For much of the past decade, Shilpa Medicare invested ahead of its earnings, building capacity and capabilities that have taken years to translate into meaningful returns.
The company’s net block increased from around Rs 558 crore in FY19 to more than Rs 1,400 crore by FY25. Meanwhile, asset turnover declined sharply, ROCE moved into single digits, and earnings came under pressure as depreciation and financing costs rose faster than revenue.
That equation now appears to be changing.
In Q1 FY27, revenue rose 43% year-on-year to Rs 469 crore, EBITDA increased 42% to Rs 139 crore, and PAT more than doubled to Rs 101 crore. The company has also reported four consecutive quarters of record revenue and EBITDA. More importantly, the improvement is not coming from a single product or one-off opportunity. It reflects a broader business that has been rebuilt across APIs, formulations, peptides, biologics and CDMO.
As utilisation improves, fixed costs can be absorbed over a larger revenue base, allowing EBITDA to grow faster than revenue. At the same time, several businesses that were once investments for the future are moving closer to commercialisation.
Shilpa Medicare: 1-Year Stock Price Movement
Source: TradingView
This makes Shilpa an interesting case of a pharmaceutical company moving from capacity creation to capacity monetisation. While the opportunity is substantial, so are the execution and valuation risks.
The key question is how much of the company’s decade-long investment is yet to show up in the bottom line?
From oncology APIs to a multi-platform pharma company
Shilpa’s transformation began well before the current earnings recovery. One of the important strategic moves was the 2017 acquisition of Navya Biologicals, which brought fermentation-based biomanufacturing, recombinant protein expression, mammalian cell-line development and microbial expression capabilities into the company.
These capabilities have since helped Shilpa expand beyond its traditional oncology API business. This is evident from the sales mix over the last three years.
While API revenue is stagnant, both formulations and Biologicals have grown rapidly.
Segmental revenues over the last 3 years
Source: Q4 FY26 investor presentation
Business Segments
The reported segments, however, only tell part of the story.
Within them sit several businesses at different stages of maturity. For example, APIs and formulations are already meaningful contributors to revenue, while peptides, biosimilars and CDMO represent the next layer of growth. Recombinant albumin and ADCs (Antibody-Drug Conjugate) sit further out and should be viewed as longer-term opportunities rather than near-term earnings drivers.
Source: Q4 FY26 investor presentation
That distinction is important because Shilpa’s future growth is not dependent on a single molecule or a single product launch. The company is gradually building a portfolio in which different businesses can contribute at different points in the growth cycle.
APIs remain the earnings foundation
The API business remains the foundation of Shilpa’s earnings. A series of patent expiries through 2030 across molecules in targeted small-molecule oncology drugs, which includes Palbociclib, Ruxolitinib, Apalutamide, Cabozantinib, Osimertinib and Ibrutinib, creates opportunities for new product launches. Management has also indicated that more than 15 new APIs are currently moving through validation in FY27.
The significance of this pipeline is that Shilpa does not need every project to succeed for the API business to continue growing. Patent expiries, new launches, capacity utilisation and an expanding product portfolio can collectively provide a relatively visible earnings base while newer businesses develop.
Peptides add another potential growth layer. Shilpa is building one of India’s larger solid-phase peptide synthesis (SPPS) capacities, giving it the capability to manufacture complex peptide drugs at commercial scale. With a Liraglutide DMF (Drug Master File) already filed and Semaglutide next in line, the platform could open another growth avenue as peptide-based therapies expand.
Source: Q4 FY26 investor presentation
This distinction is important when thinking about the company’s valuation.
Formulations: Where the pipeline has already reached the market
The formulations business offers some of the clearest evidence that Shilpa’s investments are translating into commercial products. Its US partner Amneal launched PEMRYDI RTU, a ready-to-use pemetrexed injection, in April 2024. The product has maintained roughly 35% US market share for seven consecutive quarters, while BORUZU, a ready-to-use bortezomib product, has reached around 5% share within four quarters of launch.
Shilpa has also launched NODUCA in India and is developing Rotigotine for Europe. Together, these products demonstrate that the company’s manufacturing and development capabilities are beginning to translate into meaningful market adoption, rather than remaining confined to capacity and pipeline.
Biosimilars, peptides and ADCs expand the opportunity
The next layer of Shilpa’s growth lies in biologics and biosimilars. Aflibercept, used in ophthalmology, is targeted for an India launch in FY27 and has been out-licensed to partners in India and Russia. Shilpa is also working with Finland’s Orion Corporation on Nivolumab, an oncology biosimilar that is moving towards human trials.
The company has also entered the antibody-drug conjugate space through SBPL01, its first ADC, which is entering human studies in FY27. The programme is being manufactured at what the company describes as a first-of-its-kind ADC GMP facility in India.
Source: Q4 FY26 investor presentation
These programmes should not yet be treated as major earnings contributors. Their importance lies in the capabilities they represent. Shilpa now has exposure across small molecules, peptides, biologics and ADCs, giving the company a broader technology base than its traditional API business.
Commercial success across even a portion of these programmes could meaningfully expand the company’s revenue base. But the timelines are longer and the uncertainty higher, making it important to distinguish these opportunities from businesses already generating revenue.
