track

For investors, the FY26 result highlights two parallel trends. First, full-year earnings improved faster than revenue, with PAT up 16% on a 7% revenue increase, indicating better overall cost discipline and mix. Second, Q4 profitability remained under pressure year-on-year despite sales growth, showing that start-up losses and domestic softness can still affect near-term outcomes.

The ongoing increase in regulated-market contribution and export share is a key watchpoint because the company explicitly linked it to higher-value products and compliance capability. Separately, the sequential jump in Q4 EBITDA from ₹56.3 crore to ₹96.6 crore is a concrete indicator of operating leverage as the company scales.

Analysis: why FY26 mattered for the operating cycle

FY26 was framed as a transition from capex to operational scale. The quarter-by-quarter improvement in Q4, together with comments on process optimisation and energy measures, suggests management focus has shifted from commissioning to stabilisation.

The other structural theme is mix. Formulations and Specialty Chemicals delivered much faster growth than APIs in FY26, and the company highlighted exports and regulated markets as key growth drivers. For a business navigating API price cycles, that diversification can matter, but the reported Q4 PAT decline also shows that execution costs and domestic conditions can still offset gains in a given quarter.

Conclusion

Aarti Drugs ended FY26 with higher full-year revenue and a sharper rise in PAT, while Q4 FY26 showed a clear sequential improvement in EBITDA alongside a year-on-year dip in PAT. Management commentary emphasised stabilising pricing trends since September 2025, stronger export traction, and the ramp-up of new facilities such as the Sayakha backward integration project as key operational drivers to track in the coming quarters.