AARTI DRUGS: A PHARMA BUSINESS REGAINING MOMENTUM 💊

AARTIDRUGS India’s pharmaceutical opportunity is not only about finished medicines. The companies manufacturing APIs, formulations and specialty chemicals are also positioned to benefit from global healthcare demand. Aarti Drugs is building its presence across all three. Aarti Drugs operates in Active Pharmaceutical Ingredients (APIs), formulations, specialty chemicals and intermediates, serving domestic and international pharmaceutical markets. And Q2 FY27 delivered a strong performance. Q2 FY27 consolidated results: Revenue: ₹829 crore, up 27% YoY. EBITDA: ₹138 crore, up 63% YoY. EBITDA margin: 16.6%, expanding 370 basis points. PAT: ₹82.8 crore, up 83% YoY. H1 FY27 revenue increased 23% to ₹1,532 crore, while EBITDA grew 48% to ₹235 crore. The interesting part is the improving business mix. API revenue grew 17% YoY to ₹605 crore. Formulations revenue increased 58% to ₹130 crore. Specialty chemicals revenue surged 92% to ₹72 crore. The company is also strengthening backward integration through its Sayakha facility, which is helping meet a significant share of its metformin intermediate requirements internally. The growth opportunity comes from: Rising demand for pharmaceutical ingredients. Expansion in regulated markets. Higher contribution from formulations. Backward integration and manufacturing efficiency. Better capacity utilisation. The business flywheel: API demand → Manufacturing scale → Backward integration → Better cost efficiency → Margin improvement. However, investors should not extrapolate the latest margins blindly. Management has acknowledged that strong pricing realisations contributed meaningfully to Q2 growth, and margins could normalise. Export performance, regulatory compliance, raw-material costs, capex execution and competition remain important risks.