Alivus Lifesciences Ltd Quarterly Results Q1 FY 26 stock analysis

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Sector Outlook: Neutral

Steady quarterly performance amid market headwinds

Alivus Life Sciences reported a revenue growth of 2.2% YoY / down 7.3% QoQ to Rs. 6,018 mn, below our expectations of Rs. 6,240 mn. The company reflected a modest YoY growth of 2.2%, driven mainly by a 14.5% YoY growth in the non-GPL business due to successful new launches. However, this was partially offset by a 22% YoY decline in the GPL business owing to inventory rationalisation by Glenmark. Geographically, growth was supported by India, Europe, LATAM, Japan, and other emerging markets. EBITDA increased 8.0% YoY / down 13.2% QoQ to Rs. 1,723 mn, while EBITDA margin stood at 28.6% (above 154bps YoY) in Q1FY26, aided by expansion in gross margins by 397bps YoY to 55.1%, aided by lower raw material costs and operational efficiencies. Profit after Tax stood at Rs. 1,215 mn (up 9.0% YoY / down 14.3% QoQ) in Q1FY26. PAT margin came at 20.2% versus 21.8% in the previous quarter. The company remains confident of achieving high single-digit revenue growth in FY26, with stronger momentum expected in the second half. Margins are projected to remain healthy in the 28–30% range.

Valuation and Outlook

Alivus Life Sciences delivered a steady performance in Q1FY26 despite headwinds in its GPL-linked business. Revenue growth was modest annually, primarily driven by strong growth in the non-GPL segment, aided by new launches and strong traction in chronic therapies. While the GPL business declined 22% annually due to inventory rationalisation, the company’s overall profitability improved, with gross margin expanding led by operating leverage and cost efficiencies. As we advance, the company maintains mid-teens volume growth guidance for FY26, though revenue growth is expected to be in high single digits due to pricing pressure. Stronger performance is expected in H2FY26, led by recovery in the GPL business and CDMO project ramp-up. The company has advanced its Rs. 600 crore CapEx plan for FY26, including Rs. 190 crore carried over from FY25. The Solapur facility is set to commence operations in Q4FY26, with ROW business expected in H1FY27. The Dahej brownfield expansion will support the ramp-up of the fourth CDMO project, while Ankleshwar is being expanded to cater to upcoming product launches. Despite the loss of PLI, EBITDA margins are projected to remain in the 28% to 30% band in the foreseeable future, supported by better gross margins and operational efficiencies. Overall, Alivus Life Sciences presents a combination of financial strength, growth visibility, and strategic expansion into premium pharmaceutical segments, making it an attractive long-term growth play. We, thus, believe Alivus is well-positioned to emerge as a key player in the global API and CDMO landscape in the coming years. We value the company at 27x FY26e EPS and arrive at a TP of Rs. 1,147 per share, implying an upside of 18%.

Key concall Highlights

The company’s high-potency API (HPAPI) pipeline is also advancing steadily, with 26 products under development targeting a total addressable market of approximately $61 billion. Out of these, 12 products already have firm customer interest, leading to validation in the plant, with commercial activity in the oncology and high-potential pipeline expected to commence from late FY27, timed with patent expiration in early markets.

New Generic APIs launches:

Alivus Life Sciences reported that the growth in its non-GPL business was led by successful new launches of generic APIs across multiple geographies, including India, Europe, LATAM, emerging markets, and Japan. This continuous introduction of new products is part of the company’s strategy to leverage its deep pipeline of 165 molecules and maintain strong growth in its API business, aiming for it to become a double-digit growth business in the future.

Therapy mix:

The company’s therapeutic mix indicates a strong focus on chronic therapies, which contributed 70% to the top line. The company highlighted that Cardiovascular and CNS therapies continued to lead to growth during that quarter.

Strong Client Relationship:

Alivus showcase strong client relationships through several key aspects of its operations and strategic planning. The company benefits from a long-standing contractual obligation with Glenmark Pharma, which provides security for its GPL business, even amidst quarterly fluctuations. Their commitment to clients is also evident in their pipeline development, which is directly influenced by customer interest.

CDMO Outlook:

The CDMO business for Alivus Life Sciences remained subdued in Q1FY26 but is expected to witness a significant ramp-up in H2FY26. Validation batches for the fifth CDMO project have already commenced, with commercialisation anticipated in H2FY26. Alivus is confident that all five currently active CDMO projects will be commercial by the second half of the fiscal year, potentially reaching a run-rate of Rs. 50 crores per quarter. Management expects the CDMO segment to contribute meaningfully over the next 3–5 years, with revenue share increasing from the current ~6–7% to around 12–15%. The management remains optimistic that CDMO will be a significant value contributor, supported by differentiated capabilities and strong execution.

Capex Plan:

The company has received a total Capex outlay of Rs. 600 crores for FY26, which includes a carryover of Rs. 190 crores from FY25. This planned investment is directed toward completing key projects, including the Solapur greenfield facility, which is expected to go live in Q4FY26, and two major brownfield expansions at Ankleshwar and Dahej. These capex initiatives are aligned with its strategic goals of enhancing capacity for both generic APIs and CDMO services, including backwards integration and support for new molecule launches.

Ankleshwar Facility Update:

The site is currently undergoing a brownfield expansion to meet increasing demand from the company’s deepening product pipeline, particularly in high-potency APIs and specialty molecules. Ankleshwar is expected to continue contributing significantly to revenue and capacity utilisation in the near to medium term.