This article first appeared on GuruFocus .
Release Date: August 04, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Consolidated revenue grew 26% year-on-year, driven by broad-based growth across all major businesses.
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International generics business grew 37% YoY, supported by volume growth, new launches, and improved manufacturing asset utilization.
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API business delivered strong 33% YoY growth, exceeding initial guidance and supported by long-term growth drivers.
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US generics business saw 49% YoY growth, aided by bosutinib exclusivity and a robust launch pipeline with 10 approvals and 4 filings in Q1.
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Company raised FY27 growth outlook for US generics to mid-to-high teens and overall company growth to mid-teens, reflecting strong momentum.
Negative Points
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Pricing pressure remains in the US generics market, with potential for significant erosion post-exclusivity periods.
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US branded specialty business is still in soft launch phase, causing margin dilution of about 150 basis points for FY27.
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Gross margins were impacted by rising solvent prices, product mix changes, and under-absorption due to maintenance upgrades in a facility.
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India branded business growth (7%) remains below market, with management expecting a couple of quarters to see improvement from new leadership.
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Higher depreciation and interest costs due to US branded product acquisitions and increased working capital, impacting profitability.
Q & A Highlights
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Q: Can you provide more details on the key drivers of the strong US generics growth, and confirm the marketing exclusivity on bosutinib? A: Pranav Amin, Managing Director, confirmed that the company has 180-day marketing exclusivity on the 100mg and 500mg strengths of bosutinib. Beyond this, the base business grew over 20% (closer to 25%) due to new launches. The company launched 6-7 products in Q1 and has a pipeline of about 15 more launches for the rest of the year, which is driving momentum.
Q: Given the strong Q1 performance, what is the updated growth outlook for the US generics business and the overall company for FY27? A: Pranav Amin stated that the US generics growth guidance has been revised upward from low-teens to mid-to-high teens for the year, subject to market conditions. Consequently, the overall company growth outlook has improved from the low double-digit range to closer to the mid-teens for FY27, driven by broad-based growth and continued execution.
Q: What is the timeline for the US branded specialty business to start contributing positively to profitability? A: Pranav Amin explained that the first three months were a soft launch for the lead product, and the reception has been encouraging. The investment is purely in field force and marketing, with no manufacturing costs. He expects the business to trend toward break-even by the end of this year and start contributing positively from the next financial year (FY28) onwards.
Q: Can you clarify the margin guidance for FY27, given the operating leverage on the core business and the dilution from the US branded business? A: G. Krishnan, CFO, reiterated that the core business margins are expected to improve to high-teens, which will be partially offset by approximately 150 basis points of dilution from the US branded business. The overall reported EBITDA margin is expected to be broadly flat to slightly better than FY26 levels, depending on the ramp-up of the branded business.
Q: How sustainable is the revenue from bosutinib beyond the exclusivity period, and what is the competitive landscape? A: Pranav Amin noted that bosutinib is a low-volume product with good pricing. The exclusivity is secured until November. He has not seen any new competitors entering the market for the strengths they hold, but expects the market to be a two-player market until then. He cautioned that if competition does enter, the impact could be drastic due to the small volumes.
Q: What is driving the gross margin performance, and is it within the expected range? A: G. Krishnan stated that gross margins were flat quarter-on-quarter and remain within the guided 70-75% range. The factors influencing this include rising solvent prices due to geopolitical issues, product mix, and a planned maintenance upgrade in one facility that caused under-absorption. The upgrade has expanded capacity without incremental CapEx.
Q: What is the outlook for the API segment for the full year? A: Pranav Amin stated that the API business performed well in Q1, growing 33%. The initial guidance was for around 10% growth, but given the healthy trend, the company expects to finish the year above that 10% level. The growth is driven by partnerships, debottlenecking initiatives, and capacity enhancements.
Q: When will the India branded business see an improvement in growth, and what is the full-year guidance? A: Pranav Amin and G. Krishnan explained that the animal health business is performing well, but the human health side is a work in progress under the new sales head, Ramesh Junija. They expect to see positive trends in a quarter or two. For the full year, the India business is expected to be closely aligned to market growth, bridging the gap from last year's high single-digit performance.
Q: Can you quantify the US sales in USD and the constant currency growth for the quarter? A: G. Krishnan stated that while they don't intend to break up the rupee depreciation impact, the reported growth of 49% includes a currency impact of about 10%. The underlying constant currency growth is approximately 38-39%, which reflects the strong volume-driven performance.
Q: What is driving the sharp increase in depreciation and interest costs, and what is the outlook? A: G. Krishnan explained that the increase in depreciation is primarily due to the amortization of intangible assets from the US branded business product acquisitions, which are amortized over 7-8 years, along with increased capitalization from the last year. The higher interest cost is due to increased working capital debt from higher sales, which is expected to unwind in Q2 and Q3, bringing debt levels back to March levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
