Ajanta Pharma Ltd Management Discussions

Economic Overview and Outlook

Once again, the global economy is threatened with being thrown off course—this time by the outbreak of war in the Middle East, which started at the end of February 2026. Given the difficulty of underpinning a consistent set of assumptions for projections, the World Economic Outlook (WEO) report published in April 2026 presents a reference forecast on the assumption that the war will have limited duration, intensity, and scope, such that the disruptions will fade by mid-2026.

Under the reference forecast, global growth is projected to be 3.1% in 2026 and 3.2% in 2027, slower than its recent pace of about 3.4% in 2024-25 and historical (2000-19) average of 3.7%. Global headline inflation is expected to increase to 4.4% in 2026 and decline to 3.7% in 2027, marking upward revisions for both years.

Crucially, there is a high degree of cross-country dispersion in the reference forecast. While the growth and inflation revisions seem relatively modest at the global level, the toll on the conflict region and commodity-importing emerging market and developing economies with pre-existing fragilities—is much more pronounced.

Pharmaceutical Sector Overview

Branded Generics: High-growth Opportunity in Emerging Markets

As per market research firm Research and Markets, the global Branded Generics market is forecast to grow from USD 393.5 billion in 2025 to USD 434.56 billion in 2026, a 10.4% annual growth. It is expected to see rapid growth in the next few years.

It will grow to USD 653.17 billion in 2030 at a CAGR of 10.7%. The growth in the forecast period can be attributed to expansion of Branded Generics portfolio, adoption of digital marketing, increasing partnerships with healthcare providers, growth in emerging markets, and advancements in drug formulation technologies. Major trends in the forecast period include increasing brand awareness among patients, marketing strategies focused on differentiation, growth in prescription volume for Branded Generics, rising physician preference for Branded Generics, and expansion of emerging markets for generic drugs.

The rising prevalence of chronic diseases is expected to drive growth in the Branded Generics market. Chronic diseases are long-lasting conditions that often cannot be fully cured but can be managed and controlled. Their incidence is increasing due to factors such as poor nutrition, physical inactivity, and excessive alcohol consumption. Globally, consumers are increasingly opting for Branded Generics to manage chronic diseases, as these medications are more affordable than standard treatments.

Among the Emerging Markets, the Indian Pharmaceutical Market (IPM) specifically continues to deliver robust growth. As per PharmaTrac, IPM registered annual growth of 8.6% for the year ending March 2026 to over H 2.46 trillion. This trajectory reflects the markets inherent resilience, consistent therapy- level performance, and strong fundamentals supporting long-term expansion. Projections indicate that the market will continue to expand nearly 2 times over the next six to seven years, fuelled by rising chronic disease prevalence, improved healthcare access, and government support for local manufacturing and R&D.

Branded Generics remain the backbone of the Indian market, accounting for nearly 87% of value. However, the market is becoming more competitive, with price-led growth outpacing volume, and increased substitution by trade generics.

US Generics Market: Growth and Business Potential

According to Precedence Research, the US generic drugs market is projected to reach approximately USD 243.70 billion by 2035, growing from an estimated USD 146.04 billion in 2025 at a Compound Annual Growth Rate (CAGR) of 5.25%.

The growth of this sector is underpinned by several critical factors that are reshaping the US pharmaceutical landscape, including

• Patent Expirations: A significant shift toward complex generics and biosimilars is occurring as numerous branded drugs face patent cliffs, providing substantial opportunities for generic manufacturers to enter the market.

• Disease Prevalence: The ageing US population and the rising prevalence of chronic and life-threatening conditions— including cancer, autoimmune diseases, and multiple sclerosis— are increasing the sustained demand for cost-effective therapeutic alternatives.

Company Overview

Ajanta Pharma is a specialty pharmaceuticals formulation company with a well-diversified Branded Generics business spread across India, Asia, and Africa; Generics in the USA and Institutional business in Africa. In Branded Generics business, the Company has a strong chronic- focused product portfolio led by a first-to-market strategy and front-end presence which helps it outgrow the market. The Company is committed to investing in R&D for product innovations to meet the unmet medical needs by filling identified gaps.

Performance Highlights

The following analysis and discussion are based on the consolidated financials of the Company for FY 2026. It covers different business verticals as well as the consolidated financial position.

Branded Generics

The growth for the year was fuelled by an excellent performance of our Branded Generic business, which contributed 68% of overall revenue. This business is spread across India, Asia and Africa. This business exhibits assurance, sustainability and scalability in the long term.

Exhibit 1

Branded Generics	FY26 Sales (H cr.)	FY25 Sales (H cr.)	Growth (%)
India	1,654	1,452	14%
Asia	1,175	1,191	(1%)
Africa	861	750	15%
Total	3,690	3,394	9%

India Business

It was a very eventful year for India business with outperformance on all fronts. In India, sales grew by 13%, surpassing the IPM growth rate of 10% as per IQVIA MAT March 2026.

