Any current/future new fundraising through debt or equity?

No explicit mention of new fundraising through equity in the transcript. For capex financing, the company typically uses internal accruals for brownfield expansions. Term loans from banks are taken only for bigger greenfield projects. Current long-term cost of debt is around 8.3% to 8.5%, expected to reduce due to lower interest rates. The company aims to maintain a debt-to-equity ratio between 0.4 and 0.7 for optimal leverage. Despite heavy capex and shareholder payouts, debt has been stable around INR 597 crores. Debt levels may reduce if no new large capex is undertaken and shareholder payo

Any current/future capex/capital investment/strategic investment?

Q1 FY '26 capex was ~INR48.5 crores focused on capacity expansion, backward integration, safety, and formulation R&D. FY '26 capex guidance is INR150 crores to INR200 crores. About 50% of FY '26 capex will go into new product R&D for formulation (oncology and regulated markets). Remaining capex allocated to brownfield expansions in API and specialty chemical products. Greenfield projects underway: Sayakha plant for backward integration into anti-diabetic products and intermediates, and salicylic acid plant entering import-dominated market with ramp-up expected from Q3 FY '26. Expansion of the

Future growth expectations in sales/revenue/volumes?

Targeting around 15% volume CAGR growth for FY '26 and FY '27, with potential 10% in one year and 20% in the next. Expect 10%-15% growth in both value and volume in the second half of FY '26 and continuing into FY '27. Negative price variance of 4%-6% expected in H1 FY '26 likely to normalize in H2 leading to stronger value growth. Anticipate 6% revenue growth in Q1 FY '26 year-on-year with improving demand and volume growth. New regulated market approvals and expanded capacity expected to boost sales; ramp-up of greenfield projects (Sayakha and salicylic acid plants) contribute from F

Future growth expectations in earnings/operating earnings/profits/EPS?

Targeting EBITDA margin of 15% to 16% starting FY 2027 with optimal capacity utilization and margin improvements. Standalone EBITDA margin in March ’25 quarter was 14.5%, expected to improve to 16.5%-17.5% with better gross margins and utilization. Incremental profitability expected at 25% on additional sales beyond INR 500-600 crores. Salicylic acid plant commercialization will improve EBITDA margin by ~1% at company level. Volume and value growth targeted at ~15% CAGR for FY ’26 and FY ’27, with H2 FY ’26 expected to see double-digit growth post negative price variance in H1. Reven

Aarti Drugs LtdQ2 FY26

Aarti Drugs Ltd Q2 FY26 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹417P/E: 19.5Market Cap: ₹3.8K Cr

Management growth scorecard

Revenue

Category 3

Margin

Category 1

Fundraise

Yes

Order

N/A

Capex

Yes

3 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Targeting around 15% volume CAGR growth for FY '26 and FY '27, with potential 10% in one year and 20% in the next.
→Expect 10%-15% growth in both value and volume in the second half of FY '26 and continuing into FY '27.
→Negative price variance of 4%-6% expected in H1 FY '26 likely to normalize in H2 leading to stronger value growth.
→Anticipate 6% revenue growth in Q1 FY '26 year-on-year with improving demand and volume growth.
→New regulated market approvals and expanded capacity expected to boost sales; ramp-up of greenfield projects (Sayakha and salicylic acid plants) contribute from FY '27 onwards.
→Oncology formulations segment targeted to grow to INR 550-600 crores in 3 years.
→Revenue from new capex expected to phase in over 3 years, with INR 1,200 crores incremental revenue potential by FY '28.
→Focus on expanding exports to regulated markets with higher realizations and margin contribution.

Margin guidance

Category 1

→Targeting EBITDA margin of 15% to 16% starting FY 2027 with optimal capacity utilization and margin improvements.
→Standalone EBITDA margin in March ’25 quarter was 14.5%, expected to improve to 16.5%-17.5% with better gross margins and utilization.
→Incremental profitability expected at 25% on additional sales beyond INR 500-600 crores.
→Salicylic acid plant commercialization will improve EBITDA margin by ~1% at company level.
→Volume and value growth targeted at ~15% CAGR for FY ’26 and FY ’27, with H2 FY ’26 expected to see double-digit growth post negative price variance in H1.
→Revenue contribution shifts expected: Formulation business to double to INR 550-600 crores in 3 years, Spec Chem & Intermediate growing faster too.
→Gradual ramp-up of greenfield capex projects expected to contribute INR 1,200 crores revenue by FY ’28.
→Tax rate to normalize to ~25% from FY ’27 onwards, with some income tax rebates expected affecting FY ’26.

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Fundraise plans

Yes

→No explicit mention of new fundraising through equity in the transcript.
→For capex financing, the company typically uses internal accruals for brownfield expansions.
→Term loans from banks are taken only for bigger greenfield projects.
→Current long-term cost of debt is around 8.3% to 8.5%, expected to reduce due to lower interest rates.
→The company aims to maintain a debt-to-equity ratio between 0.4 and 0.7 for optimal leverage.
→Despite heavy capex and shareholder payouts, debt has been stable around INR 597 crores.
→Debt levels may reduce if no new large capex is undertaken and shareholder payouts continue.
→No direct statement on fresh debt or equity fundraising plans, implying no immediate plans for raising new funds through debt or equity.

Order book

The transcript on page 17 and surrounding pages does not explicitly mention the current or expected order book or pending orders for Aarti Drugs Limited. However, relevant insights related to business outlook and growth include: - The company anticipates 15% volume CAGR growth over FY '26 and FY '27. - Sales demand is picking up with a focus on ramp-up of new capacities (e.g., salicylic acid plant from Q3 FY '26). - They expect a significant uptick in Europe and regulated markets over 9 to 12 months. - Commercial supply to USFDA market expected after around 9-12 months. - Value growth guidance is about 10% to 15% annually for FY '26 and FY '27. - Ongoing capex aimed at growth and backward integration to reduce cost and improve margins. No specific figures for order book or pending orders are disclosed in the provided transcript.

Capex plans

Yes

→Q1 FY '26 capex was ~INR48.5 crores focused on capacity expansion, backward integration, safety, and formulation R&D.
→FY '26 capex guidance is INR150 crores to INR200 crores.
→About 50% of FY '26 capex will go into new product R&D for formulation (oncology and regulated markets).
→Remaining capex allocated to brownfield expansions in API and specialty chemical products.
→Greenfield projects underway: Sayakha plant for backward integration into anti-diabetic products and intermediates, and salicylic acid plant entering import-dominated market with ramp-up expected from Q3 FY '26.
→Expansion of the USFDA-approved Tarapur API facility ongoing, with more blocks planned.
→Solar power joint venture project (24.4 MW peak) commissioned, expected to reduce long-term power costs and improve ESG.
→Management aims to fund brownfield expansions from internal accruals; large greenfield projects funded via term loans with borrowing cost reduced recently.

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