Beta Drugs Limited Stock Analysis

Gross margin expansion to 59% in Q3FY26 from 52% in Q3FY25 demonstrates improved pricing power and product mix optimization / Own branded sales grew 33% YoY indicating strong market acceptance and reduced dependency on lower-margin CDMO business / EBITDA margins maintained at robust 22% despite 21% increase in employee costs from strategic hiring in regulatory, manufacturing, and QA/QC teams / Strategic de-focus on Platins (from INR 46.50 Crores in FY25 to INR 31.60 Crores YTD Dec'25) positions company for higher-margin product portfolio / FY27 revenue guidance of INR 530 Crores represents 32.5% growth over revised FY26 target of INR 400 Crores with improved EBITDA margins at ~24% / Cash generation capability remains intact with PAT margins at 9.5% despite increased interest burden from CCD financing

Flat revenue growth in Q3FY26 compared to previous year driven by weak CDMO sales and delayed export tenders due to geopolitical tensions in Latin America / Interest expenses surged 137% to INR 4.43 Crores from INR 1.87 Crores YoY due to CCD financing, pressuring net profitability / Employee expenses jumped 21% YoY as company invested in senior-level hiring, compressing operating leverage despite margin improvements / Export sales impacted by tender delays and Latin American geopolitical risks, creating uncertainty around international revenue streams / Revenue guidance downgraded from INR 420 Crores to INR 400 Crores for FY26 reflecting execution challenges in transitioning away from Platin sales / Consolidated results include three subsidiaries (Adley Formulations, Adley Lab, Beta Research) whose financials were not independently audited, raising transparency concerns

Gross margin expanded sharply to 59% in Q3FY26 from 52% in Q3FY25, signaling better product mix and pricing quality. / Own branded sales grew 33% YoY, indicating stronger traction in higher-margin oral products. / Operating profitability remained resilient with Q3FY26 EBITDA of INR 19.28 crore and EBITDA margin of 22% despite flat sales. / The company stayed profitable with Q3FY26 PAT of INR 8.51 crore and PAT margin of 9.5%. / Management is intentionally shifting away from lower-priority Platin business (INR 31.60 crore YTD Dec'25) toward higher-margin products, a positive strategic quality move.

Top-line momentum is weak, with Q3FY26 sales reported as flat YoY despite internal segment growth. / FY26 revenue guidance was cut from INR 420 crore to INR 400 crore, indicating weaker near-term demand/visibility. / Interest expense rose materially to INR 4.43 crore from INR 1.87 crore due to CCD-related cost, pressuring net earnings. / Employee expenses increased 21% YoY due to senior hiring in Regulatory, Manufacturing, and QA/QC, limiting EBITDA margin expansion. / Export and CDMO visibility is uncertain: key tenders were pushed out, Latin America geopolitical tensions affected exports, and no additional Platin sales are expected in Q4FY26.