Zydus Lifesciences Q2 profit falls 27% as revenue rises 29%

Zydus Lifesciences Limited reported consolidated net profit of Rs 925.5 crore for the quarter ended September 30, 2026, down 27% from Rs 1,260.9 crore a year earlier, even as revenue from operations rose 29% to Rs 7,909.6 crore. Higher expenses, including depreciation, finance costs and purchases of stock-in-trade, outweighed the sales growth.

Why did Zydus Lifesciences’ profit fall despite higher revenue?

Zydus Lifesciences’ profit fell because total expenses increased 51% year on year to Rs 6,806.6 crore in the quarter ended September 30, 2026, exceeding the 29% growth in revenue from operations. Profit before tax fell 26% to Rs 1,261.7 crore from Rs 1,694.2 crore, while net profit after non-controlling interests declined to Rs 925.5 crore from Rs 1,260.9 crore.

The increase covered several cost lines. Purchases of stock-in-trade rose to Rs 1,260.2 crore from Rs 589.1 crore, employee-benefit expense increased to Rs 1,357.1 crore from Rs 1,034.2 crore, and other expenses rose to Rs 2,640.2 crore from Rs 1,796.8 crore. Depreciation and amortisation doubled to Rs 604.5 crore from Rs 300.3 crore, while finance costs increased to Rs 187 crore from Rs 101.3 crore.

Inventory changes provided a benefit of Rs 492.9 crore in the September 2026 quarter, compared with a Rs 225.7 crore benefit a year earlier. However, Zydus Lifesciences recorded a foreign-currency gain of Rs 136.6 crore, compared with a Rs 414.1 crore gain in the September 2025 quarter, reducing the benefit from this line by Rs 277.5 crore year on year.

How much did Zydus Lifesciences’ revenue grow in the quarter?

Zydus Lifesciences’ revenue from operations increased by Rs 1,786.4 crore, or 29%, to Rs 7,909.6 crore in the quarter ended September 30, 2026. Product sales accounted for Rs 7,754.4 crore, up from Rs 6,037.9 crore a year earlier, while other operating revenue rose to Rs 155.2 crore from Rs 85.3 crore.

On a sequential basis, revenue from operations was below Rs 8,017 crore in the quarter ended June 30, 2026. Total income, including other income, was Rs 8,039.5 crore in the September quarter, compared with Rs 8,123.1 crore in the preceding quarter and Rs 6,232.2 crore a year earlier. Other income rose to Rs 129.9 crore from Rs 109 crore in the September 2025 quarter.

For the half year ended September 30, 2026, revenue from operations increased 25% to Rs 15,926.6 crore from Rs 12,696.9 crore in the comparable six-month period. Net profit for the half year declined 31% to Rs 1,885.9 crore from Rs 2,727.7 crore, showing that profit was lower across the first six months despite higher revenue.

Which Zydus Lifesciences segments drove quarterly sales and profit?

Zydus Lifesciences’ pharmaceuticals segment remained its largest revenue contributor, reporting Rs 6,558.2 crore in the September 2026 quarter, up from Rs 5,321.1 crore a year earlier. Consumer products revenue increased to Rs 1,125.7 crore from Rs 648.9 crore, while medical technologies revenue rose to Rs 225.7 crore from Rs 153.2 crore.

Pharmaceuticals segment result declined to Rs 1,318.6 crore from Rs 1,774.9 crore despite the revenue increase. Consumer products reported a Rs 7.1 crore segment profit, compared with a Rs 17.2 crore segment loss a year earlier. Medical technologies reported a Rs 92.8 crore segment loss, wider than the Rs 34.5 crore loss in the September 2025 quarter.

The three segment results totalled Rs 1,232.9 crore before Zydus Lifesciences’ share of joint-venture profit, exceptional items and tax. Its share of joint-venture profit was Rs 27.5 crore, compared with Rs 5.2 crore a year earlier, but that increase did not offset lower pharmaceuticals segment profit and the wider medical-technologies loss.

What exceptional items affected Zydus Lifesciences’ September-quarter results?

Zydus Lifesciences reported a net exceptional gain of Rs 1.3 crore in the September 2026 quarter, compared with exceptional expenses of Rs 34.2 crore a year earlier. The current-quarter reconciliation included a Rs 39.6 crore provision for rain-related damage at Ahmedabad facilities, a Rs 37.6 crore insurance-claim receivable and a Rs 3.3 crore negative provision relating to Assertio Holdings severance compensation.

Torrential rains during July 2026 affected operations at some Ahmedabad manufacturing facilities and damaged inventories and property, plant and equipment. Zydus Lifesciences lodged insurance claims for an estimated loss of Rs 39.6 crore and recognised an insurance receivable of Rs 37.6 crore. It said it was assessing any incremental losses and consequent insurance recoveries.

In the quarter ended June 30, 2026, exceptional items included a Rs 109.1 crore provision for severance compensation at Assertio Holdings, a Rs 55.9 crore provision for an antitrust-lawsuit settlement and a Rs 146.8 crore receipt from settlement of litigation with Teva parties. These items resulted in net exceptional expenses of Rs 18.2 crore for that quarter.

How did Zydus Lifesciences’ balance sheet change by September 2026?

Zydus Lifesciences’ total assets rose to Rs 55,606.9 crore at September 30, 2026, from Rs 52,508.6 crore at March 31, 2026. Goodwill increased to Rs 7,817.9 crore from Rs 7,531 crore, while other intangible assets rose to Rs 8,004.1 crore from Rs 7,228.1 crore.

Total borrowings, combining current and non-current borrowings, increased to Rs 13,249.6 crore from Rs 11,769.5 crore over the same period. Current borrowings stood at Rs 9,143.4 crore and non-current borrowings at Rs 4,106.2 crore on September 30, while cash and cash equivalents declined to Rs 669.2 crore from Rs 855.2 crore.

Zydus Lifesciences completed the Assertio acquisition on June 16, 2026, and the consolidated results include Assertio’s operations from that date using provisional purchase price allocation figures. Zydus Lifesciences also completed the acquisition of Sterling Biotech Limited’s active pharmaceutical ingredients business on November 2, 2026, after the September-quarter reporting date.

Conclusion

Zydus Lifesciences delivered higher consolidated revenue in the September 2026 quarter, led by pharmaceuticals and consumer products, but net profit of Rs 925.5 crore was 27% lower year on year. Expenses rose faster than revenue, pharmaceuticals segment profit declined, and medical technologies remained loss-making even as all three reported segments increased revenue.

Next, Zydus Lifesciences is expected to finalise the Assertio purchase price allocation within the measurement period provided under Indian Accounting Standard 103, or Ind AS 103. Its assessment of incremental Ahmedabad rain losses and insurance recoveries, alongside the integration of the Sterling Biotech active pharmaceutical ingredients business acquired on November 2, 2026, remains relevant to subsequent disclosures.