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Near-term Moderation Masks an Intact Growth Story

We maintain our positive view on GNP, supported by product launches, the scale-up of recently launched and existing products and an improving product mix. Revenue growth is projected to moderate to mid-single digit in FY27E, alongside a planned contraction in EBITDA margin. We believe this largely reflects the high FY26 base, which included the one-off AbbVie settlement. The underlying demand environment and core business growth remain intact. With R&D expenditure forecast to normalise and new products scaling up, we project stronger growth from FY28E. We revise our FY27E/FY28E estimate down by 5.3%/1.1%, respectively, reflecting slower US growth in FY27E. We roll forward our valuation to the average of FY28E– FY29E and with an ‘ADD’ rating and a revised target price of INR 2,835.

Revenue Recovery on Sequential Basis

* Revenue declined 29.8% YoY / grew 5.7% QoQ to INR 42,473 Mn (vs. CIE estimate: INR 40,423 Mn).

* EBITDA declined 63.4% YoY / grew 7.3% QoQ to INR 8,638 Mn; margin contracted 1,868 bps YoY / expanded 31 bps QoQ to 20.3% (vs. CIE estimate: 21.0%).

* APAT declined 67.9% YoY / 1.3% QoQ to INR 4,767 Mn (vs. CIE estimate: INR 5,119 Mn).

From Landmark Deals to Product Scale-up: Growth Drivers Remain Intact

The company delivered healthy like-for-like growth of ~20% in Q2. FY27E growth is projected to moderate due to a higher base in FY26 and the impact of ISB 2001. We expect a recovery from FY28E and a revenue CAGR of 11.8% in FY26–29E, driven by the following factors

* India: India remains the key growth driver, supported by strength in chronic therapies, particularly respiratory, and launches in oncology.

* North America: On a like-for-like basis, we project healthy growth, driven by sustained traction in exclusivity products such as FloVent and a meaningful contribution from recently launched respiratory products. Operating leverage is also projected as the Monroe and Goa facilities scale up.

* Europe: Growth is supported by an increasing contribution from the branded portfolio, alongside new product launches.

* Emerging Markets: Ryaltris remains a key growth driver across markets, with further momentum projected. Oncology launches from FY28E are also expected to contribute to growth.

Planned Investments to Temporarily Weigh on Margin

FY27E is expected to witness a planned contraction in EBITDA margin, as FY26 benefitted from the one-off the AbbVie settlement. We view the higher investments as essential to strengthening the company's long-term growth pipeline rather than a structural margin concern. The management expects EBITDA margin to remain in the 21–22% range in FY27E.

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