Quarter Marked by Step-Up in Scale
Granules India Ltd. (NSE: GRANULES) reported its financial results for the quarter ended 31 December 2025, with the December quarter standing out for the extent to which higher operating scale translated into improved profitability. The company recorded faster growth in earnings than in revenue, underscoring the impact of operating leverage during the period.
Revenue from operations rose to ₹13,879 million, representing 22% year-on-year growth. Profitability expanded at a quicker pace, with EBITDA rising 34% to ₹3,081 million and profit after tax increasing 28% to ₹1,502 million. The earnings presentation indicated that performance improvements were driven primarily by volume-led growth and efficiency gains, rather than pricing actions or exceptional items.
Operating Leverage Becomes More Visible
A defining feature of the quarter was the widening gap between revenue growth and profit growth. Margin improvement reflected better absorption of fixed costs over a larger revenue base as utilisation levels increased across manufacturing facilities. Compared with earlier periods, the December quarter showed a clearer conversion of scale into profitability.
Operational factors supporting margin expansion included:
- Higher throughput across key manufacturing plants
- Improved cost absorption at elevated production volumes
- Better operating efficiency across business segments
These factors contributed to earnings growth outpacing top-line expansion.
Finished Dosages Gain Momentum
Another notable development during the quarter was the increasing contribution of the finished dosages segment. Granules India has been transitioning over time from a predominantly bulk-drug-focused business toward a more formulations-led model, and the December quarter reflected further progress in this shift.
Growth in finished dosages was supported by steady demand in regulated markets and deeper engagement with existing customers. The segment benefited from product mix improvements and execution across key geographies. Meanwhile, the active pharmaceutical ingredients and pharmaceutical formulation intermediates segments delivered stable performance, supported largely by internal consumption and steady external demand.
The company reiterated that increasing the share of finished dosages remains central to its long-term strategy, given the segment’s relatively higher value addition.
Capacity Investments Start Reflecting in Results
The earnings presentation pointed to early signs that recent capacity additions and process optimisation initiatives are beginning to reflect in financial performance. Higher utilisation levels contributed to both revenue growth and margin expansion during the quarter.
Granules India continues to focus on backward integration and operational improvements aimed at enhancing supply chain reliability, reducing cost volatility, and supporting growth in value-added products. These initiatives are positioned as execution-focused measures designed to support sustainable growth rather than short-term gains.
Balance Sheet Discipline Maintained
While disclosures for the quarter focused primarily on operating performance, the company maintained a disciplined approach to capital allocation. Management commentary suggested that growth was achieved without disproportionate increases in operating expenses, supporting cash generation aligned with earnings growth. No material changes to capital structure or extraordinary items were highlighted during the quarter.
Industry Context
The broader pharmaceutical sector continues to navigate pricing pressure in parts of the global generics market, alongside ongoing regulatory and compliance requirements. Against this backdrop, Granules India’s December-quarter performance reflects execution-driven gains rather than favourable sector conditions.
Key Takeaways
- Earnings growth outpaced revenue growth, indicating operating leverage
- Finished dosages increased their contribution to overall performance
- Capacity expansion and efficiency initiatives began translating into results
- Growth was driven by scale and execution, not one-off factors
Looking ahead, market participants are likely to focus on the sustainability of margin gains, continued progress in finished dosages, and the impact of capacity investments as Granules India executes its longer-term growth strategy.