Sudeep Pharma reports record quarterly EBITDA despite freight

Sudeep Pharma Limited reported record Q2 FY27 earnings before interest, tax, depreciation and amortisation (EBITDA) of Rs 73.2 crore, up 32% year-on-year, while its EBITDA margin rose to 37.2% despite about Rs 8 crore of above-normal freight-related selling and distribution costs. Revenue from operations increased 21% to Rs 196.7 crore.

How did Sudeep Pharma deliver record quarterly EBITDA?

Sudeep Pharma delivered record quarterly EBITDA through revenue growth, a higher-value product mix, improved gross margin and manufacturing efficiencies that outweighed elevated logistics costs. Q2 FY27 revenue from operations reached Rs 196.7 crore, compared with Rs 162.7 crore in Q2 FY26 and Rs 158.3 crore in Q1 FY27, representing 21% year-on-year growth and 24% sequential growth.

Sudeep Pharma’s gross margin improved to 64.7% in Q2 FY27 from 62.5% a year earlier, while EBITDA margin increased to 37.2% from 34.1%. EBITDA also rose 33% from Rs 54.9 crore in Q1 FY27, showing a sequential margin increase while supply-chain costs remained above normal levels.

Selling and distribution expenditure was approximately Rs 8 crore above the normal quarterly average, principally because of elevated sea freight, according to management. Sudeep Pharma said it absorbed the cost rather than passing it on to customers in order to meet delivery commitments, yet EBITDA margin rose by 2.5 percentage points from Q1 FY27.

Which Sudeep Pharma segment drove Q2 FY27 growth?

Sudeep Pharma’s Pharma Food Nutrition (PFN) segment drove Q2 FY27 growth, with revenue rising 57% year-on-year to Rs 142 crore and contributing approximately 72% of consolidated revenue. PFN segment EBITDA margin increased to approximately 41% from 33% a year earlier, while segment EBITDA nearly doubled.

PFN growth was broad-based across India, Africa, Asia-Pacific (APAC) and Europe, supported by the phosphate portfolio, new customers and higher-value ingredients. Management said demand from Indian pharmaceutical customers remained healthy for core mineral ingredients, while Africa and APAC added pharmaceutical and food-fortification opportunities.

Specialty Ingredients revenue was Rs 54 crore in Q2 FY27, rising 9% sequentially but declining 25% year-on-year. Management attributed the decline to the temporary pause in the Government of India’s Fortified Rice programme, which contributed to Q2 FY26 revenue, and lower revenue and earnings at NSS.

Management said the Fortified Rice programme represented around 20% to 25% of Specialty Ingredients revenue in the prior full year, or roughly Rs 40 crore to Rs 50 crore. It expects customer contracts and approvals in infant nutrition, dietary supplements and human nutrition to begin generating commercial revenue in Q3 FY27, without assuming that the programme restarts.

What supports Sudeep Pharma’s PFN volume and margin plans?

Sudeep Pharma’s Nandesari greenfield facility is intended to support PFN volume growth with annual capacity of 51,000 tonnes across existing products and newer categories including glycinates, gluconates, citrates and phosphates. Management said the facility had received Food and Drug Administration (FDA) approval, but it made no contribution to Q2 FY27 because approval came only near the end of the period.

Management expects commercial supplies from Nandesari to begin in H2 FY27 as customer qualifications convert into orders. Existing facilities were operating close to optimum utilisation, and the additional approved capacity is intended to let Sudeep Pharma bid for larger volumes from major customers and increase supply to existing accounts.

Magnesium bisglycinate is a higher-value PFN product that management said has an average realisation of more than three times the PFN portfolio average. Sudeep Pharma plans to introduce the MaxZobis brand for supplement and nutrition customers, and management expects magnesium bisglycinate to become one of PFN’s top three revenue contributors over the next two to three years.

The AbsorBis range continued to gain momentum after Q1 sales exceeded sales for all of FY26, according to management. Commercial supplies have started for selected customers, while the dedicated glycinates capacity at Nandesari is intended to support larger volumes as approvals convert into orders from Q4 FY27.

What could affect Sudeep Pharma’s second-half execution?

Sudeep Pharma’s principal unresolved issue is whether the Fortified Rice programme will restart, as management said it had no visibility on procurement during FY27. Management nevertheless expects Specialty Ingredients to return to positive year-on-year growth in Q3 and Q4 through secured contracts and new business that do not rely on a programme restart.

NSS remained a drag on Specialty Ingredients in Q2 FY27, but management said it had secured five customer approvals and had approximately 12 projects at various stages of evaluation and development. The business is also broadening its reach beyond Ireland and increasing sourcing from India where management believes it improves competitiveness and operating flexibility.

At the consolidated level, H1 FY27 revenue from operations rose 23% year-on-year to Rs 355 crore, while EBITDA increased 29% to Rs 128.1 crore. H1 EBITDA margin improved to 36.1% from 34.5%, but profit after tax rose 18% to Rs 92.4 crore because other income was Rs 6 crore lower year-on-year and the effective tax rate increased to 27% from about 21%.

Cash flow from operations was Rs 43.5 crore in H1 FY27, an increase of Rs 26 crore year-on-year, while net working-capital days were 214 as of September 30, 2026, similar to March 2026. Management targets 170 to 180 days excluding Battery Materials inventory and about 150 days over a longer period, after building stocks of purified phosphoric acid and holding some battery-project materials.

Conclusion

Sudeep Pharma’s record Rs 73.2 crore Q2 FY27 EBITDA and 37.2% margin show that PFN growth, improved gross margin and product mix offset approximately Rs 8 crore of additional freight-related expenditure. PFN revenue of Rs 142 crore and its approximately 41% segment EBITDA margin offset the effect of the Fortified Rice pause and weaker NSS performance within Specialty Ingredients.

The next milestones are commercial supplies from Nandesari in H2 FY27 as customer qualifications become orders, and management’s expected return to positive year-on-year Specialty Ingredients growth in Q3 and Q4. Sudeep Advanced Materials is planned to begin commercial operations in April 2027, while management expects to provide a more concrete update on firm binding offtake contracts in Q4 FY27.