The 324-basis points outperformance to the IPM came on the back of 26 new product launches, including 5 first-to-market, and consistent growth in the existing products. This also helped the Company gain 2 ranks in the last 12 months to 24th rank in IPM. Even our Derma business gained 3 ranks in the last 12 months to 13th rank in IPM.

Exhibit 2: Industry vs. Ajanta Pharma Growth

IQVIA MAT March 2026

Particulars	Mar-26	Mar-25
Indian Pharma (? cr.)	H 2,56,500	H 2,33,261
Industry	10%	8%
APL	13%	11%
APL Rank	24	26
Ophthalmology J cr.)	H 4,934	H 4,508
Industry	9%	5%
APL	14%	6%
APL Rank	2	2
Cardiology J cr.)	H 34,362	H 30,054
Industry	14%	12%
APL	7%	11%
APL Rank	17	17
Dermatology (? cr.)	H 17,426	H 16,301
Industry	7%	10%
APL	14%	14%
APL Rank	13	16
Pain Management J cr.)	H 20,027	H 18,541
Industry	8%	8%
APL	12%	11%
APL Rank	27	27

Basket of More than 250 Products

The Branded Generics business in Asia and Africa consists of more than eight major therapeutic segments, and we hold the leading position in all our sub-therapeutic segments.

Ajantas Asia business extends across the Middle East, Southeast Asia, and Central Asia, covering nearly 12 countries. We are strategically strengthening this business through increased investments in both products and people to drive accelerated growth. We have significantly expanded our product portfolio in the region with the launch of 15 new products, primarily in chronic therapies. This business saw a de-growth of 1% in the year and contributed 22% to total sales. The performance during the year remained below our internal expectations, largely due to softer traction in select markets and geopolitical developments in the Middle East that led to significant supply chain disruptions. We remain confident that the business will regain its growth momentum in the coming quarters.

Our Africa business achieved a robust growth of 15%, driven by a continued strategic focus on expanding our chronic therapies portfolio in the region and the successful launch of 8 new products. These initiatives are steadily building a strong foundation for a more sustainable and scalable business in the years to come.

This business contributed 16% in total sales in the year.

The US Generics

The US Generics recorded exceptional 49% growth for the year and contributed 29% to total sales. This high growth rate was on the back of 8 new products launched in the last 15 months. We have 49 products on the shelf, and 19 ANDAs are awaiting approvals.

During the year, we filed 5 ANDAs, received 4 final approvals and launched 3 products.

Africa Institutional

This business consists of antimalarial products being distributed through multilateral aid agencies, which saw growth of 9% for the year and contributed 3% to total sales.

At the start of the year, we had anticipated a softer performance; however, improved order flows from procurement agencies in the second half supported a steady performance for the full year.

Operational and Financial Performance

During FY 2026, we significantly enhanced capital allocation to the Branded Generics business with accelerated product filing and enhanced ground presence. We have maintained our margins. This has added surety, scalability, and sustainability to the business.

Revenue from Operations

It was a landmark year of performance, with revenue from operations crossing the H 5,000 cr. mark to reach H 5,453 cr. in FY 2026 against H 4,648 cr. in FY 2025, registering a strong growth of 17%.

Material Costs

Material cost moved to 22% in FY 2026 from 23% in FY 2025, an improvement of 100 basis points on the back of stable API prices and favourable currency.

Employee Expenses

Personnel expenses accounted for 24% of the revenue from operations in FY 2026 against 23% in the previous year. Total cost stood at H 1,291 cr. in FY 2026 against H 1,090 cr. in FY 2025. Higher increase in the cost is due to a one-time charge of about H 9 cr. for the new Labour Code and the addition of 500+ medical representatives in Branded Generics business.

Other Expenses

Other expenses stood at H 1,583 cr. in FY 2026 (29% of revenue from operations) against H 1,228 cr. in FY 2025 (26% of revenue from operations), a 300-basis point increase over the previous year.

The other expense also includes a mark-to-market hedge loss of Rs. 103 cr., which was 2% of revenue from operations and was on account of depreciation of the INR against the US Dollar and Euro during the year.

Excluding this, the increase was due to higher SG&A expenses towards the addition of new therapies and marketing divisions in India business. R&D cost was at H 252 cr. in FY 2026 against H 224 cr. in FY 2025, which accounted for 5% of revenue from operations.

With our continued focus on Branded Generics business, we have allocated higher resources to product registrations, promotions, and the launch of new products, resulting in higher marketing expenses.

