Whalesbook
Aurobindo Pharma shares fell by as much as 7% on the National Stock Exchange (NSE) after the company released its financial results for the fourth quarter of fiscal year 2026. While the company announced a modest 2% increase in consolidated profit after tax to ₹920.84 crore, investors focused on the decline in profit margins.
Margin Contraction Hits Investor Sentiment
The pharmaceutical company reported total consolidated revenue of ₹8,853.34 crore for the January-March period, up from ₹8,382.12 crore in the same quarter last year. However, expenses also rose to ₹7,677.34 crore from ₹7,149.65 crore. Earnings before interest, taxes, depreciation, and amortization (Ebitda) grew by 0.5% year-on-year to ₹1,801 crore. More significantly, Ebitda margins decreased by 103 basis points to 20.3%, compared to 21.4% in the previous year's quarter, which appears to be a major reason for the stock's decline.
US Business Weakness Persists
Aurobindo Pharma noted that its US formulation business experienced a slowdown during the quarter. Revenue from this segment declined by 13% year-on-year, falling to ₹3,543 crore from ₹4,072 crore. The US market typically accounts for about 40% of Aurobindo Pharma's total revenue, and this drop was attributed to lower transient sales.
Europe Performance Offsets US Slump
In contrast to the US market, Aurobindo Pharma's European formulation business showed strong growth. Revenue from this region jumped 30.2% year-on-year to ₹2,795 crore, driven by solid performance in its main European markets. Aurobindo Pharma operates globally in over 150 countries, focusing on the development, manufacturing, and marketing of a wide range of generic and branded pharmaceuticals, as well as active pharmaceutical ingredients.