Epigral Limited Q2 FY27 Earnings Conference Call Summary

Call Date: 02 November 2026

Management Participants

  • Mr. Maulik Patel, Chairman and Managing Director
  • Mr. Kaushal Soparkar, Executive Director
  • Mr. Rakesh Agrawal, Chief Financial Officer
  • Mr. Milind Kotecha, Investor Relations & Strategy
  • Mr. Gagan Dixit, Emkay Global Financial Services Limited (Moderator)

Opening Remarks by Management

Mr. Maulik Patel described the chemical industry as facing a "complex, volatile and highly challenging operating environment" with headwinds expected to persist. Key challenges included:

  • Lag time in passing through volatile feedstock prices
  • Normalization of previous inventory lead days
  • Ongoing West Asia crisis impacting raw material prices
  • Extended lead times and increasing global freight rates
  • Rising domestic transportation costs

Despite these challenges, the company delivered 28% revenue growth in Q2 FY27 driven by volume growth and improved realizations. The derivatives and specialty business contributed 57% of total revenue in Q2 FY27.

Financial Performance

Q2 FY27 Financials (Presented by Mr. Rakesh Agrawal):

  • Revenue: INR752 crores (up 28% YoY from INR589 crores in Q2 FY26)
  • EBITDA: INR136 crores (up 3% YoY from INR132 crores in Q2 FY26)
  • EBITDA Margin: 18% (impacted by high raw material costs)
  • PAT: INR64 crores (up 26% YoY from INR51 crores in Q2 FY26)

H1 FY27 Financials:

  • Revenue: INR1,461 crores (up 21% YoY from INR1,204 crores)
  • EBITDA: INR315 crores (vs INR296 crores in H1 FY26)
  • EBITDA Margin: 22% maintained despite challenging environment
  • PAT: INR164 crores (vs INR131 crores in H1 FY26)
  • PAT Margin: 11% (similar to H1 FY26)
  • ROCE: 15% as of September 30, 2026 (18% if excluding capital work in progress)
  • Net Debt to EBITDA: 0.9x as of September 30, 2026 (vs 0.8x as of September 30, 2025)
  • Net Debt: INR514 crores (vs INR496 crores)
  • Capex Spend in H1 FY27: INR88 crores

Capacity Expansion Update

The company provided detailed updates on ongoing capacity expansions:

  • CPVC and Epichlorohydrin capacity expansions are in final stages with trial runs underway
  • Expected commissioning within a quarter (Q3 FY27)
  • Epoxy resin and multipurpose plant (MPP) projects progressing as planned
  • Pilot plants for epoxy resin and MPP are ready; customer approval process to begin soon
  • This approach expected to minimize qualification timelines once commercial production begins

Market and Product Specific Discussions

Chlor-Alkali Business:

  • Management discussed the impact of 60-70% increase in coal prices on coal-based caustic soda plants
  • Noted that increased energy costs are being transferred to chlorine prices rather than caustic soda
  • Q2 ECU realization was approximately INR31,000-32,000
  • Chlorine prices around zero (previously negative)
  • Expectation that chlorine prices will not return to negative zone going forward
  • Caustic soda prices expected to increase in Q3 and Q4 due to high energy costs in Europe during winter

Capacity Utilization Rates (Q2 FY27):

  • ECH: 75-80%
  • Hydrogen Peroxide: 95%
  • Caustic Soda: 75%
  • CPVC: 60-65%

Product Specific Updates:

  • Hydrogen Peroxide: Moving into value-added grades for solar applications, commissioning expected in Q4 FY27
  • Chlorotoluene: Expected to generate ~INR100 crores revenue in current year, with volumes increasing quarter-on-quarter
  • Peak revenue potential for chlorotoluene business estimated at INR300-350 crores at optimum utilization
  • CPVC realizations: INR120-125 per kg, moving in line with raw material (PVC) price increases

Growth Strategy and FY31 Guidance

Management reiterated long-term guidance:

  • FY27 revenue target: INR2,900 crores
  • FY31 revenue target: INR5,000 crores
  • Epoxy and MPP projects together guided at INR1,300-1,500 crores peak revenue
  • Current gross block: ~INR3,000 crores
  • Post current expansions (CPVC and ECH): Gross block to increase to ~INR3,500 crores, capable of generating INR3,600-3,700 crores revenue
  • Additional INR600 crores capex for MPP and epoxy resin to increase gross block to INR4,100-4,200 crores, capable of generating INR5,000-5,100 crores revenue by FY31

Energy Strategy

  • Company has commissioned solar and wind hybrid project
  • Second project announced
  • Targeting 30-35% of total power demand from renewable sources within 2-3 years
  • Investment model: 26% equity in SPV with 20-year commitment, not major capex requirement

Other Business Updates

  • Maintenance capex: Approximately 1.5% of gross block annually
  • Tax demand mentioned was described as "routine thing" with no specific impact disclosed
  • El Niño: No direct impact on company's products
  • Competitive advantages: First-mover advantage in CPVC, integrated manufacturing with captive chlorine via pipeline, technology not easily available, lengthy customer approval processes

Q&A Session Highlights

The conference call included questions from institutional and individual investors covering:

  • Impact of coal price increases on chlor-alkali economics
  • Product-specific realizations and margins
  • Capacity utilization rates
  • Growth projects and commissioning timelines
  • Competitive landscape and moats
  • Logistics and geographical advantages
  • Energy cost reduction strategies
  • FY31 revenue guidance and capex requirements

Closing Remarks

Management maintained a positive outlook for H2 FY27, noting that historically the second half outperforms the first half as H1 is typically off-season for some products. The company remains committed to portfolio diversification and expanding into high-value chemical products to deliver consistent long-term growth.