Financial Performance Highlights

Q2 FY27 Performance:

  • Revenue from operations: ₹663 crores, representing 23% YoY growth
  • Sequential revenue growth: 22% QoQ
  • EBITDA including other income: ₹55 crores
  • EBITDA margin: 8.2%
  • Sequential EBITDA growth: 32% QoQ
  • YoY EBITDA contraction: 13%
  • Finance costs: ₹13.6 crores (8% reduction QoQ, 12.5% reduction YoY)

Segment Performance Q2 FY27:

  • Specialty Chemicals: 32% YoY growth, 4% sequential growth
  • Basic Chemicals: 20% YoY growth, 31% sequential growth
  • Basic Chemicals EBITDA swung to positive ₹20 crores from loss of ₹14 crores in Q1
  • Specialty Chemicals EBITDA declined 33% YoY

H1 FY27 Performance:

  • Revenue from operations: ₹1,205 crores, 19% YoY growth
  • Specialty Chemicals: 35% YoY growth
  • Basic Chemicals: 13% YoY growth
  • EBITDA including other income: ₹96 crores, 20% contraction YoY
  • Finance costs: ₹28.4 crores, 7.2% reduction YoY

Key Operational Developments

Market Conditions Impact:

  • West Asia crisis affected Q1 production of PVC and severely impacted VCM-PVC spread
  • Floods at Dhrangadhra facility in Gujarat caused plant stoppage affecting Soda Ash production in Q2
  • Volatile PVC price movements, including removal of import duties on petrochemical products
  • Abnormal contraction of VCM-PVC spread in Q1 followed by second-order effect in PVC and C-PVC spread in Q2
  • Abnormal increase in freight in Q2 impacting export profitability to North America (₹7-8 crores additional cost)

Product Specific Performance:

  • PVC-VCM spread improved from less than $50 in Q1 to north of $100 in Q2, currently around $120
  • CPVC faced margin pressure as PVC input costs rose faster than selling prices could adjust
  • SIOP exports to North America impacted by elevated ocean freight rates
  • Synthetic Rutile volumes recovered from previous inventory degradation

Balance Sheet Position (as of September 30, 2026)

  • Cash and cash equivalents including investments: ₹297 crores
  • Gross leverage: ₹323 crores
  • Net debt: ₹26 crores
  • Gross debt-to-EBITDA (TTM): 1.5x
  • Net debt-to-EBITDA: 0.12x
  • Debt-EBITDA ratio: 0.29x
  • Current ratio: 1.17x
  • Asset turnover (H1 annualized): 1.83x vs 1.62x in FY26

Capital Allocation and Corporate Actions

Share Buyback:

  • Board approved buyback of up to ₹40 crores
  • Expected to reduce equity base by nearly 3%
  • Execution through open market purchases as per SEBI regulations (25% of average volume of last 10 days)
  • Buyback period: 50 days of operations at ₹80 lakh per day

Growth Investments:

  • Initiated work on ₹250 crores investment program announced last quarter
  • Projects include expansion of iron oxide Pigments Business and optimization of captive power infrastructure
  • Both projects at early stage with previously communicated timelines intact

Management Guidance and Outlook

  • Expect full-year finance costs to be approximately 10% lower than last year
  • Expect H2 FY27 to be significantly stronger than H1
  • Focus on execution, improving margins, maximizing existing assets, progressing investments
  • Target to return to double-digit EBITDA margins in H2 FY27
  • Revenue potential at current prices: approximately ₹2,500 crores at full capacity

Strategic Initiatives

  • Refreshed company identity and mission statement
  • Mission: Harness the power of chemistry to create products that shape the world
  • Vision: To be a global leader in chemicals powered by innovation and sustainability
  • Values: Innovation, agility, trust, sustainability

Regulatory and Market Developments

  • DGTR recommendation of countervailing duty on PVC imports from China on October 26, 2026
  • Awaiting Ministry of Finance approval for duty implementation
  • SEBI reintroduction of open market buybacks through stock exchanges

Capacity Utilization Status

  • PVC and Caustic Soda: Operating at 100% capacity utilization
  • Soda Ash: Operating at around 90% (affected by floods in Q2)
  • SIOP: Operating at 80-85% (considered equivalent to 100% due to changeover requirements)
  • CPVC: Recently expanded from 40KT to 50KT, slightly short of capacity in Q2

Tax Regime Change

  • Shifted to 25% tax bracket under new regime from April 1, 2026
  • Effective tax rate: 25.17%
  • Repricing of deferred tax liability resulted in ₹34 crores income in Q1

Q&A Session Highlights

  • Management addressed questions on PVC-VCM spread normalization
  • Discussed challenges in CPVC price pass-through due to contract structures
  • Clarified buyback size limitations due to SEBI regulations
  • Provided updates on SIOP expansion timeline (Q4 FY28 expected commissioning)
  • Discussed impact of elevated coal prices on power costs despite solar investments
  • Addressed questions on Japanese customer agreements for synthetic rutile (benefits expected from Q3)