SMS Pharmaceuticals has announced a sharp jump in its FY26 performance, posting strong profit growth and margin expansion despite a mixed fourth quarter. 

The Hyderabad-based API and intermediates manufacturer delivered a standout year driven by operating leverage and cost efficiencies. 

Profit After Tax (PAT) rose 48% year-on-year to Rs. 102 crore (Rs. 101.98 crore) from Rs. 69.14 crore in FY25. This includes a Rs. 14 crore (Rs. 13.99 crore) contribution from associate company VKT Pharma. 

Revenue from operations climbed 13% to Rs. 886.87 crore, up from Rs. 782.75 crore in the previous year, supported by strong volumes across key API segments. 

EBITDA increased 23% to Rs. 171.28 crore, with margins improving to 19%, up 155 basis points from FY25, reflecting efficiency gains rather than pricing tailwinds. 

Gross profit stood at Rs. 302.83 crore, with a stable margin of 34%. Earnings per share rose 37% to Rs. 11.15, compared with Rs. 8.16 last year. 

The board recommended a final dividend of Rs. 0.40 per share (40%). 

In the March quarter (Q4FY26), revenue slipped 4% year-on-year to Rs. 237.95 crore, down from Rs. 248.20 crore in Q4FY25. The company attributed the decline to a deliberate shift away from lower-margin product categories. 

Management reduced exposure to the anti-diabetic segment while scaling up higher-margin anti-inflammatory and Anti-Retro Viral (ARV) APIs. 

Despite lower revenue, profitability strengthened sharply. Gross margin expanded 336 basis points to 34%, producing gross profit of Rs. 81.29 crore. EBITDA came in at Rs. 39.90 crore, with margins at 17%, while PAT surged 61% year-on-year to Rs. 32.71 crore. 

The company’s product strategy pivot was clearly reflected in FY26 segment performance: 

* ARV APIs surged 55% to Rs. 251.80 crore, becoming the largest revenue contributor at 28%.

* Anti-inflammatory products rose 20% to Rs. 177.05 crore (20% share).

* Anti-diabetic revenue fell 30% to Rs. 129.40 crore, dropping to 15% of total sales from 24%.

* Anti-epileptic APIs jumped 85% to Rs. 54.15 crore.

* Anti-anginal products climbed 70% to Rs. 41.52 crore. 

Other segments included Anti-migraine at Rs. 93.81 crore, Anti-erectile dysfunction at Rs. 53.68 crore, Anti-ulcer at Rs. 46.02 crore, and miscellaneous products at Rs. 39.44 crore.

Capacity expansion and R&D push 

SMS Pharmaceuticals Limited operates manufacturing facilities in Hyderabad and Visakhapatnam, with combined capacities of 200 KL and 3,000 KL. 

Its Rs. 280 crore capex programme remains on track for completion by FY27, aimed at expanding API capacity, launching new products, and strengthening R&D capabilities. 

During FY26, the company completed 12 regulatory filings including DMF and CEP submissions, with plans for 10 more in FY27. 

Executive Director P. Vamsi Krishna said the company expects structural cost advantages to support over 15% revenue growth in FY27, alongside EBITDA margins moving toward the 20% range. 

Growth is expected to be driven by backward integration, capacity additions, a stronger product mix, and contributions from VKT Pharma.