Alembic’s Q4 profit surge gets a tax-rate lift as margin eases
Standalone operating profit grew +60.60% YoY, but sequential costs outpaced revenue and the margin remained below the healthcare peer median.
Filed 13 Jul 2026, 15:29 IST · Alembic Pharmaceuticals Ltd (APLLTD)
Key takeaways
- Standalone Q4 revenue grew +9.43% YoY, while operating profit rose +60.60% as expenses increased only +3.19%.
- Standalone net profit increased +222.63% YoY, helped by a tax rate of -40.13% versus +17.72% a year earlier.
- Operating margin declined 0.59 percentage points QoQ to 15.95%, which was 7.43 percentage points below the median of 48 healthcare peers.
Price around the results
Operating leverage drove the YoY profit gain
Revenue grew +9.43% YoY while expenses rose only +3.19%, lifting operating margin by 5.09 percentage points. Interest expense fell +18.09%, which further supported the improvement in pre-tax profit. The sequential picture was weaker: expenses grew +5.40% against revenue growth of +4.66%.
Margin has declined for two quarters from the Q2 peak
Operating margin fell from 16.89% in Q2FY26 to 16.54% in Q3FY26 and 15.95% in Q4FY26. This is a second consecutive quarterly decline, with the latest drop caused by costs growing faster than revenue. Management said API growth was tempered by pricing challenges, while Ex-US performance was muted by a higher base and one-off variances.
The tax credit mattered more than other income
The tax rate moved to -40.13% from +17.72% a year earlier, a decline of 57.85 percentage points, giving reported net profit a substantial lift. Other income contributed only +0.65% of pre-tax profit, so the earnings increase was not driven by non-operating income. The sequential tax-rate change was even larger at 57.65 percentage points.
Margin trails healthcare peers despite the YoY recovery
Alembic’s standalone operating margin of 15.95% was 7.43 percentage points below the 23.38% median for 48 healthcare companies that had reported the quarter, placing it eighth from the bottom. Management said future growth is expected to come from product launches and geographical diversification, and that it continues to invest in product pipelines. The company said it has established subsidiaries in Thailand, the Philippines and Germany, while its API business remains focused on cost efficiency.
The market reaction was weaker than Alembic’s usual early move
The stock was down 0.20% on the reaction day, then fell 3.82% by day five and 5.12% by day 15 before gaining 4.72% by day 30. The five-day decline was larger than the stock’s median absolute post-results move of 2.88%. Its previous eight results reactions were evenly split, with four rises and four declines.
Q4FY26 at a glance
Standalone figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,719 cr | ₹1,642 cr | +4.66% | +9.43% |
| Other income | ₹1 cr | ₹-32 cr | — | -91.52% |
| Expenses | ₹1,445 cr | ₹1,371 cr | +5.40% | +3.19% |
| Operating profit | ₹274 cr | ₹272 cr | +0.91% | +60.60% |
| Operating margin (%) | 15.95% | 16.54% | — | — |
| Interest | ₹19 cr | ₹22 cr | -10.30% | -18.09% |
| Depreciation | ₹82 cr | ₹80 cr | +3.31% | +20.00% |
| Profit before tax | ₹173 cr | ₹139 cr | +24.99% | +89.45% |
| Tax | ₹-70 cr | ₹24 cr | — | — |
| Net profit | ₹243 cr | ₹114 cr | +112.34% | +222.63% |
| EPS (₹) | ₹12.37 | ₹5.82 | +112.54% | +222.98% |
Operating margin of 15.95% compares with a Healthcare sector median of 23.38% across 48 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -0.20% | -0.01% |
| Next session | -7.80% | — |
| 5 sessions | -3.82% | -3.94% |
| 15 sessions | -5.12% | — |
| 30 sessions | +4.72% | — |
Volume on the results session was 2.63× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- Future growth is expected to be supported by product launches and geographical diversification.
- Alembic targets 63% GHG emission reduction by 2034 and 90% by 2050.
- Alembic targets water neutrality and planting 50,000 trees by 2027.
Expansion
- The company has set up subsidiaries in Thailand, the Philippines and Germany.
New initiatives
- Alembic is continuing to invest in building product pipelines.
- The API business is focused on cost efficiency to remain competitive.
Problems & risks
- Ex-US quarterly performance was muted because of a higher base effect and one-off variances.
- API growth was tempered by pricing challenges.
- Ex-US revenue declined 2% year over year in the quarter.
What to watch
- Whether operating margin recovers from 15.95% after two sequential declines from 16.89% in Q2FY26.
- Whether expenses continue to grow faster than revenue after rising +5.40% versus revenue growth of +4.66% QoQ.
- Whether reported earnings remain affected by the tax rate after it moved to -40.13% in Q4FY26.