Operating Profit Margin

EBITDA in FY 2026 stood at H 1,395 cr. against H 1,260 cr. in FY 2025, a growth of 11% over the previous year, and was 26% of revenue from operations. Adjusted EBITDA margin stood at 27% with a growth of 18% excluding the impact of mark-to-market hedge loss of H 103 cr., which actually got offset by forex gain shown under other income of H 97 cr.

Other Income

Other Income stood at H 172 cr. in FY 2026 against H 94 cr. in FY 2025. A major component in both years was the forex gain. Excluding forex gain, other income stood at H 75 cr. against H 66 cr. in FY 2025.

Net Profit Margin

Once again, another landmark for the year was PAT crossing the H 1,000 cr. mark. Profit After Tax was at H 1,056 cr. in FY 2026 against H 920 cr. in FY 2025. PAT margins stood at 19% in FY 2026 against 20% in FY 2025.

Return on Net Worth

Return on Net Worth stood at 25% in FY 2026 and FY 2025.

Return on Capital Employed

Return on Capital Employed stood at 33% in FY 2026 and FY 2025.

Exhibit 5

(H cr.)

Particulars	FY 2026	% to RO	FY 2025	% to RO	% Growth
Revenue from Operations	5,453	-	4,648	-	17%
Adjusted EBITDA*	1,498	27%	1,268	27%	18%
Profit Before Tax	1,378	25%	1,189	26%	16%
Net Profit	1,056	19%	920	20%	15%
Total Comprehensive Income	1,085	20%	922	20%	18%

* Adjusted EBITDA is excluding the impact of mark-to-market hedge loss.

Balance Sheet

Non-current Assets

The non-current assets, mainly consisting of property plant & equipment, have gone up to H 2,419 cr. in FY 2026 from H 2,172 cr. in FY 2025. This was on the back of capex of H 330 cr. for the year, including maintenance capex, oral solid block & liquid plant at Pithampur and a new office in Andheri.

Current Assets

Current Assets stood at H 3,735 cr. in FY 2026 against H 2,843 cr. in FY 2025. Receivables days saw an increase to 125 days from 94 in FY 2025 due to a shift from factoring to working capital loans, enabling better interest efficiency. This remains neutral to the P&L, supported by corresponding investment income. The absolute amount stood at H 1,854 cr. against H 1,183 cr. in FY 2025.

Inventory in terms of the number of days to sales has improved to 63 days in FY 2026 from 72 days in FY 2025 due to better monitoring of the supply chain. In absolute amounts, it has marginally increased to H 939 cr. in FY 2026 from H 904 cr. in FY 2025. Current ratio for FY 2026 stood at 2.64 against 2.85 in FY 2025.

Shareholders Funds

Shareholders funds increased to H 4,527 cr. in FY 2026 from H 3,790 cr. in FY 2025. Earnings per share stood at H 85 in FY 2026 against H 74 in FY 2025. During the year, the Company paid H 350 cr. through dividend against H 701 cr. in FY 2025 through a combination of dividend and share buyback (including tax).

Non-current Liabilities

Non-current liabilities in FY 2026 stood at H 212 cr. against H 229 cr. in FY 2025, mainly consisting of deferred tax and lease liabilities. The decrease in FY 2026 was mainly for payment made against the provision of change in gratuity policy in FY 2025.

Current Liabilities

Current liability stood at H 1,416 cr. in FY 2026 against H 996 cr. in FY 2025. Trade payable days increased from 75 in FY 2025 to 100 in FY 2026. Our strong balance sheet combined with a focus on cash conservation provides us the confidence that we will continue with our consistent performance.

Consolidated Cash Flow

The Company had a healthy cash flow during FY 2026; the snapshot of this is in Exhibit 6.

Exhibit 6 (h cr.)

Particulars	FY 2026	FY 2025
Opening Cash and Cash Equivalents	175	129
Cash Flows from:
a) Operating Activities	525	1,157
b) Investing Activities	(429)	(377)
c) Financing Activities	(168)	(734)
Closing Cash and Cash Equivalents	103	175

Empowered Team

At Ajanta, our people remain the driving force behind the Companys continued success. We are committed to building an inclusive and progressive workplace where employees are empowered to grow, contribute, and create meaningful impact. Guided by the core values of Excellence, Transparency, Integrity, and Discipline, over 13,000 Ajantaites work with a shared purpose of delivering quality medicines to patients across the world. A strong culture of ownership and accountability enables employees to align their individual contributions with the Companys broader business objectives.

Our people practices are centred on respect, fairness, inclusion, and employee well-being. These efforts were reaffirmed with Ajanta being certified as a Great Place to Work for the fourth consecutive year. The Company was also recognised as the Most Preferred Workplace for Women, reflecting the trust of employees and the strength of our inclusive workplace culture.

