Aarti Pharmalabs reported a stellar second quarter for FY27 with revenue rising 47% YoY to Rs 613 crore. Net profit surged to Rs 66 crore from Rs 24 crore in the year-ago period, fueled by strong volume growth in Xanthine derivatives and robust CDMO performance. While profitability improved significantly, investors should monitor rising debt levels, which have climbed to Rs 660 crore to fund ongoing capacity expansions, including the upcoming Atali block.
Aarti Pharmalabs Q2 FY27 Profit Jumps 175% to Rs 66 Crore
Revenue rises 47% to Rs 613 crore, while EBITDA margin hits 22.2%.
Reader Takeaway: Strong operational momentum in CDMO and Xanthine units offsets rising debt from ongoing capacity expansion projects.
What just happened
Aarti Pharmalabs delivered a strong quarterly performance, with profit after tax reaching Rs 66 crore, a 175% jump from the Rs 24 crore reported in Q2 FY26. Revenue climbed 47% to Rs 613 crore, supported by significant volume growth and higher realizations in its Xanthine derivatives segment, which accounted for half of the quarterly turnover. The EBITDA margin expanded to 22.2%, up from 17.7% in the previous year.
Why this matters
The results signal a successful execution of the company’s three-pillar strategy: Xanthine derivatives, API intermediates, and its growing CDMO business. The CDMO segment, now managing 59 active projects, is a core focus area with a long-term revenue target of Rs 1,000 crore. Investors are seeing the impact of the newly completed steroid block, which has already begun contributing to production output.
Risks to watch
Short-term borrowings have increased to approximately Rs 660 crore to facilitate capital expenditure. Management noted that additional debt may be required to fund the remaining Rs 350-400 crore capex planned for FY27. Furthermore, investors should monitor working capital, as inventory levels were increased in H1 to support anticipated high sales volumes in the second half of the year.
What to track next
Key milestones include the commercialization of the Atali Dedicated Block (Block 2), currently under construction with an H2 FY28 target, and the progress of upcoming peptide and oligonucleotide labs. Additionally, the debt-to-equity ratio remains a critical metric as the company continues to aggressively fund its growth infrastructure.
Context metrics
- EBITDA: Rs 136 crore (+84% YoY)
- CDMO projects: 59 (39 commercial, 20 development)
- Cash conversion cycle: 150-160 days