CDMO: An opportunity with an important caveat
CDMO is potentially attractive because successful programmes can create long-duration manufacturing revenue and milestone payments. However, it also highlights a risk that is particularly relevant to Shilpa’s growth strategy: the company is increasingly working with partners whose regulatory and commercial outcomes it cannot fully control.
The experience with Unicycive Therapeutics provides a useful example.
Shilpa built a dedicated manufacturing block for Unicycive’s kidney-disease drug, Oxylanthanum Carbonate. The facility was commissioned in the March 2026 quarter, with validation batches beginning in Q1 FY27.
The FDA subsequently issued Unicycive a second Complete Response Letter (CRL), meaning the drug could not be approved in its current form and the company would need to address the FDA’s identified deficiencies before resubmission.
Source: Q4 FY26 investor presentation
The rejection was not related to efficacy or safety. It centred on unresolved manufacturing and quality-control deficiencies at a third-party drug-substance supplier. Under the original agreement, Shilpa could receive up to $10 million in milestone payments, in addition to the $6.5 million already received for capacity creation. The second CRL has pushed that opportunity further out.
The episode does not invalidate the CDMO opportunity, but it does illustrate why the business should not be modelled as a simple, linear revenue stream.
Shilpa can control its own manufacturing capabilities and execution, but the ultimate commercialisation of a partner’s product remains dependent on regulatory approvals, customer decisions and external manufacturing inputs.
Recombinant albumin could provide long-term optionality
Among Shilpa’s longer-duration opportunities, recombinant albumin stands out because of the size of the potential market.
The global albumin market is estimated at around $8-10 billion and remains heavily dependent on plasma-derived supply. Traditional albumin production relies on donated human plasma, creating supply and manufacturing constraints.
Shilpa has developed a recombinant human albumin using Pichia pastoris as the expression system, with its production technology protected by patents in the US and Europe. In May 2025, Shilpa Biocare signed an agreement with Finland’s Orion Corporation giving Orion exclusive rights to distribute, market and sell the product across Europe. The financial terms were not disclosed.
Source: Q4 FY26 investor presentation
The opportunity, however, needs to be viewed with appropriate caution. First revenue isn’t expected before FY29, and the product still needs to navigate development, regulatory and commercialisation milestones. Albumin should therefore be considered a longer-term opportunity rather than an earnings driver that should be heavily incorporated into near-term estimates.
If successfully commercialised, however, the addressable market is large enough to materially increase the long-term ceiling of the business.
The financial inflection is becoming visible
For all the attention around Shilpa’s pipeline, the financial statements are already showing a meaningful improvement.
Source: Investor Presentations
Q1 PAT benefited from a tax reversal, so the underlying improvement is better captured by the combination of revenue growth, EBITDA growth and improving utilisation. As the capacity built over the previous investment cycle gets absorbed, a larger share of incremental revenue can flow through to EBITDA because much of the fixed cost base is already in place.
This creates the possibility of operating leverage, with EBITDA growing faster than revenue and returns on capital gradually recovering. In that sense, the more important story may not be any individual pipeline product, but the improving economics of the asset base Shilpa has already built.
Valuation: How much growth is already priced in?
At the current valuation, Shilpa trades at roughly 31x TTM EV/EBITDA. This is a premium multiple, but the comparison with Laurus Labs provides some useful context. Laurus, a much larger pharmaceutical and CDMO player, trades at around 49x TTM EV/EBITDA.
Source: http://www.screener.in
The difference is useful for context, but it should not be interpreted as evidence that Shilpa is undervalued relative to Laurus. Laurus has a much larger and more established earnings base, while Shilpa is still scaling several of its newer businesses.
For Shilpa, the justification for its current multiple will depend on whether the faster growth expected from these businesses translates into sustained EBITDA expansion.
If the company can sustain its recent growth, improve utilisation and convert its pipeline into commercial revenue, EBITDA could expand faster than revenue as the existing fixed cost base is absorbed. That would gradually bring down the effective EV/EBITDA multiple even without any meaningful change in the share price.
At the same time, the current multiple leaves limited room for execution disappointments. The valuation therefore hinges less on whether Shilpa can grow and more on how quickly that growth translates into EBITDA and cash generation.
The risks and the bottom line
- Regulatory risk remains, particularly in the US, with the Jadcherla Unit IV inspection resulting in eight Form 483 observations. Partner-related setbacks, such as the Unicycive delay, could also postpone revenue and milestone payments.
- Execution remains critical. Pharmaceutical projects can take longer than expected to move from development to commercial scale, while slower utilisation or weaker margins could put pressure on the current valuation.
- Shilpa has spent the past decade building manufacturing capacity and capabilities across APIs, formulations, peptides, biologics and CDMO. As utilisation improves, these assets could generate operating leverage, allowing EBITDA to grow faster than revenue and potentially improving returns on capital.
The next phase is therefore less about building capacity and more about monetising what has already been built. If the newer businesses scale as expected, the decade-long investment cycle could translate into sustainably higher earnings and returns. At the current valuation, however, execution will determine how much of that potential ultimately accrues to shareholders.
Note: We have relied on data from http://www.screener.in and http://www.tijorifinance.com throughout this article. Market price and market capitalisation data are from Thurro. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
Rahul Rao has helped conduct financial literacy programmes for over 1,50,000 investors. He has worked at an AIF, focusing on small and mid-cap opportunities.
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