Unichem Laboratories (UNICHEMLAB) Q2 FY27 Profit Dives 46% Despite Steady Revenue Growth
A one-off provision of ₹24.3 crore slashed quarterly profit, overshadowing a 10.6% revenue gain and raising questions about cash flow.
Unichem Laboratories posted a consolidated net profit of ₹22.2 crore in Q2 FY27, a steep 46% drop from the previous quarter. Revenue grew steadily to ₹640 crore, but a significant exceptional item and weak operating cash flow tempered the recovery story.
For Unichem Laboratories, the September quarter was a story of two opposing forces. Steady operational improvement drove revenue higher, but a substantial one-off charge cut the bottom line nearly in half from the prior quarter, highlighting the fragility of its ongoing recovery.
The numbers show the split. Revenue grew 10.6% year-on-year to ₹640.2 crore and edged up 1.2% sequentially. Yet, net profit plunged 46.4% quarter-on-quarter to ₹22.2 crore, dragging the net profit margin down to 3.5%.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 640.22YoY +11% | 632.62 | 578.96 |
| Profit (₹ Cr) | 22.22YoY +287% | 41.47 | -11.89 |
| Net Profit Margin (%) | 3.5YoY +267% | 6.6 | -2.1 |
The One-Off That Sank Profits
The sharp profit drop stemmed from a single line item. According to Flash Finance, an exceptional item of ₹24.3 crore—a provision for claims—weighed heavily on pre-tax profit. Stripping this out reveals a core business profit of ₹36.3 crore, which grew 37% year-on-year. This gap explains why profit before tax fell 44% sequentially despite a slight revenue increase.
A Cash Flow Conundrum
Beyond the headline profit, cash generation remains a concern. Flash Finance notes that operating cash flow for the first half of FY27 was negative ₹68.1 crore, despite a net profit of ₹63.7 crore. This follows FY26, where operating cash flow was a mere 2% of profit. The strain is visible in rising current borrowings, which increased to ₹442.2 crore at the consolidated level, per Arthneeti.
Capacity Build-Out Amid the Squeeze
Management is betting on expansion to drive future growth. A LinkedIn post details a ₹1,460 crore approved capex plan, with ₹870 crore already spent. Key projects like a commercial peptide facility have started operations, with firm commitments worth about $30 million already secured. This aggressive investment, while promising, adds to the near-term cash flow pressure.
Key Points
- Consolidated net profit fell 46.4% quarter-on-quarter to ₹22.2 crore, primarily due to a one-off exceptional provision of ₹24.3 crore.
- Revenue growth remained steady at 10.6% year-on-year, reaching ₹640.2 crore, indicating underlying business momentum.
- Operating cash flow was deeply negative in H1 FY27, highlighting a persistent disconnect between reported profits and cash generation.
- The company is midway through a significant ₹1,460 crore capacity expansion plan aimed at capturing future demand in peptides and formulations.
Hexa Perspective
The quarter underscores a transitional phase where operational progress is real but financial stability is not yet assured. The core business profit growth of 37% year-on-year is encouraging, suggesting the turnaround in formulations and APIs is taking hold. However, the consistent negative cash flow and reliance on borrowings to fund growth capex mean the recovery's sustainability is still being tested. Investors are left weighing solid revenue traction against the time it will take for heavy investments to translate into cleaner, cash-accretive earnings.
Also read
Want this applied to your portfolio?
Talk to a HexaWealth advisor, or sync your mutual fund data for insights tailored to your holdings.
