This article first appeared on GuruFocus .
Release Date: August 10, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Akums Drugs and Pharmaceuticals Ltd ( BOM:544222 ) reported a strong Q1 FY27 with revenue growth of 13.9% YoY and a 35.4% increase in EBITDA, driven by the CDMO segment's double-digit volume growth and improved API prices.
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The CDMO segment delivered a robust 18.6% YoY revenue growth, with management confident of continued high-teens volume growth in Q2 and a full-year EBITDA margin guidance of 14-15%, potentially trending to the upper end.
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The company's balance sheet remains exceptionally healthy with a net cash surplus of Rs 1,616 crores, providing ample firepower for strategic acquisitions and future growth initiatives.
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The acquisition of Oriflame India's manufacturing business expands Akums Drugs and Pharmaceuticals Ltd ( BOM:544222 )'s footprint into high-margin skincare, cosmetics, and wellness products, aligning with its strategy to tap niche formulations.
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The API segment is showing clear progress toward profitability, with losses narrowing to Rs 4 crore from Rs 6 crore YoY, driven by a higher share of non-SEVA products, and management targets monthly EBITDA positivity by end of FY27.
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The domestic branded formulation business (Acumentis) resumed growth with a 7.3% YoY revenue increase, supported by a 15% expansion in field force, which is expected to drive improved performance from Q3 onwards.
Negative Points
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The domestic branded formulation segment's EBITDA declined 25.4% YoY due to the cost of hiring nearly 200 new field staff, which will continue to pressure margins in the near term.
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The international branded formulation business saw a muted quarter with revenue declining 1.5% YoY and EBITDA falling 14.4%, with no clear timeline for a return to growth.
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The API segment continues to report losses, with revenue declining 29.7% YoY to Rs 32 crore, and management has not provided a definitive timeline for achieving full-year profitability.
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The trade generic segment experienced a 9.5% YoY revenue decline and a 23.4% QoQ drop, with EBITDA only at breakeven, indicating ongoing weakness in this business.
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Management's guidance for the Zambia order (expected in H2) and the European business (starting next fiscal year) remains uncertain, with no concrete revenue or margin figures provided beyond broad expectations.
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The company's strategy of maintaining significant spare capacity (currently at ~50% utilization) may limit near-term margin expansion, as it continues to invest in new facilities like the Baddi plant without clear returns.
Q & A Highlights
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Q: On the CDMO segment, how should we think about overall growth in terms of volume and value this year and next year, and can you provide color on margins? A: Sahil Maheshwari (Head Strategy) stated that volume growth in Q2 looks healthy in the high teens, with API prices currently volatile but moving upwards. He expects the year to end on a good note. Regarding margins, the company maintains its guidance of 14-15% EBITDA, and given the strong Q1 performance, they expect to incline towards the upper bracket of that range. The margin strength was aided by strategic inventory builds in Q4 to protect against rising API prices.
Q: What is the outlook for volume growth for FY27, given the accelerating IPM growth? A: Sahil Maheshwari (Head Strategy) highlighted that the company has seen high-teens volume growth for the past three quarters (Q3 FY26, Q4 FY26, and Q1 FY27), and Q2 also looks strong. While the industry volume growth is in the 2-3% range, Akums remains confident of sustaining double-digit volume growth in the coming quarters, driven by new launches and market share gains.
Q: Is there a timeframe within which you will evaluate whether to continue with the API business, given its continued losses? A: Sahil Maheshwari (Head Strategy) affirmed management's full confidence in the API business, noting that quarterly losses have been gradually coming down. The strategy involves shifting away from low-margin SIFA products and increasing the basket of non-SIFA products like Lena, Zoled, and Montelukast to improve margins. The goal is to achieve monthly EBITDA positivity by the end of FY27 and scale the business into a profitable venture.
Q: Can you provide an update on the Zambia and Europe business, including margin guidance and expected revenue contribution? A: Sahil Maheshwari (Head Strategy) confirmed that margins for both Zambia and Europe will be similar or slightly higher than the current CDMO business, in the high teens. The $25 million Zambia order is expected to be delivered in H2 of this fiscal year, translating to roughly Rs 240 crore in revenue, with a similar amount expected next fiscal year. The European business is expected to kickstart within the next financial year, and both will uplift corporate margins.
Q: Can you explain the rationale behind the recent acquisition of Oriflame India's manufacturing business? A: Sahil Maheshwari (Head Strategy) explained that the acquisition is a capability and capacity expansion into skincare, cosmetics, and wellness products. Akums already has a dedicated cosmeceuticals facility (Aplan5) operating at peak utilization with good profitability. The acquisition will expand capacity and enable entry into color cosmetics, a fast-growing space, leveraging the company's strong formulation R&D capabilities to tap into additional niche markets.
Q: With capacity utilization around 50%, how are you planning to handle the increased volume from European and Zambian orders? Will you resort to subcontracting? A: Sahil Maheshwari (Head Strategy) clarified there is no concept of subcontracting. The company is in the business of delivering manufacturing volume and does not wish to rationalize low-margin portfolio. They are in the process of setting up a new facility in Baddi, which will go live by the end of this financial year, significantly boosting oral manufacturing capabilities.
Q: Can you quantify how much of the gross margin increase is due to value addition from high-value products versus inventory gains? A: Sahil Maheshwari (Head Strategy) stated that very limited margin improvement is due to inventory gains; most is driven by the addition of high-value products. He also noted a positive contribution from the API segment, where gross margins improved from around 90% last year to 75% this quarter, alongside the CDMO segment's strong performance.
Q: What is the strategy for the domestic branded formulation business (Acumentis), given that productivity is lower than the industry average and you are increasing the field force? A: Sahil Maheshwari (Head Strategy) explained that the expansion of the field force by almost 200 people (a 15% increase) is aimed at tapping additional geographies and headquarters. While PCPM is one metric, the company is in a building phase for this business. The focus remains on key therapies like gynecology, cardiology, and pediatrics, and they expect improved performance from Q3 onwards as the new hires become productive.
Q: Where is the Rs 1,600 crore cash surplus currently parked, and what is the plan for its deployment? A: Sumit Sood (CFO) confirmed that 98% of the cash is parked in fixed deposits with nationalized banks. With a net worth of over Rs 3,400 crore and no debt, the company has the appetite for inorganic opportunities. They will evaluate acquisitions based on value accretion and business rationale, and will announce any significant moves when appropriate.
Q: Regarding the API business, are you still on track to turn profitable by the end of FY27, and should we expect growth in FY28? A: Sahil Maheshwari (Head Strategy) confirmed the target is to be monthly EBITDA positive by the end of February or March 2027. From the next financial year (FY28), the API segment should start positively contributing to the company's overall profits.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
