Aarti Drugs Limited targets US and EU APIs with new capacity

Aarti Drugs Limited is building regulated-market active pharmaceutical ingredient (API) capacity at Tarapur and Sarigam, including three new multipurpose Tarapur plants that management said could generate Rs 180 to Rs 200 crore of revenue at full scale. The projects target Sarigam commissioning from early FY28 and Tarapur commercial production toward the end of FY29.

What regulated-market API capacity is Aarti Drugs adding?

Aarti Drugs is expanding its US Food and Drug Administration (USFDA)-approved Tarapur block through an adjacent facility with three new multipurpose plants, which management said will more than double the block’s capacity. The multipurpose design is intended to allow production of a wider range of regulated-market products rather than capacity for a single disclosed molecule.

At Sarigam, Aarti Drugs is increasing metformin capacity from 1,400 tonnes per month to 1,700 tonnes per month. It is also adding a dedicated 500-tonnes-per-month USFDA-compliant block and preparing USFDA drug master files (DMFs) for metformin, which management identified as part of its regulatory-market expansion.

The Sarigam metformin project raises total capacity by 300 tonnes per month, while the separate compliant block is aimed at regulated-market supply. At Tarapur, management said it plans to use the new facility for existing molecules, where Aarti Drugs already knows the chemistry, as well as newer and more niche API products.

When will Aarti Drugs bring the new facilities online?

Aarti Drugs expects to commercialise the Sarigam metformin expansion in early FY28 and complete the dedicated 500-tonnes-per-month USFDA-compliant block by the end of FY28. The two projects have different functions: the first adds metformin output, while the second is designed for compliant manufacturing for regulated customers.

Aarti Drugs expects the Tarapur project to take about 18 to 20 months, with commercial production targeted toward the end of FY29. Management did not disclose capital expenditure, individual product capacities or customer commitments for the three new Tarapur plants during the November 4, 2026 call.

Management said approval of the new regulated block is expected to open access to many United States and European Union customers. That statement remains conditional on approval, and the call did not provide inspection dates, filing schedules or product-level approval timelines for the Tarapur and Sarigam API projects.

What revenue could Aarti Drugs generate from Tarapur?

Aarti Drugs said the Tarapur USFDA-block expansion with three additional lines could have revenue potential of Rs 180 to Rs 200 crore at full scale. Management linked that estimate to business from existing molecules and to the introduction of newer niche products in the multipurpose facility.

The regulated-market projects form part of a five-to-seven-year planning exercise that includes established volume APIs, niche API molecules and potential contract development and manufacturing organisation (CDMO) capabilities. Management said it expected a clearer view of capital expenditure and capital allocation for those projects within four to five months of the November 2026 call.

Aarti Drugs is also increasing integration for metformin at its Saykha methylamines facility, where utilisation was about 72% in Q2 FY27 and captive consumption for the antidiabetic portfolio reached about 85%. The facility was commissioned in September 2025, and management said it now produces a large share of key metformin intermediates that were previously bought externally.

What financial performance supports Aarti Drugs’ expansion plan?

Aarti Drugs reported consolidated revenue of Rs 829 crore in Q2 FY27, up 27% from Rs 653 crore in Q2 FY26. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 63% to Rs 138 crore, while the EBITDA margin increased by 370 basis points to 16.6%.

The API business, Aarti Drugs’ largest segment, grew 17% to Rs 605 crore in Q2 FY27 from Rs 516 crore a year earlier. Specialty chemicals rose 92% to Rs 72 crore from Rs 37 crore, while formulations increased 58% to Rs 130 crore from Rs 82 crore, showing faster growth in the smaller specialty chemicals and formulations segments than in APIs.

Management attributed standalone API and specialty-chemicals growth to price growth of about 17% to 18% and combined volume growth of about 5% year on year. It said prices were stable at the time of the call, while describing 5% to 10% second-half volume growth as an assumption because customers had been cautious about inventory after price increases.

For H1 FY27, consolidated revenue rose 23% to Rs 1,532 crore from Rs 1,244 crore, while EBITDA increased 48% to Rs 235 crore from Rs 159 crore. The H1 EBITDA margin was 15.3%, up 250 basis points year on year, compared with the higher 16.6% achieved in Q2 FY27.

How will Aarti Drugs sequence further investment?

Aarti Drugs reported operating cash flow of roughly Rs 90 crore in H1 FY27 across its standalone and formulations businesses, with management saying the contributions were broadly similar. It identified the Tarapur USFDA-block expansion and the compliant metformin capacity addition as near-term standalone projects focused on regulatory markets.

Beyond Tarapur and Sarigam, management said it could consider a CDMO block for intermediates and specialty chemicals and invest heavily in formulations research and development. At Baddi, Aarti Drugs is using an adjacent plot for a brownfield project that management said should nearly double oral-solid-dosage manufacturing capacity by the middle of the following year.

The formulations business reported Rs 130 crore of Q2 FY27 revenue, with exports contributing 74%, compared with Rs 83 crore a year earlier. Management said a four-month export order book supported near-term visibility and that the Baddi expansion would address capacity that had been nearing full utilisation.

Conclusion

Aarti Drugs is combining a 300-tonnes-per-month Sarigam metformin increase with compliant production blocks at Sarigam and Tarapur to increase its presence in regulated markets. The Tarapur project has management’s stated full-scale revenue potential of Rs 180 to Rs 200 crore, while Q2 FY27 API revenue grew 17% to Rs 605 crore.

The next disclosed milestones are early FY28 commercialisation of the Sarigam metformin expansion, completion of the 500-tonnes-per-month Sarigam compliant block by the end of FY28 and Tarapur commercial production toward the end of FY29. Management’s planned capital-allocation update within four to five months, DMF preparation and required regulatory approvals will determine the pace at which the projects can serve US and EU customers.