Piramal Pharma Q2 FY27 Earnings Call: Raises Revenue Guidance to 19-20%, CDMO Growth Accelerates With 22 New Logos (PPLPHARMA)

Piramal Pharma Ltd held its Q2 FY27 earnings call on October 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Quarter Prompts a Raise to FY27 Revenue Guidance

• Q2 FY27 revenue of Rs.2,617 crore, +28% YoY — EBITDA grew 72% YoY to Rs.385 crore; H1 FY27 revenue grew 23% to Rs.4,887 crore with EBITDA up 72% to Rs.669 crore.
• EBITDA margins expanded >350 bps in both Q2 FY27 and H1 FY27, driven by better capacity utilization, operating leverage and cost discipline.
• FY27 revenue guidance upgraded to ~19-20% growth — versus earlier guidance of early-to-mid-teens growth, with meaningfully higher profitability growth; H2 FY27 expected stronger than H1 FY27, consistent with prior-year trends.
• Gross margin trajectory — CFO Vivek Valsaraj reiterated the historical average of 64-65% is what the company will move towards on a full-year FY 2026-2027 basis; Q2 gross margin was stable, aided by balanced growth across India and North America facilities.
• Margin sustainability — Chairperson Nandini Piramal said current margins are sustainable into FY 2027-2028, with fixed costs largely controlled so incremental revenue flows down to EBITDA; further improvement is expected, conditional on revenues continuing at the intended pace (no specific target quantified).

Innovation-Led Growth Accelerates; 22 New Logos in H1

• CDMO revenue +36% YoY to Rs.1,424 crore in Q2 FY27 — H1 FY27 +28% to Rs.2,611 crore, with sustained RFP and order buildup giving greater visibility; management expects momentum to continue through FY27.
• 22 new customers added in H1 FY27 — defined as companies with no prior business history with Piramal; wins skew biotech-heavy but include big pharma names, and new logo profile aligns with previously shared KPIs.
• Innovation mix at 49% of CDMO in H1 FY27 (vs 46% in H1 FY26); on-patent commercial manufacturing revenue +39% YoY, described as fairly broad-based across multiple products; phase 3 molecules rose from 25 (March 2026) to 28 (September 2026); differentiated revenues at 43% of CDMO vs 40% at end of FY26.
• ADC revenues +>50% YoY — ADC services revenue across all sites totaled ~$40 million in H1 FY27; capacity utilization at the ADC site is improving on better order inflow; ADC will be disclosed only annually.
• Innovation/on-patent mix to exceed 50% — responding to a question framed around the company's 2030 directional target, Nandini Piramal said innovation and on-patent commercial manufacturing are expected to grow faster than the rest of the business and exceed 50% of the business within the next couple of years (FY 2027-2028 to FY 2028-2029).
• GLP-1 excluded — Nandini Piramal stated Piramal is "not really participating in the GLP-1 opportunity"; focus is on niche peptides and third-party contract manufacturing, with peptide capabilities at Turbay plus earlier-stage work at Digwal and Ennore.
• No high single-customer concentration — Peter DeYoung said the customer concentration mix shared at end of FY 2025-2026 has not changed materially; management will no longer discuss individual customers (including the large FY27 PO).

North America Ahead of Plan; Lexington Expansion on a Three-Step Timeline

• North America performing ahead of prior years and ahead of plan in FY27 — higher RFP inflow, higher order booking and higher revenue realization across all sites, explicitly not at the expense of India ("balanced growth").
• Nearshoring clarified — Peter DeYoung said prior Q1 FY27 commentary may have been misinterpreted; the intent was broad-based demand across North America, UK and India ("multiple pistons, not a single engine").
• Lexington expansion: three go-lives — (1) micro expansion lab live in October 2026 around CPHI; (2) legacy-facility Annex 1 upgrade most likely early CY 2027; (3) full expansion go-live at end of CY 2027; 3 anchor customers already signed for their specific batches.
• Lexington mix shift expected — the massive vials and lyophilization capacity increase (exact% not disclosed) is expected to attract commercial tech transfers and shift the site toward commercial, which management believes will benefit margins.
• Morpeth USFDA observations (September 2026) — the company has responded to the FDA and expects timely resolution through monthly updates, as with all prior audits; remediation is primarily people and processes, with no large remediation-specific capex and no major change to the capex trajectory.
• Morpeth capex limited to maintenance and compliance — no significant growth capex; management sees meaningful benefit to owning a European drug product facility near the UK/EU end market in the "global-local" environment.
• Sellersville break-even not committed — management is seeing improved revenue translate into EBITDA improvement in FY 2026-2027 across its 4 North American sites; if the trend continues, the dialogue around some North American sites would change.

