Financial Performance Highlights

Q2 FY27 Performance:

  • Operating Revenue: ₹499 crore, representing 48% year-on-year growth
  • Sales Volume Growth: 7% year-on-year
  • Export Volumes: Witnessed recovery during the quarter, reversing Q1 FY27 decline
  • Operating EBITDA: ₹58 crore, representing 44% year-on-year growth
  • EBITDA Margin: 11.69% (compared to 12.06% in Q2 FY26)
  • Profit After Tax: ₹35 crore, representing 38% year-on-year growth
  • PAT Margin: 6.98%

H1 FY27 Performance:

  • Operating Revenue: ₹1,025 crore, representing 44% year-on-year growth
  • Operating EBITDA: ₹175 crore, representing 121% year-on-year growth
  • EBITDA Margin: 17.12% (expanded by 599 basis points from previous year)
  • Profit After Tax: ₹114 crore, representing 156% year-on-year growth
  • PAT Margin: 11.11% (improved from 6.25% in previous year)

Operational and Strategic Updates

Margin Analysis:

  • Q2 margins moderated due to high raw material prices and approximately 1.5% inventory losses from price declines in July-August 2026
  • Management emphasized focus on ROCE and EBITDA per ton rather than percentage margins alone
  • Strategic price adjustments implemented to offset cost pressures

Capacity Utilization:

  • Nitrile latex plant running at close to full capacity
  • NBR plant running at full capacity utilization for past 1.5-2 years
  • Other plants operating at 80-90% capacity utilization

Expansion Projects:

  • ₹210 crore CAPEX project at Valia facility largely on track
  • Solid NBR expansion expected commissioning: April 2027 (Q1 FY28)
  • SBR latex plant expected commissioning: Q2 FY28
  • CAPEX spending: ₹65 crore spent so far, ₹155 crore remaining outflow
  • Funding: Primarily through internal accruals, maintaining net cash positive position

Working Capital:

  • Working capital requirements remained elevated due to higher input costs
  • Increased inventory values and receivables
  • Company maintained net cash positive position as of 30th September 2026

Segment Performance and Market Outlook

Segment Performance:

  • Construction segment: Performing extremely well (specialty applications, waterproofing, oil drilling)
  • Paper segment: Performing quite well despite industry overcapacity
  • Textiles segment: Decent performance
  • Tires segment: Okay performance
  • Carpets segment: Lagging due to US tariffs, war impact, high ocean freight rates affecting MENA region exports

Volume Growth Outlook:

  • Management expects 10-12% annual volume growth CAGR over next 3-5 years
  • Growth drivers: Population growth, per capita GDP growth, Southeast Asia expansion, substitution from European competitors

Product Development:

  • Battery binder products under development
  • Oil drilling industry products developed over past few years
  • Specialty products for textile and paper industries
  • Bio-based raw material integration initiatives

Raw Materials and Supply Chain

Raw Material Sourcing:

  • Bulk imports of styrene monomer and butadiene
  • Butadiene currently sourced from Indian Oil Corporation Limited (IOCL)
  • IOCL styrene project still in development phase, not yet available for commercial discussions

Supply Chain Challenges:

  • Geopolitical supply chain disruptions affecting freight rates
  • Container availability issues, particularly affecting MENA region exports
  • Some improvement in ship availability to Saudi Arabia and Fujairah in Q2 compared to Q1

Q&A Session Key Points

Margin Sustainability:

  • Management targets ~15% EBITDA margins ideally, comfortable with 12% in current high-cost environment
  • Focus on maintaining competitiveness and volume protection

Nitrile Latex Expansion:

  • Decision pending on further nitrile latex expansion
  • Waiting for 2-3 more quarters of consistent margin performance before investment decision
  • Current market characterized by overcapacity from COVID-era expansions

Regional Performance:

  • 65-67% of sales India-based
  • MENA region remains challenging due to geopolitical tensions
  • Southeast Asia showing growth potential

Forward-looking Statements

Management cautioned that forward-looking statements are subject to risks and uncertainties, and investors should not place undue reliance on them for investment decisions.