Downgrades

We expect growth momentum to sustain over the coming quarters, supported by steady demand across regulated markets, scale-up of the Module E facility, and a stronger mix from high-value therapies.

Granules India appears to be entering a phase of structural recovery, supported by steady progress on regulatory milestones (notably the remediation of Gagillapur) and a 40% incremental formulation capacity expansion at its Genome Valley site, which should meaningfully reduce supply constraints.

The YoY numbers for the quarter are not comparable due to low base of FY25. Post the Gagillapur USFDA warning letter, the company has focused on developing other facilities and also focused on incremental flings across markets. Besides CNS and ADHD, it is also focusing on Oncology as a segment with dedicated API and formulations block at Vizag. The management expects full revival of Gagillapur facility post clearance from the USFDA (Management meeting with USFDA scheduled in Jan 26) by filing new products. On the margins front, the numbers continued to...

ALKEM Laboratories (ALKEM) delivered better-than-expected revenue/EBITDA/PAT, with a beat of 6%/9%/13% for the quarter. The superior performance was driven by broad-based higher revenue growth and lower-than-expected R&D spend for the quarter.

Ipca Laboratories (IPCA) delivered slightly better-than-expected revenue in 2QFY26, while EBITDA/PAT beat our estimates by 18%/22%.

Management remains optimistic about performance in other regulated markets, anticipating stronger revenue growth in FY26 as European partners prepare for product launches. The company also expects these markets to eventually generate...

Q2FY26- Muted numbers on expected lines Revenues grew ~6% YoY to 8286 crore due to softness in the US (44% of the revenues) which grew 3% to 3638 crore. Europe (30% of the revenues) grew 18% to 2480 crore and ARV (~4% of the revenues) grew 68% to 325 crore. Growth Markets (~10% of the revenues) grew ~9% YoY to 882 crore (including India formulations). APIs de-grew at 17% YoY to 961 crores. EBITDA grew 7% YoY to 1678 crore while EBITDA margins increased 16 bps to 20.3%. EBITDA de-growth was mainly driven by increase in employee expenses....

Aurobindo Pharma delivered a steady quarter, with revenue growth driven mainly by formulations, particularly Europe and a stable US base supported by new product launches.

Firm expansion plans in place- In the US, the company is optically transitioning to B2C model to focus on high margin products. The company is also looking for third party ANDAs (4 already acquired, 5 more to come) as well as outsourcing some in-house products to the CMOs for optimal plant utilisation. This, we believe is a part of larger strategy where the company wants to increase the offerings via front-end and at the same time focusing on margin expansion. The legacy LatAm growth was slower seemingly on account of some saturation in the existing markets and focus...

GlaxoSmithKline Pharmaceuticals (GSK) reported weak Q2FY26 result. Revenue growth was negatively impacted due to supply-led issues at a CMO (~INR 400mn) and temporary impact of GST rate cut (~INR 300); adjusting for it, growth in general medicines segment stood at 6-7%.

Abbott India’s (Abbott) Q2FY26 revenue grew at a modest pace of 7.6% YoY. We believe moderation in growth was mainly due to discontinuation of insulin pens for Human Mixtard, Levemir and Xultophy by Novo Nordisk in India as it prioritises capacity for GLP-1 brands Ozempic and Wegovy.

Lupin (LPC) delivered better-than-expected performance for the quarter, with a 9%/30%/28% beat on revenue/EBITDA/PAT.

Zydus Lifesciences’ (Zydus) recent acquisitions in consumer wellness and medtech divisions helped it in driving a beat in Q2FY26 revenue though subdued margins of these businesses and lower revenue of gRevlimid dragged EBITDA margin (down 28bps YoY and 426bps QoQ).

We maintain our BUY recommendation on the stock with a TP of Rs 1,345/share.

Aurobindo’s Q2FY26 performance was steady, helped by its Europe (+17.8%) and ARV (68.4%) verticals. US sales, at USD 417mn, beat our expectation; though, gRevlimid sales slipped sequentially.

We remain constructive on Zydus Lifesciences given its improving business mix, continued progress on complex launches, and stable performance in India formulations.

Q2FY26- Decent numbers despite flat US growth - Revenues grew ~9% YoY to 14478.3 crore driven mainly by growth in India, global specialty portfolio (now named as Innovative products), RoW and Emerging Markets. India growth was strong at 11% to 4735 crore. The US remained flat YoY with a revenue of 4329 crore due to weakness in generics which was made good by Innovative traction to some extent. RoW markets reported growth of ~23% to 2041 crore, mainly due to growth in both generics and specialty. Emerging markets grew ~16% to 2837 crore,...

Sun’s 2QFY26 EBITDA was ahead of the street and our estimates (by ~12%), on the back of a marginally higher gross margin and lower R&D spend.

Blue Jet Healthcare (BLUEJET) reported revenue of INR1.7b, marking a decline of 21% YoY, primarily due to a higher proportion of goods remaining in transit, which led to delayed revenue recognition.

Q2FY26- Momentum driven by US and India Business - Revenues grew ~14% YoY to 1354 crore driven by US and India branded business which grew ~48% / ~12% to 344 crore and 432 crore, respectively. Other branded businesses such as Asia and Africa witnessed the growth of 5% / 4% (on higher base) to 310 crore and 221 crore, respectively. On the operational front, EBITDA grew 5.4% YoY to ~328 crore (excluding forex losses of 41 crore, 9 % growth to ~369 crore) with margins at 24.2%...