Aarti Drugs Q2 EBITDA rises 63% as margin reaches 16.6%

Aarti Drugs Limited reported consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) of Rs 137.9 crore in second quarter of fiscal year 2027 (Q2 FY27), up 63% year on year, with an EBITDA margin of 16.6%, 370 basis points higher and, according to management, its highest in nearly six years; profit after tax rose 83% to Rs 82.8 crore.

How did Aarti Drugs perform in Q2 FY27?

Aarti Drugs increased consolidated revenue to Rs 828.8 crore in Q2 FY27 from Rs 652.9 crore in Q2 FY26, a 27% year-on-year increase, while EBITDA rose faster than sales to Rs 137.9 crore from Rs 84.4 crore. The company’s consolidated financial figures include other income, as stated in the release, and the quarter ended on September 30, 2026.

The higher EBITDA produced a margin of 16.6%, compared with 12.9% in Q2 FY26 and 13.8% in Q1 FY27. That represents expansion of 370 basis points year on year and 280 basis points quarter on quarter, where one basis point equals one-hundredth of a percentage point. Management described the 16.6% result as the highest margin level in nearly six years.

Aarti Drugs’ profit after tax, or PAT, reached Rs 82.8 crore from Rs 45.2 crore a year earlier, an 83% increase that exceeded both revenue and EBITDA growth rates. PAT margin increased by 310 basis points to 10.0% from 6.9%, while earnings per share, or EPS, rose to Rs 9.07 from Rs 4.95.

What drove Aarti Drugs’ margin expansion in Q2 FY27?

Aarti Drugs attributed the Q2 FY27 improvement to volume growth, stronger realisations across active pharmaceutical ingredients (APIs), formulations and specialty chemicals, and progress in building an integrated manufacturing platform. Managing Director Adhish Patil said the company achieved its highest-ever revenue from operations of Rs 826 crore and its highest-ever quarterly EBITDA of Rs 138 crore.

Management said all facilities operated without disruption during a period of global volatility, which supported customer service. The release does not quantify the separate contribution of volume, pricing or manufacturing integration to the 370-basis-point margin increase, so the relative weight of each driver cannot be determined from the disclosed data.

Formulations were a major source of reported growth: Q2 FY27 formulation revenue was Rs 130.0 crore, up 58% from Rs 82.5 crore in Q2 FY26. Exports accounted for 74% of quarterly formulation revenue, while management said export-market demand led the increase in that business.

Specialty chemicals revenue was Rs 71.8 crore in Q2 FY27, with the release reporting 92% year-on-year growth and a 13% sequential decline from Rs 82.6 crore in Q1 FY27. Management said the Sayakha facility scaled up during the quarter and connected the business’s near-doubling to that expansion.

How did Aarti Drugs’ first-half results compare with last year?

Aarti Drugs reported H1 FY27 consolidated revenue of Rs 1,532.4 crore, up 23% from Rs 1,243.7 crore in H1 FY26, while EBITDA increased 48% to Rs 234.8 crore. The first-half EBITDA margin was 15.3%, compared with 12.8% a year earlier, an expansion of 250 basis points.

First-half PAT increased 34% to Rs 132.9 crore from Rs 99.1 crore, and PAT margin reached 8.7% compared with 8.0%. The half-year margin was below Q2 FY27’s 16.6%, because Q1 FY27 EBITDA margin was 13.8%, showing that the second quarter generated the higher profitability rate within the six-month period.

Aarti Drugs’ standalone revenue was Rs 708.9 crore in Q2 FY27, up 22% from Rs 579.0 crore in Q2 FY26, and represented 86% of consolidated revenue. Domestic sales made up 68% of standalone revenue and grew 43% year on year, whereas exports represented 32% and declined 5%.

Within standalone API sales, anti-biotic products accounted for 34.1%, anti-diabetic products 18.2%, anti-protozoal products 18.1% and anti-inflammatory products 14.8% in Q2 FY27. Antifungal products contributed 9.3%, while the remaining categories accounted for 5.6%, giving anti-biotic and anti-diabetic categories a combined 52.3% share.

What capacity and integration plans has Aarti Drugs disclosed?

Aarti Drugs said that, within a year of commissioning, the Sayakha facility was meeting a significant share of its metformin intermediate requirements in-house. Management said this integration enhanced cost competitiveness and supply-chain security for the anti-diabetic segment, although the release does not disclose the share produced internally or the resulting cost savings.

The company also said capacity expansions at Tarapur, Sarigam and Baddi were progressing, including new US Food and Drug Administration, or USFDA, compliant capacity. Management said these projects are intended to deepen Aarti Drugs’ presence in regulated markets, but the release provides no commissioning dates, capital expenditure amount or expected incremental capacity.

The formulation segment generated Rs 211.7 crore in H1 FY27, up 30% from Rs 162.8 crore in H1 FY26, with exports contributing 63% of sales. The lower export mix for the half year than the 74% reported in Q2 indicates that the second-quarter formulation mix was more export-oriented than the first-half average.

Aarti Drugs disclosed a leadership change effective October 1, 2026: Prakash M. Patil retired as Chairman, Managing Director and chief executive officer, Rajesh Gauri became Chairman, and Adhish Patil assumed the Managing Director role. Management said its ongoing priorities are capacity utilisation, regulatory footprint expansion and sustainable growth.

Conclusion

Aarti Drugs’ Q2 FY27 result showed profit growth outpacing revenue growth: EBITDA increased 63% against a 27% rise in consolidated revenue, and PAT increased 83%. The 16.6% EBITDA margin was 370 basis points above Q2 FY26 and 280 basis points above Q1 FY27, while growth in formulations and the Sayakha-led specialty chemicals scale-up were identified by management as operational contributors.

Next, investors can watch utilisation at Sayakha and the stated expansions at Tarapur, Sarigam and Baddi, including USFDA-compliant capacity. Management has set out an aim to improve utilisation and expand its regulatory footprint, but the release leaves unresolved the timelines, investment amounts, capacity additions and financial contribution from these projects.