SMS Pharma expands margin as Q2 revenue jumps 52.73% QoQ
Costs grew slower than revenue, but the profit increase was not materially driven by tax or other income; management raised its FY27 outlook.
Filed 04 Nov 2026, 13:26 IST · SMS Pharmaceuticals Ltd (SMSPHARMA)
Key takeaways
- Consolidated revenue rose 52.73% QoQ to Rs 316.09 cr, while expenses grew 49.65%, lifting operating margin by 1.61 percentage points.
- Consolidated net profit increased 90.58% QoQ to Rs 39.85 cr, with the lower tax rate contributing only 0.14 percentage points and other income accounting for 3.05% of pre-tax profit.
- Management said FY27 revenue growth and EBITDA margins are expected to exceed earlier guidance, while the company remains on track for 10 DMF/CEP filings.
Price around the results
Revenue growth outpaced costs in Q2FY27
SMS Pharmaceuticals reported consolidated revenue growth of 52.73% QoQ, while expenses rose 49.65%, resulting in a 1.61-percentage-point expansion in operating margin. Net profit grew 90.58% QoQ to Rs 39.85 cr, and EPS rose 91.03% to Rs 4.26. Other income contributed 3.05% of pre-tax profit, so the earnings increase was primarily operational rather than driven by non-operating income.
Margin improved despite reported API price erosion
Management said gross margins remained stable despite price erosion, consistent with expenses growing more slowly than revenue in the quarter. Interest expense rose 4.36% QoQ and depreciation increased 4.50%, but the tax rate declined only 0.14 percentage points, limiting the benefit from tax changes. The company’s 21.40% operating margin matched the Healthcare-sector median across 69 reported peers.
Management raises FY27 expectations and advances capacity plans
Management said FY27 revenue growth and EBITDA margins are expected to exceed its earlier guidance, and that the company is on track to make 10 DMF/CEP filings during FY27. The company said its Rs 280 cr capital expenditure programme is targeted for completion by FY27, with spending directed towards capacity expansion for existing APIs. Management also said the peptides R&D facility is fully operational, with pilot-scale production targeted for Q4FY27 and initial CRO revenue anticipated in Q2FY28.
Operating margin has recovered from Q1FY27
Operating margin increased from 19.79% in Q1FY27 to 21.40% in Q2FY27, reversing the lower-margin starting point of the financial year. With only one prior quarter in the trend, the data supports a sequential improvement rather than a multi-quarter direction. The quarter’s margin was in line with the sector median, not above it.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹316 cr | ₹207 cr | +52.73% |
| Other income | ₹2 cr | ₹2 cr | -33.88% |
| Expenses | ₹248 cr | ₹166 cr | +49.65% |
| Operating profit | ₹68 cr | ₹41 cr | +65.23% |
| Operating margin (%) | 21.40% | 19.79% | — |
| Interest | ₹6 cr | ₹6 cr | +4.36% |
| Depreciation | ₹10 cr | ₹10 cr | +4.50% |
| Profit before tax | ₹53 cr | ₹28 cr | +90.25% |
| Tax | ₹13 cr | ₹7 cr | +89.29% |
| Net profit | ₹40 cr | ₹21 cr | +90.58% |
| EPS (₹) | ₹4.26 | ₹2.23 | +91.03% |
Operating margin of 21.40% compares with a Healthcare sector median of 21.40% across 69 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.
Guidance & outlook
- FY27 revenue growth and EBITDA margins are expected to exceed earlier guidance.
- The company is on track to meet its FY27 target of 10 DMF/CEP filings.
- Pilot-scale production from the peptides R&D facility is targeted for Q4FY27.
- Initial CRO revenue from peptides pilot-scale production is anticipated in Q2FY28.
- Average net asset turnover is targeted to reach 1.75 times over the next two to three years.
Expansion
- The ₹280 crore capital expenditure programme is targeted for completion by FY27.
- Capex is directed toward capacity expansion for existing APIs.
New initiatives
- The peptides R&D facility is now fully operational.
- The company aims to generate additional revenues through its arrangement with Chemo.
Competition
- The company is targeting to become the number-one player globally in anti-inflammatory products.
- The company expects market share wins in key APIs to support growth.
Problems & risks
- The company reports stable gross margins despite price erosion.
What to watch
- Whether operating margin holds above 21.40% after the Q2FY27 improvement.
- Progress towards the 10 DMF/CEP filing target for FY27.
- Completion of the Rs 280 cr capex programme and the Q4FY27 pilot-scale production target for peptides.