SMS Pharma. Q1 FY27 Results (NSE: SMSPHARMA)
Signal: Growth reaccelerated
The read
Q1FY27 was a mixed quarter: standalone operations showed healthy operating leverage (EBITDA +10.6% vs revenue +5.6%, margin +100bps YoY) and a significant raw material cost tailwind, but consolidated PAT was nearly flat (+2% YoY) due to a 60% plunge in associate income from VKT Pharma. The PAT-to-EPS discrepancy (PAT up 2%, EPS down 3.5%) confirms equity dilution from the 5.6% share count increase in the past year. The sequential collapse in associate income from Q4FY26's ₹1,175 Lakh to ₹71 Lakh shows that Q4FY26's massive 'other income' beat was non-recurring. The raw material cost ratio improved sharply YoY, indicating pricing power or input deflation benefiting the API business.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹206.96 Cr | 5.6% | -12.9% |
| EBIT | ₹32.7 Cr | 8.2% | |
| Net profit | ₹20.91 Cr | 2.0% | |
| EPS | ₹2.23 | -3.5% | |
| EBIT margin | 20.6% |
P&L walk
Revenue grew modestly (+5.6% YoY) while EBITDA margin expanded to 20.6% (+10bps) as raw material cost % declined sharply. The sequential collapse in associate income (₹1,175 Lakh in Q4FY26 to ₹71 Lakh) compressed PAT growth to just +2% YoY. Standalone PAT rose 16% YoY, benefiting from operating leverage and lower input costs.
Segments
Single segment; all activity is in API manufacturing.
Key positives
- Raw material cost % of revenue improved from 74.1% to 66.0% YoY, a tailwind of 810bps for standalone operations.
- Standalone EBITDA grew 10.6% YoY vs revenue +5.6%, demonstrating operating leverage on fixed costs.
- Standalone PAT grew 16% YoY, driven by cost efficiencies and margin expansion.
- Balance sheet shows no exceptional items or auditor qualifications (unmodified opinion).
Key concerns
- Consolidated PAT nearly flat (+2% YoY) as associate income from VKT Pharma dropped 60% YoY from ₹177.58 Lakh to ₹70.80 Lakh.
- EPS fell 3.5% YoY despite PAT growth, due to 5.6% equity dilution from share count increase.
- Sequential revenue decline of 12.9% QoQ and EBITDA margin contraction of 350bps QoQ indicate Q1 seasonality or lumpy order pattern.
- Employee cost % of revenue rose to 11.4% from 9.3% YoY (+210bps), partially offsetting raw material tailwind.
Research and educational content only. Not investment advice.