Natural capsules Limited faced significant operational challenges in Q3FY26, with financial performance reflecting the impact of regulatory disruptions and execution-related headwinds across its business segments. The quarter ended 31st December 2025 marked a difficult period for the hard capsule shell manufacturer and API developer.

Financial Performance Overview

The company's Q3FY26 consolidated results showed substantial declines across key metrics. Revenue contracted to ₹37.75 crore, representing decreases of 18% quarter-on-quarter and 14% year-on-year. More concerning was the shift to negative EBITDA of ₹(2.33) crore compared to ₹7.12 crore in the previous period, resulting in EBITDA margins of (6.16%).

Operational Challenges and Regulatory Impact

The quarter's performance was significantly affected by the temporary shutdown of the Puducherry manufacturing unit following regulatory action relating to the manufacturing licence in December 2025. The regulatory review extended beyond manufacturing to include the sales licence, resulting in deferred dispatches from the facility throughout the quarter.

Management confirmed that the regulatory matter has since been addressed and the Puducherry unit is now operational. Shipments that were delayed during Q3FY26 have been executed in the current quarter, with the spillover expected to positively impact Q4FY26 performance.

Market Developments and Strategic Response

Despite the operational challenges, the company received positive news regarding US market access. The US trade tariffs that had been impacting HPMC capsules have been eased, restoring visibility for growth in the US market and strengthening the outlook for the base capsules business.

Regarding the API segment through subsidiary Natural Biogenex Private Limited, management acknowledged that commercial scale-up of the fermentation block has taken longer than anticipated. While pilot and smaller scale operations demonstrated technical viability, translating this into consistent commercial scale output has presented ongoing challenges.

Strategic Initiatives for Recovery

In response to the fermentation block challenges, Natural Capsules has adopted a calibrated strategy combining internal technical stabilisation efforts with external partnerships. The company has initiated discussions with suitable partners to utilise the fermentation block on a contractual basis, with these discussions reportedly at an advanced stage and initial validation activities undertaken.

Management Outlook

Management noted that input costs and realisations remained stable during the quarter. With both manufacturing plants now running and demand normalising, the company expects meaningful improvement in the current quarter. The leadership expressed confidence that with regulatory issues resolved, US tariff pressures eased, and a structured path forward defined for the fermentation block, the company enters the next quarter with improved operational visibility and a clear strategy to restore growth and profitability.

Natural Capsules Limited has received relief from the Madras High Court, which has suspended the Drug Controller's order for temporary closure of the company's manufacturing plant in Pondicherry. The pharmaceutical company announced the resumption of operations following the court's intervention in the regulatory matter.

Court Order Details

The Madras High Court issued an order suspending the suspension directive previously passed by the Department of Drug Controller. Natural Capsules Limited received the court order on January 29, 2026, enabling immediate resumption of manufacturing activities at its Pondicherry facility.

Regulatory Violation Background

The temporary closure was initiated due to a regulatory compliance issue involving material supply to a customer whose drug license had expired. This violation led to the Drug Controller's Department taking action against the company's manufacturing operations.

Financial Impact Assessment

The temporary closure of the Pondicherry manufacturing plant had measurable financial consequences for Natural Capsules Limited. The company quantified the operational disruption's impact on its business performance.

Compliance and Disclosure

Natural Capsules Limited has fulfilled its regulatory disclosure obligations under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company previously informed exchanges about the initial closure on December 26, 2025, and has now updated stakeholders regarding the court's favorable decision.

The resumption of operations at the Pondicherry facility allows Natural Capsules Limited to restore its full manufacturing capacity and work toward recovering the sales impact experienced during the temporary shutdown period.