Operating margin jumps 7.49 points, but depreciation limits profit growth
Consolidated Q2FY27 revenue improved sequentially as costs fell, but depreciation rose 209.37% and kept pre-tax profit growth to 1.02%.
Filed 01 Nov 2026, 15:09 IST · after market close · Sai Parenterals Ltd (SAIPARENT)
Key takeaways
- Revenue grew 9.09% sequentially while expenses fell 0.30%, lifting operating margin by 7.49 percentage points to 20.65%.
- Net profit rose 32.70% sequentially, but a -6.28% tax rate and other income equal to 37.61% of pre-tax profit flattered earnings quality.
- Management said it plans Rs 571 crore of group-level capital deployment across injectable, oral, research and Australian projects.
Price around the results
Revenue growth came with lower operating costs
Sai Parenterals' consolidated revenue increased 9.09% sequentially to Rs 194.92 cr, while expenses declined 0.30% to Rs 154.68 cr. That combination lifted operating profit 71.09% and expanded operating margin by 7.49 percentage points to 20.65%. With no year-on-year comparison provided, the sequential improvement is the clearest read on Q2FY27 momentum.
Depreciation and tax distorted the profit conversion
Depreciation rose 209.37% sequentially to Rs 25.09 cr, offsetting much of the operating-profit improvement and leaving pre-tax profit up only 1.02%. Interest fell 4.06%, but other income still represented 37.61% of pre-tax profit. The tax rate moved down 25.35 percentage points to -6.28%, so the 32.70% increase in net profit was helped by a tax credit rather than operating gains alone.
Margin matched the healthcare peer median
The company's 20.65% operating margin matched the median for the 39 healthcare peers that had reported the same quarter. Results were filed after market close, so there is no reported market reaction to assess yet.
Management outlined capacity expansion and export constraints
Management said it has set a FY27 revenue target of Rs 750 crore and an EBITDA margin target of approximately 17%, while also seeing room for gross margin to move towards 50%. The company said Unit III expansion lifted capacity from 85.5 million to 155 million units per month, with output ramping up from Q4FY27. Management said accreditation is the main bottleneck because the group currently has no injectable-export accreditation for the European Union, alongside planned Rs 571 crore of capital deployment across four projects.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹195 cr | ₹179 cr | +9.09% |
| Other income | ₹4 cr | ₹4 cr | -0.53% |
| Expenses | ₹155 cr | ₹155 cr | -0.30% |
| Operating profit | ₹40 cr | ₹24 cr | +71.09% |
| Operating margin (%) | 20.65% | 13.16% | — |
| Interest | ₹9 cr | ₹9 cr | -4.06% |
| Depreciation | ₹25 cr | ₹8 cr | +209.37% |
| Profit before tax | ₹10 cr | ₹10 cr | +1.02% |
| Tax | ₹-1 cr | ₹2 cr | — |
| Net profit | ₹11 cr | ₹8 cr | +32.70% |
| EPS (₹) | ₹2.38 | ₹1.79 | +32.96% |
Operating margin of 20.65% compares with a Healthcare sector median of 20.65% across 39 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
- The company added 11 molecules and 22 SKUs in the Philippines during the quarter.
Guidance & outlook
- The company set a FY27 revenue target of Rs. 750 crore and an EBITDA margin target of approximately 17%.
- The company expects gross margin to move towards 50%.
Expansion
- The company plans Rs. 571 crore of group-level capital deployment across injectable, oral, research and Australian projects.
- Unit III expansion increased capacity from 85.5 million to 155 million units per month, with output ramping up from Q4FY27.
New products
- The company added 11 molecules and 22 SKUs to its Philippines portfolio during the quarter.
New initiatives
- The company introduced first-in, first-out controls through a new ERP system to reduce inventory levels.
- Sai Prathyak Laboratories will house all group R&D and begin taking external CDMO development contracts.
Problems & risks
- The company identifies accreditation as the main bottleneck because it currently exports no injectables.
- No facility currently has injectable-export accreditation for the European Union.
- Earlier periods carried higher-cost inventory, which the company worked through during the quarter.
- Third-party contract manufacturers in Australia and New Zealand previously fell short on volumes supplied to Noumed.
What to watch
- Whether operating margin remains at or above 20.65% after the 7.49-percentage-point sequential expansion.
- Whether depreciation of Rs 25.09 cr changes as Unit III output ramps up from Q4FY27, as management said.
- Progress against management's stated FY27 targets of Rs 750 crore revenue and approximately 17% EBITDA margin.