The Wide Debt Divide in India’s Top Pharma Stocks
Top listed pharma companies in India differ widely in terms of their reliance on debt. On one extreme, there are conservative players such as Divi’s Labs that avoids debt altogether, and had no debt by the end of FY26. On other extreme, aggressive players like Sun Pharma, Torrent Pharma, Mankind Pharma and Zydus have relied on debt to fund their acquisitions. Between these two extremes, there are other players who rely on debt but their Net Debt-to-Equity ratio has remained negative. In other words, they have net cash positive position. Cipla, Aurobindo Pharma, Lupin and Dr. Reddy’s Labs (DRL) fall in this category.
On Consolidated basis,Debt Equity ratio of Sun Pharma stood at 0.06 times at the end of FY26 (0.03x in FY25). In one year, Debt increased from ₹23,621.90 Mn to ₹46,273.20 Mn. On standalone basis, the ratio increased to 0.61x at the end of FY26 as against 0.50x at the end of FY25. In one year, Debt increased from ₹119,470.70 Mn to ₹136,047.30 Mn and Total equity including reserves declined from ₹239,002.90 Mn to ₹223,707.60 Mn. Debt Service Coverage Ratio touched 5.44 times by March 31, 2026, which was just 0.54 times by the end of FY25.
Among top 10 listed pharma companies Divi’s Labs remained only company that did not present Debt Equity ratio in their reporting period for FY26 and FY25 as it had no net debt outstanding. As a result, Net debt to Equity ratio, and Debt Service Coverage Ratio is not applicable to Divi’s Labs.
Among major listed companies,Torrent Pharma has leveraged its financial strength to fund high-growth acquisitions and support the next phase of expansion as reflected in recent acquisition of J.B. Pharma. Net Debt/EBITDA has increased from 0.6x in FY25 to 2.3x in FY26. Debt Service Coverage Ratio of Torrent got affected as it declined to 3.22x by the end of FY26 from 4.08x by the end of FY25. Non-current borrowings (Secured non-convertible debentures and Secured terms loans from banks) of Torrent Pharma increased from ₹1,020.59 Crores as at March 31, 2025, to ₹11,461.86 Crores as at March 31, 2026.
Debt Equity ratio ofCipla on standalone basis as at March 31, 2026 remained at the same level that it had on March 31, 2025. But the Debt Service Coverage Ratio of the company got affected as it was 237.65x at the end of FY25, and it declined to 104.54x by March 31, 2026. On consolidated basis, Interest Coverage Ratio has improved from 26.8x in FY21 to 43.0x in FY22, 45.9x in FY23, 70x in FY24, 114.9x in FY25, with marginal decline to 108.9x in FY26. Net Debt to Equity Ratio has remained in negative territory for last six years, as it stood at -0.10x for FY21, -0.19x for FY22, -0.23x for FY23, -0.29x for FY24, -0.33x for FY25, and -0.31x for FY26.
Consolidated financial statements of Zydus Lifesciences reveal that borrowings increased from ₹31,695 Mn in March 2025, and Gross Debts reached ₹117,695 Mn by March 31, 2026. As a result, Debt-to-Equity ratio touched 0.43x (March 2026) as against 0.13x (March 2025). Debt Service Coverage Ratio shows the impact of borrowings as the ratio became just 1.0x as at March 31, 2026 whereas the same was comparatively better at 2.2x in March 2025. On Standalone basis, Gross Debt to Equity fell from 0.39x to 0.31x year-over-year as Gross Debt decreased from ₹83,387 Mn (March 31, 2025) to ₹74,311 Mn (March 31, 2026), and Total Equity increased from ₹211,901 Mn (FY25) to ₹236,717 Mn (FY26). Debt Service Coverage Ratio was also badly affected as it stood at 3.47x for FY25, and declined to 0.70x as on March 31, 2026.
Net Debt to Equity Ratio of Lupin has improved in last five years: 0.16x for FY22, 0.2x for FY23, 0.03x for FY24, -0.02x for FY25, and -0.21x for FY26. Lupin’s borrowings rose from ₹50,766.50 Mn in March 2025 to ₹59,102.0 Mn by March 2026. During this period, Cash and cash equivalents, Other Bank balances, and Current Investments increased. On Standalone basis, borrowings increased from NIL in March 2025 to ₹5,768.80 Mn in March, 2026. Cash and cash equivalents as well as Other Bank Balances also decreased in FY26 as compared to FY25. But substantial increase in Current Investments from ₹10,035.60 Mn (March 31, 2025) to ₹34,247.70 Mn (March 31, 2026) kept Adjusted Net Debt to Total Equity Ratio as (0.1). Debt Service Coverage Ratio improved from 51.71x to 54.65x.
