IOL Chemicals and Pharmaceuticals Ltd. commits Rs 495 crore

IOL Chemicals and Pharmaceuticals Ltd. plans Rs 495 crore of investment across three projects, funded through internal accruals: a Rs 350 crore, 6,000 metric tonnes per annum (MTPA) ibuprofen expansion; a Rs 110 crore formulations contract development and manufacturing organisation (CDMO) facility; and a Rs 35 crore specialty-chemical tolling plant. Two projects are scheduled for FY27 commercialisation and ibuprofen for FY28.

What is IOL investing Rs 495 crore in?

IOL is allocating Rs 495 crore among ibuprofen expansion, pharmaceutical formulations CDMO and specialty-chemical tolling, with the Rs 350 crore ibuprofen project representing about 71% of the announced programme. The Rs 110 crore formulations project and the Rs 35 crore tolling facility are targeted for FY27 commercialisation, while the ibuprofen project is expected to be commercialised in FY28.

The programme covers IOL's pharmaceutical and specialty-chemical operations. Its existing manufacturing footprint comprises 18 plants with total installed capacity of 2,13,126 MTPA, including 30,726 MTPA for active pharmaceutical ingredients (APIs) and 1,82,400 MTPA for specialty chemicals.

IOL says the projects will be funded through internal accruals. At September 2026, capital work in progress stood at Rs 189.4 crore, compared with Rs 93.6 crore at March 2026, while cash and cash equivalents were Rs 9.2 crore, down from Rs 65.3 crore over the same period.

How will IOL expand its ibuprofen business?

IOL will invest Rs 350 crore in a fully backward-integrated ibuprofen manufacturing unit at its existing Barnala, Punjab site, adding 6,000 MTPA and taking total ibuprofen capacity to 18,000 MTPA. The company expects commercialisation in FY28 and says the project is intended to strengthen its global ibuprofen position.

The expansion uses IOL's integrated chemicals platform, which includes 12,000 MTPA of iso butyl benzene, 7,200 MTPA of mono chloro acetic acid and 5,200 MTPA of acetyl chloride. IOL identifies iso butyl benzene as a key starting material for ibuprofen, while mono chloro acetic acid and acetyl chloride are inputs used in ibuprofen production.

The capacity addition comes alongside a changing pharmaceutical product mix. Ibuprofen represented 82% of IOL's pharmaceutical mix in FY21 but 56% in H1 FY27, while other APIs increased from 18% to 44% over the same periods. IOL's stated plan combines greater ibuprofen scale with further growth in non-ibuprofen APIs.

What does IOL's formulations CDMO project add?

IOL's Rs 110 crore formulations CDMO project provides annual capacity of 1,500 million tablets or equivalent direct-compressible grade volume, extending the company from APIs into formulations. The presentation gives FY27 as the expected commercialisation period and says the facility received a Certificate of Good Manufacturing Practice Compliance of a Manufacturer from Hungary's National Centre for Public Health and Pharmacy.

IOL's company timeline records the installation of a 1,500 million-tablet-per-year pharmaceutical formulations CDMO facility in 2026. In its stated forward plan, IOL says it intends to serve existing European customers, broaden its offering beyond APIs and deepen long-term customer relationships through FY27 commissioning.

Pharmaceuticals accounted for 61% of IOL's segment revenue in H1 FY27, compared with 59% in FY24, while chemicals, net of intersegment revenue, represented 39%, down from 41%. Within pharmaceuticals, IOL says non-ibuprofen APIs contributed 45% of pharmaceutical revenue in Q2 FY27, linking the formulations facility to its portfolio-diversification plan.

What is IOL's specialty-chemical tolling project?

IOL plans a Rs 35 crore dedicated facility to manufacture a specialty chemical for a leading global chemical company under a long-term tolling arrangement, with commercialisation expected in FY27. The presentation does not name the customer or product, state the plant location, or disclose the contract duration.

The tolling project differs from the capacity-led ibuprofen project because it is structured as a dedicated plant for one customer under a long-term arrangement. IOL also says it will use in-house chemical capabilities to support pharmaceutical requirements and expand its specialty-chemicals range, where existing installed capacity totals 1,82,400 MTPA.

The facility is being added to a specialty-chemical portfolio that includes 1,20,000 MTPA of ethyl acetate, 32,000 MTPA of acetic anhydride and 6,000 MTPA of triacetin. Chemicals represented 39% of segment revenue in H1 FY27, compared with 40% in FY26, while pharmaceuticals increased from 60% to 61%.

How does the expansion programme fit IOL's financial plan?

IOL's Rs 495 crore strategic programme exceeds the Rs 164 crore of capital expenditure spent in FY26 and the Rs 200 crore to Rs 250 crore capital-expenditure guidance presented for FY26-27. The presentation does not disclose the annual allocation of the Rs 495 crore programme, so its timing relative to the annual guidance is not specified.

Operating performance increased in H1 FY27, when revenue from operations rose 38.6% year on year to Rs 1,551.3 crore and earnings before interest, tax, depreciation and amortisation (EBITDA) rose 69.7% to Rs 226.6 crore. EBITDA margin reached 14.5%, compared with 11.8% in H1 FY26, while management's FY26-27 guidance calls for revenue growth above 25% and EBITDA margin of 14% to 15%.

Cash generation and investment outflows moved in opposite directions in the first half. Net cash from operating activities was Rs 8.3 crore at September 2026, compared with Rs 11.1 crore at September 2025, while investing cash outflow was Rs 116.8 crore, compared with Rs 96.2 crore. Current borrowings stood at Rs 194.2 crore at September 2026, up from Rs 132 crore at March 2026.

Conclusion

IOL's Rs 495 crore programme combines a 6,000 MTPA ibuprofen addition, a 1,500 million-tablet formulations platform and a customer-linked specialty-chemical facility. The Rs 350 crore ibuprofen project is the largest allocation, while the two FY27 projects direct capital towards formulations and specialty chemicals as pharmaceuticals accounted for 61% of segment revenue in H1 FY27.

The next disclosed milestones are FY27 commercialisation of the Rs 110 crore CDMO facility and Rs 35 crore tolling plant, followed by FY28 commercialisation of the Rs 350 crore ibuprofen unit. Management's disclosed FY26-27 targets also include revenue growth above 25%, EBITDA margin of 14% to 15%, export contribution of 25% to 30%, and capital expenditure of Rs 200 crore to Rs 250 crore.