FDC has secured an interim stay from the Delhi High Court on a product label notice issued by the Food Safety and Standards Authority of India (FSSAI). The order, received on August 26, 2026, halts enforcement of the directive concerning alleged mislabeling.

Court intervention in FSSAI labelling dispute

The High Court's interim order suspends immediate action arising from the notice while the writ petition remains before the court. Crucially, the court has allowed the company eight months to exhaust its existing stock bearing the descriptors 'electrolyte' or 'electrolyte drink' and to make required changes to the labels.

This development provides temporary relief from the regulatory directive, which stemmed from a seizure of stock by FSSAI Maharashtra. The company had previously filed a writ petition seeking relief against the impugned notice from FSSAI New Delhi.

Background on the regulatory notice

The contravention relates to the mislabeling of products. In its disclosure under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, FDC stated there is no material adverse impact on its financials, operations, or other activities due to this order.

The company disclosed that it has been given time to exhaust current inventory and update labels, mitigating potential disruption to sales during the pendency of the case.

FDC reported a consolidated net profit of ₹132 crore for the quarter ended June 30, 2026, marking a 9.2% increase from ₹121 crore in the corresponding period of the previous year. Revenue from operations grew to ₹668 crore, up 3.0% year-on-year, driven primarily by a robust 118.4% surge in its International Formulations business in the United States. This growth offset a 1.9% decline in Domestic Formulations and a 2.9% dip in API sales, highlighting a shifting revenue mix towards high-growth export markets.

The financial results were reviewed by statutory auditors B S R & Co. LLP and approved by the Board on August 5, 2026, pursuant to Regulation 30 and 33 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. Basic and diluted earnings per share (EPS) rose to ₹8.14, compared to ₹7.45 in Q1FY26. The company also secured U.S. FDA approval for Cefixime for Oral Suspension USP 100mg/5mL and 200mg/5mL during the quarter, strengthening its pipeline in the regulated market.

Financial Performance Highlights

FDC’s top-line growth was accompanied by a slight contraction in EBITDA margins, indicating cost management challenges amidst rising input expenses. Consolidated EBITDA increased to ₹143 crore, up 1.9% from ₹140 crore in Q1FY26, but the margin compressed to 21.4% from 21.6%. Profit before tax (PBT) rose 9.4% to ₹175 crore. Finance costs remained low at ₹83 million (consolidated), showing effective debt management.

On a standalone basis, revenue from operations was ₹655.1 crore, up from ₹642.3 crore year-on-year. Other income contributed significantly to total income, while standalone net profit stood at ₹132.02 crore, compared to ₹122.20 crore in Q1FY25.

Segment-Wise Performance

The divergence in segment performance underscores FDC’s strategic pivot towards international markets. Domestic Formulations, which accounted for approximately 85% of consolidated sales, declined 1.9% to ₹569 crore due to subdued performance in key brands like Zifi, Enerzal, and Simyl MCT. However, secondary sales data from IQVIA showed a 9.0% growth for the quarter ended June 30, 2026, suggesting potential channel inventory buildup.

International Formulations emerged as the primary growth engine, contributing ₹73 crore (11% of total sales) with a 74.2% YoY growth. The US business alone delivered ₹34 crore, up 118.4%, while Non-US exports grew 47.7% to ₹39 crore. Conversely, the API segment recorded a 2.9% decline to ₹24 crore, accounting for only 4% of consolidated sales.

Analytical Observations

While revenue growth remains robust, the divergence between revenue growth (3.0%) and profit growth (9.2%) suggests operational leverage or favorable mix shifts towards higher-margin international products. However, the marginal decline in EBITDA margins warrants monitoring as input costs remain volatile. The company continues to monitor regulatory changes impacting employee benefit obligations, having recognized a non-recurring exceptional item of ₹2,079 million in FY26 due to actuarial valuation changes under Ind AS 19. No such impact was recorded in Q1FY26.

Auditor’s Note

B S R & Co. LLP, the statutory auditors, issued an unmodified review conclusion on both standalone and consolidated results. The audit report highlights that quarterly figures may not be directly additive to year-to-date numbers due to fair value adjustments recognized under Ind AS 109. Additionally, interim financial information from three wholly-owned subsidiaries—FDC International Limited (UK), FDC Inc. (USA), and Fair Deal Corporation Pharmaceuticals SA (South Africa)—was not reviewed but deemed immaterial to the group.