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22 Oct 2025
Analysis of companies that delivered exceptional Q2 FY26 results with strong profit growth
Q2 FY26 Results Overview
The Q2 FY26 earnings season has brought some surprising performances from companies across sectors. While many large-caps delivered expected results, two companies stood out with exceptional performance that beat street estimates. In this analysis, we dive deep into their quarterly results, management commentary, and future outlook.
IT Services Company: Exceptional Profit Growth
Excellent Results
About the Company
Cigniti Technologies Limited is a leading global AI-led Digital Assurance and Digital Engineering services company. Headquartered in Hyderabad, India, Cigniti offers specialized testing services across various domains including banking, healthcare, retail, and telecommunications. With delivery centers across the US, UK, India, Australia, and Canada, the company helps enterprises accelerate their digital transformation journey.
💰 Dividend Declared
The company has declared an interim dividend of ₹5 per share for FY26, demonstrating strong cash flow generation and shareholder-friendly policies.
Q2 FY26 Financial Performance
Revenue (₹ Cr)
567
⇡ 14% YoY
EBIDT (₹ Cr)
96.2
⇡ 48% YoY
Net Profit (₹ Cr)
82.6
⇡ 56% YoY
EPS (₹)
30.08
⇡ 55% YoY
| Financial Metric | Sep 2025 | Jun 2025 | Sep 2024 | YoY Change |
|---|---|---|---|---|
| Sales (₹ Cr) | 567 | 534 | 499 | ⇡ 14% |
| EBIDT (₹ Cr) | 96.2 | 88.9 | 64.9 | ⇡ 48% |
| Net Profit (₹ Cr) | 82.6 | 65.9 | 52.9 | ⇡ 56% |
| EPS (₹) | 30.08 | 24.05 | 19.38 | ⇡ 55% |
💡 Key Investment Highlights
- Exceptional Profitability: 56% YoY net profit growth significantly outpaces revenue growth, indicating strong operational leverage
- Margin Expansion: EBIDT margin improved to ~17% from ~13% last year, showcasing efficiency improvements
- Dividend Declaration: Interim dividend of ₹5 per share demonstrates strong cash flow generation
- Sequential Growth: Strong quarter-on-quarter performance with 25% profit growth from Q1
- Reasonable Valuation: P/E ratio of 16.1 appears attractive given the high growth trajectory
Pharmaceutical Major: Steady Growth with Margin Pressure
Mixed Results
About the Company
Dr. Reddy's Laboratories Ltd. is an integrated pharmaceutical company committed to providing affordable and innovative medicines. Founded in 1984, the company has grown into a global enterprise with a presence in over 66 countries. Its business spans three segments: Global Generics, Pharmaceutical Services and Active Ingredients (PSAI), and Proprietary Products. Dr. Reddy's has a robust portfolio of over 190 medications, 60 active pharmaceutical ingredients (APIs), and biosimilars in key therapeutic areas.
Q2 FY26 Financial Performance
Revenue (₹ Cr)
8,828
⇡ 10% YoY
EBIDT (₹ Cr)
2,010
⇣ 3% YoY
Net Profit (₹ Cr)
1,337
⇡ 7% YoY
EPS (₹)
16.14
⇡ 7% YoY
| Financial Metric | Sep 2025 | Jun 2025 | Sep 2024 | YoY Change |
|---|---|---|---|---|
| Sales (₹ Cr) | 8,828 | 8,572 | 8,038 | ⇡ 10% |
| EBIDT (₹ Cr) | 2,010 | 2,174 | 2,076 | ⇣ 3% |
| Net Profit (₹ Cr) | 1,337 | 1,410 | 1,342 | ⇡ 7% |
| EPS (₹) | 16.14 | 16.99 | 15.05 | ⇡ 7% |
🏢 Management Commentary
"We delivered a steady performance this quarter with 10% year-on-year revenue growth, driven by our key markets. While we faced some margin pressure due to increased competitive intensity in the US generics market and higher R&D investments, our core business remains robust. We are making strategic investments in our pipeline which we believe will drive future growth. Our focus remains on operational excellence and bringing innovative, affordable medicines to patients worldwide. We are confident in our long-term strategy and our ability to navigate the current market dynamics."
- Company CEO
⚠️ Key Concerns & Challenges
- Margin Compression: EBIDT declined 3% YoY despite 10% revenue growth, indicating cost pressures
- US Pricing Pressure: Increased competition in the US generics market affecting profitability
- Sequential Decline: Net profit decreased from ₹1,410 Cr in Q1 to ₹1,337 Cr in Q2
- R&D Costs: Higher investments in research and development impacting near-term margins
💡 Positive Business Developments
- Revenue Growth: 10% YoY growth demonstrates strong underlying business performance
- Product Pipeline: Several key product launches expected in coming quarters
- Emerging Markets: Strong growth in India and other emerging markets
- Biosimilars Portfolio: Progress in building a strong biosimilars pipeline for future growth
Comparative Analysis & Investment Perspective
Performance Comparison & Market Outlook
| Parameter | IT Services Company | Pharmaceutical Major | Analysis |
|---|---|---|---|
| Revenue Growth (YoY) | ⇡ 14% | ⇡ 10% | Both companies showing healthy top-line growth |
| Profit Growth (YoY) | ⇡ 56% | ⇡ 7% | IT company showing exceptional bottom-line performance |
| Margin Trend | Significant Expansion | Contraction | Key differentiator in operational efficiency |
| Dividend | ₹5 per share declared | No announcement | IT company rewarding shareholders |
| Valuation (P/E) | 16.1 | 18.6 | IT company appears relatively undervalued |
| Market Cap (₹ Cr) | 4,595 | 1,07,131 | Different scale of operations |
Investment Perspective: The IT services company has delivered an exceptional quarter with explosive profit growth, margin expansion, and shareholder rewards through dividends. In contrast, the pharmaceutical major showed steady revenue growth but faced margin pressures. For growth-oriented investors, the IT company presents a compelling case, while conservative investors might find the pharmaceutical company's stable business appealing despite near-term challenges.
⚠️ Important Disclosures & Risk Factors
Market Risks: Stock markets are subject to volatility and past performance is not indicative of future results. The analysis provided is based on publicly available information and should not be considered as investment advice.
Sector-Specific Risks: IT companies face risks related to currency fluctuations, client concentration, and technological changes. Pharmaceutical companies are exposed to regulatory risks, patent expirations, and pricing pressures.
Investment Consideration: Investors should conduct their own research, consider their risk appetite, and consult with financial advisors before making investment decisions.
🏢 Management Commentary
"We are delighted to report another quarter of strong performance with robust growth across all key financial parameters. Our focus on high-margin digital assurance services and operational efficiency has resulted in significant margin expansion. The 56% growth in net profit reflects our successful strategy of focusing on quality clients and premium service offerings. We see strong demand for AI-led testing services and expect this momentum to continue in the coming quarters. The board has approved an interim dividend of ₹5 per share, reaffirming our commitment to shareholder value creation."
- Company Chairman & CEO