Aarti Drugs Q2 FY27 Results (NSE: AARTIDRUGS)
Signal: Margin expansion
The read
This is a clear growth and margin inflection: revenue growth accelerated to 26.6% YoY from the recent 9.2% run-rate, EBIT margin expanded to 16.4% from an implied 14.3% YoY, and PAT rose 82.7%; the durability of the improvement will depend on whether the lower raw-material intensity persists.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹826.24 Cr | +26.6% | +17.6% |
| EBIT | ₹128.28 Cr | N/A | |
| Net profit | ₹82.77 Cr | +82.7% | |
| EPS | ₹9.07 | +83.2% | |
| EBIT margin | 16.4% |
P&L walk
Consolidated revenue accelerated to ₹82,624 lakh, up 26.6% YoY and 17.6% QoQ; lower raw-material intensity and operating-cost absorption lifted EBIT margin to 16.4%, while PAT rose 82.7% YoY to ₹8,277 lakh.
Segments
The company reports one pharmaceutical segment; the consolidated PAT of ₹8,277 lakh materially exceeded standalone PAT of ₹5,768 lakh, indicating that subsidiaries contributed positively to the group result.
Key positives
- Consolidated revenue reached ₹82,624 lakh, up 26.6% YoY versus 9.2% YoY in the preceding comparable quarter, indicating a material acceleration.
- EBIT margin expanded to 16.4%, up 210bps YoY, as employee cost grew 12.3% while revenue grew 26.6%.
- Raw-material cost declined to 57.8% of revenue from 59.0% YoY, supporting a 120bps gross-margin improvement.
- PAT rose 82.7% YoY to ₹8,277 lakh and EPS rose 83.2% to ₹9.07, with the PAT-to-EPS cross-check clean.
- PPE and CWIP both increased while depreciation rose 16.9% YoY, indicating that capacity investment is beginning to enter the earnings base.
Key concerns
- Gross-margin improvement was only 120bps YoY, below the 150bps threshold for a decisive input-cost tailwind, and the filing does not identify whether the benefit came from pricing, mix or input deflation.
- Gross borrowings increased by ₹4,378 lakh to ₹61,861 lakh from March 2026 while cash and bank balances were only ₹995 lakh.
- Finance cost rose 25.1% YoY to ₹963 lakh despite the improvement in operating profit, warranting monitoring as borrowings increase.
Research and educational content only. Not investment advice.