During the year, the Company accelerated its HR digital transformation journey through the implementation of SAP Success Factors, one of the industrys leading HR platforms. Key processes including recruitment, onboarding, payroll, and performance management were integrated into a unified system, enhancing operational efficiency, speed, and accuracy. Ajanta continues to invest in building a future-ready workforce through focused learning and development initiatives. The launch of Ajanta Academy, the Companys digital learning management system, strengthened capability development across functions, while year-round training on emerging AI tools enhanced productivity and readiness for evolving business needs.

The Company continued to nurture young talent through the Internship at Ajanta programme, strengthening industry-academia engagement and providing students with practical industry exposure.

Ajantas manufacturing facilities operate with a robust Occupational Health and Safety (OHS) framework that promotes a safe and healthy workplace environment. Across the organisation, employee goals are aligned with the Companys philosophy and strategic priorities, enabling teams to work with clarity, purpose, and direction.

The Company remains committed to fostering an equitable workplace and continues to support the capabilities and growth of 28 differently abled employees. Ajanta also maintains strict adherence to its internal codes of conduct, with a clear zero-tolerance approach towards discrimination in any form.

Risk Management

The Companys approach to risk management is guided by a well-defined philosophy rooted in its core values and commitment to sustainable and responsible growth. This approach enables prudent capital allocation, careful selection of markets and products, and a conscious effort to minimise environmental and operational impact, while maintaining vigilance over evolving business risks.

In an increasingly dynamic and uncertain global environment, characterised by geopolitical developments, regulatory complexities and shifting economic conditions, the Company operates across multiple regulated geographies, each presenting distinct challenges.

To effectively manage this complexity, the Company has established a robust Enterprise Risk Management (ERM) framework that facilitates systematic identification, evaluation and mitigation of risks. This framework supports resilience, safeguards stakeholder interests and enables long-term value creation.

The ERM process involves close collaboration with functional leadership to identify both internal and external risk factors that may impact business objectives. It also includes continuous monitoring of the operating environment to identify emerging risks. Key risk areas covered under this framework include regulatory compliance, foreign exchange fluctuations, competitive intensity, supply chain dependencies, cybersecurity and data protection, macroeconomic and geopolitical developments, third-party exposures, and Environmental, Social and Governance (ESG) considerations.

The Risk Management Committee periodically reviews the effectiveness of the risk management framework and policy.

During the year, the Company has also identified and incorporated risks associated with the increasing adoption of Artificial Intelligence (AI) across various functions including R&D, manufacturing,

QA/QC, supply chain, commercial operations, pharmacovigilance and support functions and appropriate mitigation measures have also been implemented for the same.

Further, pursuant to a comprehensive review of the Risk Management Policy and Plan, the Company has formulated a Risk Appetite Statement. This statement establishes an integrated approach for evaluating and monitoring critical risks in alignment with the Companys strategic objectives, while ensuring consistency with stakeholder expectations and acceptable risk thresholds.

The Company also maintains a Business Continuity Plan (BCP) to ensure preparedness against potential disruptions and unforeseen events that could impact operations. During the year, the existing BCP framework has been formally adopted and strengthened to include manufacturing units, in line with the Boards guidance. The Core Risk Management Team conducts periodic reviews and disaster recovery mock drills to enhance organisational readiness and ensure continuity of operations with minimal disruption.

Internal Controls and Adequacy

The Company has established a comprehensive internal control system, which forms a cornerstone of its governance framework. These controls are designed to ensure operational efficiency, accuracy and completeness of financial and operational records, compliance with applicable laws and regulations, and safeguarding of assets. The internal control framework is commensurate with the size, scale and complexity of the Companys operations and is subject to continuous evaluation to assess its adequacy and effectiveness.

The Companys Internal Financial Controls (IFC) framework complies with the requirements of the Companies Act, 2013, and is aligned with globally recognised risk-based frameworks.

The Internal Audit function operates with independence and objectivity, reporting functionally to the Audit Committee through the Chief Financial Officer. The internal audit team, supported by external experts adopts a risk-based approach to provide assurance, insights and recommendations aimed at strengthening governance and control processes.

An annual internal audit plan is developed based on a comprehensive audit universe covering all business processes, risk areas, compliance requirements and control maturity levels. This plan is reviewed and approved by the Audit Committee at the beginning of the financial year.

The Committee is regularly apprised of key audit observations, status of corrective actions and overall control environment. It also engages with management as well as internal and statutory auditors to obtain a holistic view of the effectiveness of controls.

Recognising that internal control systems have inherent limitations, the Company undertakes periodic reviews and continuous improvements to ensure that the control environment remains robust, responsive and aligned with evolving business needs.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be forward-looking statements. Actual results may differ materially from those expressed or implied due to various risks and uncertainties. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, finished goods prices, changes in government regulations and policies, tax regimes, economic conditions within India and the countries within which the Company conducts business and other such factors. The Company does not undertake to update these statements.