Financial Performance Highlights

Q2 FY27 (Quarter Ended September 30, 2026)

  • Revenue: ₹3,887 crore, representing a 73% increase year-over-year (YoY) from Q2 FY26.
  • EBITDA: ₹418 crore, achieving a record high and representing a 44% increase YoY. This is the first quarter EBITDA surpassed the ₹400 crore threshold.
  • PAT: ₹169 crore, representing a 60% growth YoY.

H1 FY27 (Six Months Ended September 30, 2026)

  • EBITDA: ₹802 crore, an increase of over 58% compared to ₹507 crore in H1 FY26.
  • PAT: ₹324 crore, a growth of 117% compared to ₹149 crore in H1 FY26.

Operational and Segment-Wise Performance

Management attributed the strong performance to robust volume growth, resilient export demand, and the ability to pass through significant raw material (RM) cost variations. Performance across key end-user segments was as follows:

  • Dyes & Pigments: Delivered steady growth anchored by resilient domestic demand for the Nitro Chloro Benzene (NCB) chain, despite inflationary pressure from key RMs like Sulphur.
  • Agrochemicals: Achieved volume growth, though pricing trends were mixed. The second half may reflect the impact of a weaker domestic monsoon.
  • Pharma & Fluoro Products: Achieved pricing and volume gains in Para Nitro Chloro Benzene (PNCB). Paracetamol building blocks saw robust demand. Fluoro products' margins remained under pressure.
  • Polymers & Additives: Demand from high-end engineering, EV, and defense markets remained robust. Softness in the PDA chain created a short-term drag, but traction is expected to resume in Q3 FY27.
  • Energy-Linked Portfolio: Performance was strong due to elevated crude oil prices, strong gasoline-naphtha cracks, and price increases undertaken due to higher RM costs. The company is transitioning to a solutions-based approach and plans to launch new products over the next 12-24 months.

Raw Material (RM) & Working Capital

Escalating geopolitical tensions triggered significant crude oil volatility, driving RM cost inflation. Key RMs like Sulphur saw prices surge by 5-6x, combined with sharply elevated freight costs.

  • This inflation stretched working capital requirements over the past two quarters.
  • Net Debt increased to over ₹4,650 crore, leading to higher finance costs.
  • Inventory was managed at 55-60 days, though absolute inventory values doubled due to higher RM prices, carrying a risk of inventory loss if prices correct.
  • A provision of ₹40 crore was taken for goods-in-transit in the consolidated accounts.

Fundraising Plan

To strengthen the balance sheet and support long-term growth, the Board approved an enabling resolution on October 1, 2026, to raise up to ₹1,000 crore through various avenues. The primary objective is to deleverage the balance sheet. This resolution was approved by shareholders in an EGM held on October 31, 2026.

Strategic Initiatives & Growth Updates

Capital Expenditure (CAPEX)

  • Planned FY27 CAPEX is between ₹700 crore to ₹800 crore.
  • Fuel Additives: Capacity utilization remained strong following an expansion from 290 KTPA to 360 KTPA in Q1 CY2026.
  • DCB: Capacity debottlenecking to 140 KTPA remains aligned with downstream PDCB demand.
  • NCB: With current asset utilization elevated, capacity expansion initiatives are under evaluation.

Zone IV Expansion (Jhagadia, Gujarat)

  • Phase I Commissioning: Officially commissioned on September 7, 2026.
  • Operational Units: The Calcium Chloride unit, the PEDA (2-Phenyl Ethyl Diethyl Aniline) plant, and a section of the Multipurpose Plant (MPP) are operational and undergoing stabilization. Many have achieved designed capacity and quality.
  • Focus: Current operational focus is on commercial batch qualification, customer approvals, and progressive volume ramp-up.
  • Product Launch Plan: 5-10 products planned for FY27, expanding to 20-25 products across 5 different chemistry blocks by FY28. The remaining 4 chemistry blocks are expected online within FY27.
  • Financial Target: The management aspires for Zone IV to contribute ₹250-350 crore to the bottom line within the first 18 months and be value-accretive in FY28.
  • Capitalization: Approximately ₹1,800-1,900 crore of Capital Work-in-Progress (CWIP) pertaining to Zone IV is expected to be capitalized by March 31, 2027.

New Long-Term Contract

  • On October 13, 2026, the company entered a dedicated 10+ year manufacturing and supply agreement with a global specialty chemical major.
  • Revenue Potential: ~₹1,500 crore over the contract period.
  • Structure: Aarti will build and operate a dedicated facility using proprietary technology.
  • CAPEX: Structured financing under $25 million.
  • Commercial Operations Target: FY29.

Joint Ventures (JVs)

  • Augene Chemicals JV (with Superform): The facility is ready, trial production is underway, and the order book is gaining traction. Commercial production is expected to commence soon, with a steady-state revenue projection of ₹300-400 crore.
  • Aarti Circularity (Plastic Recycling JV): Project execution remains on track.

Guidance and Outlook

  • The company maintains its FY28 EBITDA guidance range of ₹1,800 - ₹2,200 crore.
  • Management expects the current business momentum to continue but noted two watch items for H2 FY27: fixed costs from Zone IV commissioning impacting the P&L in Q4, and potential impacts from a major correction in global crude oil prices on inventory.
  • The energy portfolio is expected to settle at 30-40% of the overall portfolio in the medium term as Zone IV ramps up and balances the product mix.
  • The effective tax rate is expected to be between 15% and 20%.

Management Commentary

Management highlighted that shifting global trade dynamics, including China's capacity rationalization and India's expanding trade agreements, present a compelling tailwind for Indian specialty chemical manufacturers. The company is seeing increased inbound inquiries for long-term partnerships to serve markets in Europe, Japan, and the U.S. in new areas like personal care, flavors & fragrances, batteries, and defense.

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