Summary
Fredun Pharmaceuticals Limited - Q3 FY26 Earnings Call Summary Thursday, February 12, 2026 12:00 p.m.
Event Participants
Executives 4 Fredun Medhora (MD & CFO), Gajanan, Khanjan, Rakesh
Analysts 8 Abhi Jain (AJ Capital), Dixit Doshi (Whitestone Financial), Gaurav Shukla (Fin Investors), Ishika (Perpetuity Ventures), Keshav Toshniwal (Kanakala Capital), Kush Gangar (Care PMS), Lavneesh (BlueOcean Asset Management), Pritesh (Lucky)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹160.92 crores | +57% YoY; Driven by strong traction in new brands and volume growth. |
| EBITDA | ₹26.34 crores | +99% YoY; Reflects significant operational leverage. |
| EBITDA Margin | 16% | +384 bps YoY; Margin expansion fueled by higher-margin new-age business segments. |
| Net Profit (PAT) | ₹10.48 crores | +96% YoY; Doubled compared to the previous year. |
| PAT Margin | 7% | +100 bps YoY (approx); Management indicates 5-6% as a sustainable conservative baseline. |
| EPS | ₹22.19 | +96% YoY; Calculated on a quarterly basis. |
| 9M Total Income | ₹426 crores | +48% YoY; On track for the FY26 target of ₹550-₹580 crores. |
| 9M Net Profit | ₹26.98 crores | +96% YoY; Significant profitability improvement over 9M FY25. |
Geographic & Segment Commentary
- Vintage (Legacy) Business: This segment comprises direct exports (₹118-₹120 crores annually), institutional sales (₹40-₹45 crores), and third-party/tolling business (₹90-₹100 crores). It is growing at a steady rate of 12% to 18% YoY, supported by a pipeline of 1,300 to 1,400 product registrations.
- New-Age Business (Gx, Pet Care, Nutri): Projected to contribute 51% of total revenue by FY29-30. Current annualized run rates include Generics (Gx) at ₹60 crores, Pet Care at ₹42 crores, and Nutritional business at ₹26 crores.
- Mobility & Healthcare: Focused on orthotics (Braceon brand), diagnostics (DGon/Nebon), and wheelchairs. Management is adding 30-40 retail outlets weekly and plans to launch a specialized physiotherapy range in April 2026.
Company-Specific & Strategic Commentary
- Capacity Expansion: The company operates a cluster of three plants and has recently commenced operations at a fourth facility. Additionally, it utilizes 37 partner facilities to maintain an asset-light model for diversified product lines like mobility.
- Market Diversification: Strategically focusing on “manufacturing in India for India” over the next decade. Management clarified they have no immediate intentions to enter the U.S. or European markets, insulating the firm from international regulatory shifts.
- Fund Utilization: Following a recent QIP, the company has sufficient funds for the next 12-18 months. Capital is being deployed primarily for working capital and new machinery to support rapid expansion.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue | ₹550 - ₹580 crores for FY26 | Management expresses high confidence in overachieving current conservative targets. |
| Revenue Mix | 51% New-Age by FY29-30 | Long-term shift toward higher-margin branded segments (Pet care, Dermaceuticals). |
| Profitability | Further jump in next 6-7 quarters | Expected as operational efficiencies kick in for high-margin brands (50-70% gross margins). |
| Working Capital | Improvement over 2-3 quarters | Recent QIP funds will be used to optimize the cash cycle and reduce finance costs. |
Risks & Constraints
| Risk | Context |
|---|---|
| Seasonality | The March quarter is historically the strongest but often requires higher discounts/schemes to penetrate retail shelves, which can pressure margins. |
| Working Capital Intensity | Rapid growth requires high working capital; finance costs have risen recently due to bank transitions and machinery loans. |
| Execution Risk | Penetration in the mobility segment is slow due to the volumetric nature of products (e.g., wheelchairs) requiring physical shelf space and tactile customer verification. |
Q&A Highlights
Segment Reporting & Transparency
- Question: Can the company provide a clear breakup between legacy and new-age business in quarterly releases? (Lavneesh)
- Answer: Management acknowledged this as a good suggestion and will consider including this split in future reporting to assist investors (Fredun Medhora).
Margin Sustainability
- Question: Are current margin levels sustainable given the raw material outlook? (Sayandeep)
- Answer: While maintaining growth percentages on large bases is difficult, PAT should see a “sudden jump” in the next 6-7 quarters as high-margin brands (Dermaceuticals/Pet Care) achieve cost efficiencies (Fredun Medhora).
Inventory & Receivables
- Question: What is the status of trade receivables and inventory? (Dixit Doshi)
- Answer: Receivables are cyclic; while they may appear high at year-end, they are robust. Inventory remains identical to the previous quarter with zero material risk of write-offs (Fredun Medhora).
Strategic Direction
- Question: Will the company sell into the U.S. or EU markets following recent trade deals? (Gaurav Shukla)
- Answer: The company does not sell to the U.S./EU and does not intend to. The focus for the next decade remains the domestic Indian market (Fredun Medhora).
Key Takeaway
Fredun Pharmaceuticals delivered a robust Q3 FY26, characterized by a 57% YoY revenue growth and a near doubling of net profit to ₹10.48 crores. The company is successfully transitioning its mix toward “New-Age” segments—including Pet Care, Nutri, and Mobility—which command gross margins of 50-70% and are expected to constitute 51% of the business by FY30. While the vintage export and institutional business continues to grow steadily at 12-18%, the recent QIP provides the necessary liquidity to fund working capital for its aggressive domestic retail expansion. Management maintains a conservative outlook but anticipates significant profitability leaps over the next 6-7 quarters as operational leverage takes hold. The company remains committed to the Indian market, avoiding the volatility of U.S./EU exports, and is currently focused on scaling its specialty brands across more Indian states.
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