Cohance H1 revenue falls 18.6%, adjusted EBITDA margin 6.1%

Cohance reported H1FY27 revenue of Rs 898.9 crore, down 18.6% year on year, while adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) declined 79.0% to Rs 55.1 crore and its adjusted EBITDA margin fell to 6.1% from 23.8% in H1FY26. The company expects a stronger H2FY27.

How did Cohance perform in H1FY27?

Cohance’s H1FY27 revenue declined by Rs 206 crore from Rs 1,104.9 crore in H1FY26 to Rs 898.9 crore. Material margin declined 21.6% to Rs 639.5 crore, a steeper fall than revenue, and the material margin percentage narrowed to 71.1% from 73.8%.

Profitability fell more sharply than sales. Reported EBITDA decreased 84.4% to Rs 36.7 crore from Rs 234.8 crore, reducing the reported EBITDA margin to 4.1% from 21.3%. Adjusted EBITDA, after adjustments for employee stock option plan, merger and acquisition costs, was Rs 55.1 crore, compared with Rs 262.9 crore a year earlier.

Cohance recorded an adjusted loss after tax of Rs 35.5 crore in H1FY27, versus adjusted profit after tax of Rs 130.1 crore in H1FY26. The adjusted profit after tax margin moved to negative 3.9% from positive 11.8%, while the reported result was a Rs 8.8 crore loss against a Rs 122.8 crore profit a year earlier.

What caused Cohance’s revenue and margin decline?

Cohance attributed the H1FY27 decline to lower Pharma contract development and manufacturing organisation (CDMO) revenue, lower agricultural-chemicals volumes in Specialty Chemicals, pricing pressure, programme phasing and unfavourable product mix. Pharma CDMO revenue fell 32.7% year on year in H1FY27, while the combined Pharma CDMO and Specialty Chemicals businesses represented 41% of revenue.

The company said all business segments witnessed a revenue decline in H1FY27, although its nucleic-acid business, Sapala, grew about 83% year on year. Niche technology contributed 14.4% of H1 revenue. Sapala’s growth therefore did not offset declines elsewhere in the six-month revenue base.

Cost and mix movements added to the pressure. Total expenses rose to Rs 602.8 crore from Rs 580.8 crore despite the revenue reduction, with employee cost increasing to Rs 286.4 crore from Rs 260 crore and manufacturing expenses rising to Rs 199.3 crore from Rs 197.5 crore.

Cohance identified weaker Small Molecule revenue conversion, lower AgChem contribution and raw-material inflation in active pharmaceutical ingredients, known as API+, as margin pressures. Sapala and Formulations partly offset those effects, but adjusted EBITDA margin still declined by 17.7 percentage points from H1FY26.

Did Cohance recover in Q2FY27?

Cohance showed sequential recovery in Q2FY27, as revenue increased 12.9% quarter on quarter to Rs 476.6 crore from Rs 422.3 crore in Q1FY27. Q2 revenue remained 14.2% below Rs 555.6 crore in Q2FY26, meaning the quarter did not return to the previous year’s revenue level.

Adjusted EBITDA rose to Rs 45.9 crore in Q2FY27 from Rs 9.2 crore in Q1FY27, and adjusted EBITDA margin improved to 9.6% from 2.2%. Cohance described the Q2 margin as 10% on a rounded basis, while reported EBITDA was Rs 35.5 crore, compared with Rs 1.2 crore in Q1FY27 and Rs 122.6 crore in Q2FY26.

Q2 business trends remained uneven. API+ revenue grew 6.2% year on year, supported by selective pricing actions, and Sapala revenue grew 33.6% on demand for specialised nucleic-acid building blocks. Pharma CDMO revenue declined 27.4%, while Specialty Chemicals fell 40.6% amid lower AgChem volumes, pricing pressure and programme phasing.

Q2 gross margin was 70.8%, down 377 basis points year on year. Cohance cited unfavourable product mix, lower AgChem contribution, weaker Small Molecule conversion and API+ raw-material inflation, while cautioning that quarterly comparisons may not indicate consistent performance because CDMO activity is lumpy.

What does Cohance expect in H2FY27?

Cohance expects H2FY27 revenue and EBITDA to grow year on year, with the second half stronger than H1FY27. Management linked that expectation to Small Molecule deliveries, API+ resilience, Sapala growth, improved revenue mix and higher utilisation supporting a progressive EBITDA recovery.

The Small Molecules order and reload position for Q3 and Q4 improved materially, according to Cohance. The company also secured two new commercial programmes and one late-stage programme with large global pharmaceutical customers, which it described as strengthening relationships and medium-term growth opportunities rather than disclosed FY27 revenue commitments.

Cohance plans to announce capital expenditure for adjacent capabilities and research and development supporting the One Cohance platform. It said investments would be phased according to customer visibility, project readiness and expected returns, after deploying Rs 107.7 crore of capital expenditure during H1FY27.

What was Cohance’s cash and balance-sheet position?

Cohance generated free cash flow of Rs 133.8 crore in Q2FY27 and held Rs 294.3 crore of cash and cash equivalents, including liquid investments, on September 30, 2026. Gross borrowings were Rs 227.7 crore, resulting in net cash of Rs 66.6 crore at the period end.

Shareholders’ funds were Rs 3,912.2 crore at September 30, 2026, while net assets, including Rs 74.7 crore of non-controlling interests, were Rs 3,986.9 crore. Fixed assets were Rs 3,639.4 crore, including property, plant and equipment of Rs 1,751.1 crore and intangible assets of Rs 1,456.3 crore.

Core net working capital declined to Rs 839 crore at H1FY27 from Rs 958.7 crore at FY26. Inventories increased to Rs 734.3 crore from Rs 562.2 crore, but trade receivables decreased to Rs 469 crore from Rs 681 crore and trade payables increased to Rs 364.3 crore from Rs 284.5 crore.

Conclusion

Cohance’s H1FY27 result combined an 18.6% revenue decline with a larger 79.0% fall in adjusted EBITDA, reducing adjusted EBITDA margin to 6.1%. Lower Pharma CDMO and AgChem activity, adverse revenue mix and API+ input costs outweighed growth in Sapala, although Q2 brought sequential improvement in revenue and margin.

The next disclosed measure is whether H2FY27 improves through Small Molecule deliveries, API+ performance, Sapala growth and higher utilisation, as management expects. Cohance also plans to announce capital expenditure for adjacent capabilities and research and development after spending Rs 107.7 crore on capital expenditure in H1FY27.