RPG Life Sciences is up 11% on Wednesday, touching an intraday high of Rs 2,312.40, in what at first glance appears to be one of the more counterintuitive market reactions of the results season — the company just reported a 74.5% collapse in net profit, and the stock is among the top gainers on the NSE.
The explanation, as is often the case with such divergences, lies in reading beyond the headline profit number.
The numbers
| Metric | Q4 FY26 | Q4 FY25 | YoY Change |
|---|---|---|---|
| Revenue | Rs 176.9 Cr | Rs 143.1 Cr | +23.6% |
| EBITDA | Rs 32.8 Cr | Rs 25.5 Cr | +28.8% |
| EBITDA Margin | 18.6% | 17.8% | +80 bps |
| Net Profit | Rs 29.9 Cr | Rs 117.35 Cr | -74.5% |
Revenue grew a solid 23.6% year-on-year to Rs 176.9 crore. EBITDA rose 28.8% to Rs 32.8 crore — actually outpacing revenue growth — with margin expanding 80 basis points to 18.6% from 17.8%. These are genuinely good operating numbers for a mid-sized specialty pharma company.
Why profit fell 74% despite strong EBITDA
The profit collapse is almost certainly not an operating story — it is a base effect and below-the-line story. The Q4 FY25 net profit of Rs 117.35 crore was exceptionally high, almost certainly inflated by a one-time extraordinary gain — either from asset sales, tax credits, exceptional income or a similar non-recurring item. When a base quarter contains a large one-time positive, the year-on-year comparison becomes misleading as a measure of underlying business health. The fact that EBITDA grew 29% while PAT fell 74% makes the one-time base effect explanation almost certain.
At Rs 29.9 crore PAT against Rs 32.8 crore EBITDA, the residual after depreciation, finance costs and tax is thin but positive — and importantly, consistent with the EBITDA trajectory rather than indicating any deterioration.
What the market is responding to
The 11% surge reflects the market looking through the distorted PAT comparison and focusing on what actually matters — 23.6% revenue growth, 28.8% EBITDA growth, margin expansion, and a final dividend of Rs 24 per share. At a dividend yield of 0.89% and a PE of 18.40, RPG Life Sciences is not expensively valued for a pharma company delivering double-digit revenue and operating profit growth.
The stock remains 17% below its 52-week high of Rs 2,725, suggesting there is still meaningful upside being discussed in the market even after today’s sharp move.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a qualified financial advisor before making investment decisions.