Aarey Drugs Q1 FY27 Results (NSE: AAREYDRUGS)
Signal: Margin expansion
The read
The key inflection is a sharp revenue contraction to ₹4,462.55 lakh, -56.3% YoY, with gross margin falling 480bps to 2.6% as material costs reached 97.4% of revenue; the 6.8% EBITDA margin did not prevent EBIT from declining 20.9% and PAT from falling 25.5%, while reported earnings quality is weak because other income was 330.8% of PBT and the tax line was a ₹50.81 lakh credit.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹44.63 Cr | -56.3% | -76.5% |
| EBIT | ₹2.19 Cr | -20.9% | |
| Net profit | ₹1.02 Cr | -25.5% | |
| EPS | ₹0.36 | -25.0% | |
| EBIT margin | 6.8% |
P&L walk
Standalone revenue declined to ₹4,462.55 lakh, -56.3% YoY and -76.5% QoQ, while gross margin compressed to 2.6% from 7.4% as raw-material cost rose to 97.4% of revenue; EBITDA margin was 6.8%, but PAT of ₹102.37 lakh was aided by ₹171.50 lakh of other income and a ₹50.81 lakh tax credit.
Key positives
- EBITDA remained positive at ₹304.00 lakh with a 6.8% margin despite revenue declining 56.3% YoY.
- EPS of ₹0.36 broadly tracked the 25.5% YoY PAT decline, with the filing reporting 28,454,303 shares and no material EPS dilution signal.
- The company reported no deviation in utilisation of the ₹797.50 lakh received from the convertible-warrant preferential issue.
Key concerns
- Revenue fell 56.3% YoY to ₹4,462.55 lakh and 76.5% QoQ, with no volume, price or product-mix explanation disclosed.
- Gross margin compressed 480bps YoY to 2.6% as raw-material cost increased to 97.4% of revenue from 91.1%; the company absorbed materially higher input intensity during a revenue decline.
- Finance cost increased 61.4% YoY to ₹167.44 lakh while revenue declined 56.3%, weakening operating earnings cover.
Earnings quality: includes non-operating other income
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