Sevoflurane Leadership Holds; Kenalog Transition Is the Watch Item

• Complex hospital generics +32% YoY to Rs.849 crore in Q2 FY27 — H1 FY27 +24% to Rs.1,592 crore; US sevoflurane value share maintained at 48% with the #1 position in intrathecal baclofen.
• Kenalog contributed to Q2 FY27 revenues — flagged as an important growth catalyst for FY27; interim supply is tight and expected to remain tight while manufacturing transitions to a new CMO (no specific timeframe; the CMO has met all timelines committed to the original owner and to Piramal).
• ROW sevoflurane wins — a couple of rest-of-world contract wins in Q2 FY27 were described as a "substantial" driver of incremental YoY base business growth; H2 FY27 supported by ROW inhalation anesthesia share expansion and Kenalog.
• Consumer healthcare +13% YoY to Rs.359 crore in Q2 FY27 — H1 FY27 +14% to Rs.706 crore; power brands grew 21% (53% of sales) and e-commerce grew 32% (28% of sales); premium "Visible" range launched under Lacto Calamine.
• OTC margin path — on the target of double-digit OTC margins by FY30, Nandini Piramal said the segment is currently single-digit profitable and, asked if on track, said "we'll be close to it."
• Bayer distribution agreement expires December 2026 — management is working jointly with Bayer on an orderly transition; given the low-margin nature, no material impact expected on the FY27 outlook, with margins looking better once the business goes off; the manufacturing agreement "still continues" and divestment of associated assets was not addressed.

Biopharma Funding Recovery Feeding Through to RFPs and Orders

• RFP inflows up meaningfully since January 2026 (CY2026) — Peter DeYoung said client funding has improved meaningfully from October 2025 to date; the uptick in client order decisions began in Q4 FY 2025-2026 and has continued through FY 2026-2027.
• Better-than-seasonal H1 order booking — H1 is historically soft for CDMO order booking, but more orders were booked in H1 FY27 than in past H1 periods, attributed to commercial actions plus the supportive external environment.
• Industry-wide sentiment improving — Peter cited the recently released Endpoints survey as showing sector sentiment significantly improved versus 1-2 quarters ago, alongside higher-volume, action-oriented discussions at major conferences; dynamics he said are not unique to Piramal.
• Go-to-market transformation in progress — customer-facing headcount has been increased, but new additions are expected to bear fruit only in coming quarters given the onboarding-to-RFP lag.
• Funding-cycle exposure remains — over a 10-year horizon, Peter noted the CDMO sector does well when funding is available, the FDA is approving drugs and M&A takeouts occur; the commercial transformation targeting key accounts and large pharma is expected over time to reduce Piramal's historically higher exposure, but "the cycle remains."

Leverage Down, Carry-Forward Losses a Multi-Year Option

• Net debt/EBITDA at 3.4x as of Q2 FY27 — lower than 3.7x at March 2026 (FY 2025-2026 year-end), despite net debt increasing over H1 FY27 due to the Lexington expansion, the Kenalog acquisition, currency impact and Yapan.
• $580 million of carry-forward tax losses at overseas entities (as of Q2 FY27) — CFO Vivek Valsaraj said utilization is entity-specific and dependent on each site's turnaround; per long-range plans, management expects to start utilizing these losses over the next 2 to 3 year period (≈ FY 2027-2028 to FY 2029-2030).
• Deferred tax asset of Rs.494 crore on the balance sheet (Q2 FY27) — the CFO indicated the $580 million carry-forward losses imply a potential DTA of ~$120 million that could be created (period unspecified); DTAs to be recognized one-by-one as each overseas entity turns positive.
• ~70% of tax paid in India per the standalone accounts (FY 2026-2027), where profitability is relatively higher; on tax efficiency, the CFO said the company does "what is best possible within the realms of what the law permits" via transfer pricing.
• Q2 tax incidence drew analyst scrutiny — Vinod Jain flagged that Q2 tax nearly wiped out the quarter's entire profit; the CFO attributed current tax outflows to tax-paying jurisdictions.
• Capex prioritized toward growth areas — recent allocation went to US fill-finish, high-potent API and bioconjugation, with more modest investment in peptides (an area management still views as attractive); Riverview high-potency API expansion completed and the Lexington sterile fill-finish expansion progressing per plan.