Mankind Pharma’s Net Debt-to-Adjusted EBITDA stood at 1.1x. The company’s Net Debt decreased ₹5,919.85 Crores as on March 31, 2026 down to ₹8,104.0 Crores on March 31, 2025. On Consolidated basis, Debt Equity ratio came down from 0.59x (FY25) to 0.39x (FY26), and Interest Coverage Ratio came down from 5.63x (FY25) to 4.09x (FY26). Debt Equity ratio declined due to repayment of Commercial Papers during the year whereas Interest Coverage ratio declined due to increase in finance cost pertaining to acquisition-related debt. On Standalone basis, Net Debt decreased from ₹7,182.37 Crores as at March 31, 2025, to ₹5,483.12 Crores. Debt-Equity ratio on Standalone basis, came down to 0.34x (FY26) from 0.52x (FY25). But it did not alter Debt Service Coverage Ratio significantly as it stood at 0.52x (FY26) as against 0.53x (FY25).
For DRL, long-term borrowings, including the current and non-current portion, increased by ₹9,485 million in FY26 as compared to FY25. Debt-to-equity ratio stood at 0.18x as on March 31, 2026, which was higher than that on March 31, 2025 when it stood at 0.12x. Interest Coverage ratio of DRL has substantially gone down in last four years, as it stood at 40.3x by the end of March 2023, which deteriorated by the end of FY24 to 39.7x, 25.5x by the end of FY25, and 13.6x as at March 31, 2026. Debt Service Coverage Ratio also came down from 29.71x as at March 31, 2025 to 13.02x as at March 31, 2026. For DRL too, Net Debt to Equity Ratio has remained in negative territory for last five years, as it stood at -0.08x for FY22, -0.21x for FY23, -0.23x for FY24, -0.07x for FY25, and -0.09x at the end of FY26.
ForAurobindo Pharma too, Net Debt to Equity Ratio has remained in negative territory for last five years, as it stood at -0.10x for FY22, -0.05x for FY23, -0.001x for FY24, -0.01x for FY25, and -0.08x at the end of FY26. Debt Equity Ratio stood at 0.03x as on March 31, 2026, which was 0.08x as on March 31, 2025. Interest Coverage Ratio has improved from 12.2x by the end of FY25 to 14.5x by the end of FY26. On Standalone basis, Aurobindo Pharma had Debt-to-Equity Ratio of 0.18x as at March 31, 2026 as against 0.23x as at March 31, 2025, and Net Debt to Total Equity Ratio remained intact at 0.2x by the end of FY25 as well as FY26. Debt Service Coverage Ratio improved from 8.2x by the end of FY25 to 10.9x by the end of FY26.
Laurus Labs had a debt of ₹2,397 Crores as on March 31, 2026 as against ₹2,693 Crores at the end of FY25. For FY26, Net Debt-to-EBITDA improved to 1.3x for the company from 2.3x in FY25 due to decrease in debt and increase in profits for FY26. Consolidated financial statements reveal that the Debt-Equity ratio improved to its lowest in five years, as it was 0.52x in FY22, 0.49x in FY23, 0.61x in FY24, 0.60x in FY25, and 0.45x in FY26. On Standalone basis, Debt-Equity ratio has declined from 0.51x by the end of FY25 to 0.38x by the end of FY26. Debt Service Coverage Ratio has also improved from 2.64x as at the end of FY25 to 3.87x at the end of FY26.
From above, it can be observed that Divi’s Labs remained debt-free, and Cipla maintained minimal debt backed by a high Debt Service Coverage Ratio (DSCR). Aurobindo Pharma kept Debt-Equity Ratio lower than Sun, Torrent, Mankind or Zydus while improving DSCR and Interest Coverage Ratio during FY26. For Lupin too, Debt increased but Debt Service Coverage Ratio remained comfortable. For DRL, Debt Service Coverage Ratio as well as Interest Coverage Ratio has deteriorated in last five years. Sun, Torrent, Mankind, and Zydus carried higher debt levels, primarily driven by their major acquisitions: Sun acquired Organon, Torrent acquired J. B. Chemicals, Mankind acquired Bharat Serums & Vaccines (BSV) and Zydus acquired Amplitude Surgical SA, France, two U.S.-based biologics manufacturing facilities of Agenus (US), and Comfort Click Limited in UK in FY26.
Dr. Anil Kumar Angrish- Associate Professor (Finance and Accounting) and In-Charge, Department of Pharmaceutical Management, NIPER S.A.S. Nagar (Mohali), Punjab
Disclaimer: Views are personal and do not represent the views of the Institute.
