Natural Capsules Limited , a leading manufacturer of hard capsules in India, has reported a net loss of ₹6.99 crores for the second quarter of fiscal year 2026, according to the company's latest financial results. This loss represents a significant increase from the ₹5.58 crores loss reported in the previous quarter.

Revenue Growth and EBITDA Margins

Despite the challenging environment, the company managed to achieve a modest revenue growth of 1.33% quarter-on-quarter, with revenues rising to ₹45.80 crores. However, the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins turned negative at -1.93%, indicating pressure on the company's operational efficiency.

Impact of US Tariffs on Capsules Business

The company's capsules business, which has been a key revenue driver, faced significant headwinds due to the imposition of 88% tariffs on Indian exports to the US market. This development has severely impacted demand from the US, a crucial market for Natural Capsules.

API Manufacturing Challenges

Natural Capsules' foray into API (Active Pharmaceutical Ingredient) manufacturing encountered technical difficulties despite obtaining necessary regulatory approvals. The company's subsidiary, Natural Biogenex Private Limited, which commenced commercial operations on March 31, 2025, is still grappling with scaling up fermentation batches from lab to commercial scale.

Financial Performance Overview

Here's a breakdown of the key financial metrics for Q2 FY26:

Management Commentary

Sunil Mundra, Executive Director of Natural Capsules Limited, commented on the results: "Q2FY26 has been a stable quarter for our capsules business. Demand remained steady, and overall, our performance was in line with the guidance we had shared earlier. However, the key growth triggers, especially related to the HPMC capacity expansion, were temporarily affected due to tariffs imposed on Indian exports to the US."

Regarding the API business, Mundra added, "After finally obtaining all necessary approvals from the Pollution Control Board, we aimed to ramp up commercial production from Q3. Yet, we have run into technical difficulties scaling up fermentation batches—a complex process where new issues often surface when moving from lab to commercial scale."

Future Outlook

Despite the current challenges, Natural Capsules remains optimistic about its long-term prospects. The company is proceeding with its capital expenditure plans and expects to commission a new production line by the end of the current quarter. Management believes that growth in the capsules segment will pick up once there is more clarity on the US tariffs.

For the API business, the company is navigating through the technical challenges and remains confident in its ability to scale up production rapidly once these issues are resolved.

Natural Capsules Limited acknowledges that FY26 has been a tough year, with both the capsules and API businesses facing external pressures. However, the company maintains that it is on the right path and expects to emerge stronger from these challenges in the coming year.

Natural Capsules Limited , a prominent player in the capsule manufacturing industry, has announced its financial results for the second quarter and first half of the fiscal year 2025-26, revealing a mixed performance across its standalone and consolidated operations.

Standalone Performance

On a standalone basis, Natural Capsules Limited demonstrated resilience in its core business. The company reported a revenue from operations of Rs. 4,458.02 lakhs for the quarter ended September 30, 2025, marking a slight increase from the previous quarter. The net profit for Q2 stood at Rs. 281.05 lakhs, showing an improvement over the preceding quarter.

For the six-month period, the company's standalone performance was noteworthy:

Consolidated Results and Subsidiary Performance

The consolidated financial picture, however, presented challenges:

The significant disparity between standalone profit and consolidated loss is primarily attributed to the performance of the company's subsidiary, Natural Biogenex Private Limited. The subsidiary, which commenced commercial operations on March 31, 2025, is yet to achieve its full revenue potential, contributing to higher consolidated losses.

Strategic Decision on Rights Issue

The Board of Directors of Natural Capsules Limited has decided not to subscribe to the rights issue of Natural Biogenex Private Limited. This decision was attributed to cash flow commitments from ongoing projects, indicating a strategic focus on managing financial resources effectively.

Segment Performance

The company's financial results also shed light on its segment-wise performance:

1. Capsules Segment:

   • Revenue for Q2 FY 2025-26: Rs. 4,458.02 lakhs
   • Segment Results (Profit before tax and interest): Rs. 514.96 lakhs

2. API Segment:

   • Revenue for Q2 FY 2025-26: Rs. 122.24 lakhs
   • Segment Results: Rs. 859.45 lakhs

The API segment, despite lower revenue, showed higher profitability compared to the capsules segment, indicating its potential as a growth driver for the company.

Financial Position

As of September 30, 2025, Natural Capsules Limited's consolidated balance sheet reflected:

• Total Assets: Rs. 41,995.52 lakhs
• Total Equity: Rs. 24,539.98 lakhs
• Total Liabilities: Rs. 17,855.50 lakhs

Outlook

While the standalone business remains profitable, the consolidated performance underscores the challenges faced by the subsidiary. The company's decision to abstain from the subsidiary's rights issue suggests a cautious approach to capital allocation, possibly focusing on strengthening its core operations and managing ongoing project commitments.

As Natural Biogenex Private Limited progresses towards achieving its full revenue potential, investors and stakeholders will likely keep a close watch on the consolidated performance in the coming quarters.

Natural Capsules Limited continues to navigate through a phase of strategic growth and operational consolidation, balancing the performance of its established capsules business with the evolving dynamics of its newer ventures in the pharmaceutical sector.