Ajanta Pharma Q3 Revenue Jumps 20%, Driven By US Generics; Tax Probe Looms

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AuthorKavya Nair|Published at:
Ajanta Pharma Q3 Revenue Jumps 20%, Driven By US Generics; Tax Probe Looms
Overview

Ajanta Pharma reported a robust Q3 FY2026 with revenue up 20% YoY to ₹1,375 Cr and PAT growing 18% to ₹274 Cr, propelled by a 52% surge in US generics. While ROCE stands at 34%, concerns linger over undisclosed impacts from Income Tax search operations and new Labour Codes.

Ajanta Pharma Delivers Strong Q3 Growth Amidst Emerging Tax Scrutiny

Ajanta Pharma Limited has announced its unaudited financial results for the third quarter and nine months ended December 31, 2025, showcasing significant year-on-year growth across key financial metrics. The company posted a consolidated revenue from operations of ₹1,375 crore for Q3 FY2026, a substantial 20% increase from ₹1,146 crore in Q3 FY2025. Profit After Tax (PAT) mirrored this strong performance, rising 18% YoY to ₹274 crore from ₹233 crore in the prior year period. EBITDA for the quarter stood at ₹382 crore, up 19% YoY, maintaining a healthy EBITDA margin of 28%.

For the nine months ended December 31, 2025 (9M FY2026), consolidated revenue grew by 16% YoY to ₹4,031 crore from ₹3,478 crore. PAT for the nine-month period increased by 14% YoY to ₹789 crore from ₹695 crore. The company reported a mark-to-market forex loss of ₹61 crore for the nine-month period. Excluding this, Adjusted EBITDA was ₹1,123 crore, reflecting a 15% growth with a stable 28% margin.

📈 The Financial Deep Dive

The Numbers:

  • Q3 FY2026 Revenue: ₹1,375 Cr (+20% YoY)
  • Q3 FY2026 PAT: ₹274 Cr (+18% YoY)
  • Q3 FY2026 EBITDA: ₹382 Cr (+19% YoY) | Margin: 28%
  • 9M FY2026 Revenue: ₹4,031 Cr (+16% YoY)
  • 9M FY2026 PAT: ₹789 Cr (+14% YoY)
  • 9M FY2026 Adj. EBITDA: ₹1,123 Cr (+15% YoY) | Margin: 28%
  • Basic EPS: Q3 FY2026: ₹21.91; 9M FY2026: ₹63.18

The Quality:
The company demonstrates consistent margin performance, with EBITDA margins holding steady at 28% even with topline growth. The adjusted EBITDA growth of 15% for 9M FY2026, excluding the forex impact, indicates strong operational profitability. Key financial ratios for 9M FY2026 include a Return on Capital Employed (ROCE) of 34% and Return on Net Worth (RONW) of 26%, signaling efficient capital utilization.

The Growth Drivers:

Growth was significantly bolstered by the US Generics segment, which saw an impressive 52% YoY surge in Q3 FY2026, contributing ₹399 Cr. For the nine months, this segment grew 46% YoY to ₹1,052 Cr. The Branded Generics segment also performed well, with Q3 revenue at ₹927 Cr (+11% YoY) and 9M revenue at ₹2,831 Cr (+9% YoY).

However, the Africa Institution segment experienced a decline of 6% YoY in its 9M FY2026 performance.

🚩 Risks & Outlook

Ajanta Pharma's strategy is geared towards new product launches, expanding market share, cost optimization, and entering new countries and therapies. While the company shows strong operational execution, two significant risks loom:

  1. Income Tax Search Operations: The Income Tax Authorities conducted search operations at certain premises in August 2025. The company explicitly states that the impact of these operations is "not yet ascertainable." This injects a considerable element of uncertainty and potential financial or operational disruption.
  2. New Labour Codes: The ongoing evaluation of the impact of new Labour Codes, effective from November 2025, could lead to changes in operational costs or compliance requirements.

Investors must closely monitor the outcomes of the tax investigations and the company's adaptation to the new labour regulations.

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