Operating margin recovers, but lower other income cuts profit year on year
Standalone revenue growth outpaced expenses, but other income made up 61.41% of pre-tax profit and net profit fell despite a 1.48-point margin gain.
Filed 27 Oct 2026, 21:02 IST · after market close · Piramal Pharma Ltd (PPLPHARMA)
Key takeaways
- Standalone revenue grew +19.35% year on year to Rs 1,345.38 cr, while operating margin expanded 1.48 percentage points to 12.75%.
- Net profit declined -13.03% year on year because other income fell -31.71% and the tax rate rose 3.33 percentage points, despite operating profit growth of +34.96%.
- Other income contributed 61.41% of profit before tax, leaving Piramal Pharma's operating margin 9.97 percentage points below the 22.72% median of 16 reporting healthcare peers.
Price around the results
Revenue growth restored operating leverage
Standalone revenue rose +19.35% year on year and +19.59% sequentially, while expenses grew more slowly at +17.37% and +16.46%, respectively. That spread lifted operating margin by 1.48 percentage points year on year and 2.35 percentage points from Q1FY27. The margin recovery follows a fall from 20.37% in Q4FY26 to 10.40% in Q1FY27, but the current 12.75% remains below Q4FY26.
Other income diluted the operating improvement
Other income fell -31.71% year on year to Rs 137.93 cr, and accounted for 61.41% of profit before tax. Interest expense declined -15.26%, but the tax rate rose from 20.65% to 23.98%, or 3.33 percentage points, which outweighed the operating profit increase in reported net profit. Net profit therefore fell -13.03% year on year, even as operating profit rose +34.96%.
Margin remains below the healthcare peer set
Piramal Pharma's 12.75% operating margin was 9.97 percentage points below the 22.72% median for the 16 healthcare peers that had reported the quarter. It ranked third from the bottom on this measure. Sequentially, however, the margin improved from 10.40%, interrupting the decline seen after Q4FY26.
Management points to CDMO and consumer expansion
Management said Kenalog contributed to CHG revenue in Q2FY27 and expects it to be an important FY27 growth driver; it also said 22 new customers were added in H1FY27 after strong RFP activity. The company said it upgraded FY27 revenue-growth guidance to 19%-20% with meaningfully higher profitability, and expects momentum to continue through FY27 with H2 typically stronger than H1. Management also said the Lexington expansion remains on track for sterile fill-finish capabilities, while the Bayer distribution agreement is expected to have no material impact on FY27 guidance despite its planned expiry in December 2026.
No immediate market reaction; past moves were evenly split
The standalone results were filed after market close, so there is no market reaction to report yet. After the previous eight results, the stock rose four times and fell four times, with a median absolute move of 2.63%. The historical pattern therefore offers no clear directional bias for the current release.
Q2FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,345 cr | ₹1,125 cr | +19.59% | +19.35% |
| Other income | ₹138 cr | ₹115 cr | +20.33% | -31.71% |
| Expenses | ₹1,174 cr | ₹1,008 cr | +16.46% | +17.37% |
| Operating profit | ₹172 cr | ₹117 cr | +46.66% | +34.96% |
| Operating margin (%) | 12.75% | 10.40% | — | — |
| Interest | ₹17 cr | ₹16 cr | +5.56% | -15.26% |
| Depreciation | ₹68 cr | ₹66 cr | +2.78% | +10.30% |
| Profit before tax | ₹225 cr | ₹149 cr | +50.25% | -9.22% |
| Tax | ₹54 cr | ₹36 cr | +49.61% | +5.44% |
| Net profit | ₹171 cr | ₹113 cr | +50.46% | -13.03% |
| EPS (₹) | ₹1.29 | ₹0.85 | +51.76% | -12.84% |
Operating margin of 12.75% compares with a Healthcare sector median of 22.72% across 16 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Kenalog contributed to CHG revenue during Q2FY27 and is expected to be an important FY27 growth driver.
Guidance & outlook
- The company upgraded FY27 guidance to 19%–20% revenue growth with meaningfully higher profitability.
- The company expects growth momentum to continue through FY27, with the second half typically stronger than the first.
- The company expects H2 momentum to continue for CDMO after strong growth across India and overseas sites.
- The Bayer distribution agreement is expected to have no material impact on FY27 guidance.
Expansion
- The Lexington expansion is on track to add sterile fill-finish capabilities and complete the integrated ADC offering.
- The company acquired a controlling stake in Yapan Bio to strengthen its biologics capabilities.
- The company commissioned a new microbiology laboratory at the Lexington site.
- The company is continuing to invest in capacities and capabilities across its CDMO network.
New orders
- The company added 22 new customers during H1FY27 following strong RFP activity and order inflows.
New initiatives
- The company launched the Vizible range under Lacto Calamine for premium skincare.
- The company is prioritizing fewer, high-potential consumer launches to improve success rates and portfolio quality.
- The company is expanding distribution across smaller towns, modern trade and non-chemist channels.
Competition
- The company maintained leadership in the US Sevoflurane market with a 48% value share.
- The company maintained the number-one position in the US Intrathecal Baclofen market.
Problems & risks
- The Bayer distribution agreement will naturally expire in December 2026.
- The Bayer transition includes a significant field-force transition.
What to watch
- Whether operating margin extends its recovery from 10.40% in Q1FY27 to 12.75% in Q2FY27.
- Whether other income remains below the Q2FY26 level of Rs 201.97 cr, given its 61.41% share of pre-tax profit this quarter.
- Progress against management's FY27 revenue-growth guidance of 19%-20%, including CDMO momentum after 22 new H1FY27 customers.