SMS Pharmaceuticals Ltd Q2 FY26: The API Chemist Who Went From Painkillers to Profit Killers (and Back Again)

1.At a Glance

Ladies and gentlemen, welcome to the chemical circus ofSMS Pharmaceuticals Ltd— the company that cooks APIs like Indian aunties cook achar: with precision, patience, and occasional burning sensations (mostly on the P&L). As ofNovember 2025, the stock is strutting at₹289, with amarket cap of ₹2,709 croreand astock P/E of 33.4x. Over the last three months, the stock jumped29%, proving once again that API chemistry can be as exciting as cricket if you add the right catalysts.

The company’sQ2 FY26 revenue stood at ₹242 crore, up23.2% YoY, whilePAT rose 76% YoYto ₹25 crore. That’s like going from a headache to a dopamine rush — quite fitting for a drug manufacturer. Margins bounced back to20% OPM, courtesy of better product mix and improved backward integration.

The fun part? Promoters upped their holding to68.1%, while mutual funds quietly snuck in through the side door. But before you think it’s all sunshine and ibuprofen, remember:34.6% of promoter holdings are pledged, proving once again that in pharma, leverage isn’t just for molecules.

2.Introduction – How an API Factory Became a Comeback Story

If Bollywood ever made a film about balance sheets, SMS Pharma would be the perfect protagonist — underdog beginnings, volatile middle years, and a fiery comeback. From a quiet Hyderabad-based API maker to one of India’s fastest-growing niche pharmaceutical exporters, this company has mixed science and survival with the same precision as its reaction vessels.

In FY22, the company’s margins took a nosedive — ibuprofen production launched at negative margins, input costs shot up, and analysts lost their patience faster than paracetamol dissolves in water. Yet here we are in FY26, with the company clocking18–20% EBITDA marginsand an81 crore TTM PAT.

Its recovery isn’t luck. It’s chemistry — backward integration, process efficiency, and a product mix that looks like a doctor’s prescription list: anti-retrovirals, anti-diabetics, anti-migraines, and more. In short, SMS Pharma doesn’t make pills; it makes the raw material for everyone else’s profit pills.

If every pharma company were a student, Sun Pharma would be the overachiever, Dr. Reddy’s the nerd, and SMS Pharma — the smart kid who passes exams by synthesizing the textbook.

3.Business Model – WTF Do They Even Do?

SMS Pharmaceuticals manufacturesActive Pharmaceutical Ingredients (APIs)andIntermediates. Think of it as the upstream of pharma — they make the “active” stuff that actually heals, while branded drug companies just package it in fancy tablets and ads with smiling models.

Their API portfolio includes over45 productsacross10+ therapeutic areas, such as anti-retroviral, anti-ulcer, anti-migraine, and anti-diabetic. With800+ customers across 75+ countries, the company is a behind-the-scenes supplier to giants likeCipla, Teva, Zydus, Alkem, and Johnson & Johnson.

TheAPI segmentcontributes a massive98% of revenue, while intermediates are just a supporting cast. The geographic mix is87% domestic,13% export— basically, most of their drugs are born and consumed in India itself.

They runtwo facilities: one at Hyderabad (200 KL) and another at Vizag (3,000 KL). Combined capacity:3,200 KL— enough to fill a few Olympic swimming pools with chemicals and still have room for margin expansion.

Their2025–26 capex planof ₹150 crore focuses on expanding production and completingPhase 2 backward integration(trial runs already done, commercial production from March 2025). In short — less importing, more reacting.

Ever wonder how much research goes into making a molecule profitable? SMS spends1.5–2% of its revenue on R&D, with60+ scientistsand a joint venture with Spain’sChemo Iberica.

So yes — while others import chemistry, SMS exports confidence.

4.Financials Overview

Quarterly Performance (₹ crore)

Annualised EPS:₹10.72