Aarti Drugs Limited Reports Record ₹829 Crore Q2 Revenue

Aarti Drugs Limited reported record consolidated revenue of ₹829 crore in Q2 FY27, up 27% year-on-year, while EBITDA rose 63% to ₹138 crore and profit after tax increased 83% to ₹82.8 crore. The performance reflected stronger API pricing and improved realisations, although volume growth of 5% remained below management's earlier target of about 10%.

What did Aarti Drugs report in Q2 FY27?

Aarti Drugs reported its highest-ever quarterly consolidated revenue, EBITDA and profit in the quarter ended September 30, 2026. Consolidated revenue increased to ₹829 crore from ₹653 crore in Q2 FY26. EBITDA rose to ₹138 crore from ₹84.4 crore, lifting the EBITDA margin by 370 basis points year-on-year to 16.6%, the company’s highest margin in nearly six years.

Profit after tax rose to ₹82.8 crore, compared with the prior-year quarter, representing growth of 83%. The company said the quarter benefited from a supportive operating environment, with developments in West Asia keeping active pharmaceutical ingredient, or API, prices firm across the industry. It also said customers gave greater importance to reliable and uninterrupted API supplies.

Why did revenue and margins increase?

Aarti Drugs attributed the revenue performance to a 16% year-on-year improvement in realisations and 5% volume growth. Firm API prices were the primary factor behind better realisations, while the company’s supply position allowed it to serve demand during the quarter.

Management also highlighted internal measures aimed at protecting profitability, including backward integration, process improvements and energy optimisation. These initiatives, together with a better product and market mix, supported the sharp increase in EBITDA. However, the company indicated that the 16.6% quarterly margin was exceptional and that a consolidated EBITDA margin of around 15% is considered sustainable.

Which business segments contributed to the quarter?

Aarti Drugs’ API business remained its largest segment and generated revenue of ₹605 crore, up 17% from ₹516 crore in Q2 FY26. The segment benefited from the firm pricing environment and customer focus on assured supplies.

The specialty chemicals business grew 92% to ₹72 crore from ₹37 crore, supported by the Sayakha facility. Formulations revenue increased 58% to ₹130 crore from ₹82 crore. The company said formulations growth was led by exports, which rose 73% year-on-year. The segment figures show that growth was not limited to APIs, although APIs continued to account for most of consolidated revenue.

Why was volume growth below the company’s target?

Volume growth was 5% in Q2 FY27 and 3% in the first half of FY27, below the company’s initial target of around 10%. Management linked the slower growth to customer caution over inventory stocking when prices were elevated. Customers appeared to be buying more carefully rather than building larger inventories at higher prices.

This distinction matters because a substantial part of Q2 revenue growth came from pricing rather than physical volumes. The 16% improvement in realisations exceeded the 5% rise in volumes, supporting revenue and margins in the quarter. Management said its focus remains on growing volumes while improving the product mix, geographic market mix and cost structure.

How did Aarti Drugs perform in the first half of FY27?

Aarti Drugs reported consolidated revenue of ₹1,532 crore in H1 FY27, up 23% year-on-year. EBITDA increased 48% to ₹235 crore, and the H1 EBITDA margin expanded 250 basis points to 15.3%. Profit after tax rose 34% to ₹133 crore from ₹99 crore in H1 FY26.

The company’s investor presentation separately reported net revenue from operations of ₹1,529 crore for H1 FY27, compared with ₹1,243.3 crore a year earlier. For Q2, net revenue from operations was reported at ₹826.2 crore, while management cited total consolidated revenue of ₹829 crore. These figures are closely aligned but refer to differently presented revenue measures.

What does the result mean for investors and the pharmaceutical sector?

The Q2 result shows the effect that favourable API pricing and improved realisations can have on Aarti Drugs’ earnings. The 63% EBITDA growth outpaced the 27% revenue increase, reflecting operating leverage and margin recovery. At the same time, the lower-than-target volume growth remains a key operating point because customers’ cautious inventory decisions limited demand expansion.

For the wider pharmaceutical supply chain, the quarter illustrated how geopolitical developments and supply reliability can influence API prices and purchasing patterns. Aarti Drugs has made the audio recording of its results call available on its website. Its reported financial results and investor presentation cover the quarter and half year ended September 30, 2026.

Conclusion

Aarti Drugs delivered a record Q2 FY27, with consolidated revenue of ₹829 crore, EBITDA of ₹138 crore and a 16.6% EBITDA margin. Stronger realisations and broad-based segment growth supported the result, but volume growth of 5% showed that customers remained cautious about stocking at elevated prices.

Investors will watch whether volumes move closer to the company’s earlier target of about 10%, whether API pricing remains firm, and whether EBITDA margins hold near management’s stated sustainable level of around 15%. Progress at the Sayakha facility and continued export growth in formulations will also remain relevant to the company’s revenue mix.