Oriental Aromatics Limited Q2 and H1 FY'27 Earnings Conference Call Summary

Operational Performance Highlights

Overall Performance:

  • Q2 FY27 achieved highest-ever quarterly revenue of ₹318.19 crores, representing 17% YoY growth and 22% QoQ growth
  • H1 FY27 consolidated revenue stood at ₹578 crores, representing 16.3% YoY growth
  • Consolidated EBITDA margins improved to 7.80% in H1 FY27 compared to 7.11% in H1 FY26
  • Total production increased by 7% sequentially in Q2, while sales volume increased by 4%
  • For H1 overall, sales volume increased by 7% YoY while production volume increased by 1%

Business Division Performance:

Fragrances and Flavors Division:

  • Production at Ambernath increased by 14% sequentially in Q2
  • Sales volumes increased by 20% compared with Q1 FY27
  • Continued focus on internalization of aroma ingredient programs to enhance fragrance creation capability

Specialty Aroma Ingredients Division (Baroda):

  • Production increased by 8% sequentially in Q2
  • Sales volumes increased by 12% QoQ and 8% YoY
  • H1 sales volumes increased by 10% YoY
  • Facing pricing pressure due to global capacity additions and elevated raw material costs

Camphor and Terpene Chemicals Division (Bareilly):

  • Production increased by 4% sequentially during Q2
  • Sales volumes decreased by 5% compared with Q1 and 8% compared with corresponding quarter last year
  • H1 production increased by 8% YoY, while sales volumes increased by 11% YoY
  • Significant increase in alpha-pinene prices impacting camphor selling prices and consumer off-take

Mahad Facility Progress:

  • Q2 production increased 51% sequentially
  • Q2 sales volume increased by 74% compared with Q1 FY27
  • H1 production increased by 36% YoY
  • Current utilization at 50-55% of installed capacity
  • Target to reach 80% utilization in next 2-3 quarters
  • Facility continues to operate below optimal utilization, dragging consolidated profitability

Financial Highlights

Q2 FY27 Financials:

  • Consolidated operating revenue: ₹318.2 crore
  • EBITDA: ₹25.26 crore (vs ₹19.8 crore previous quarter, ₹17.2 crore YoY)
  • Operating EBITDA margin: 7.94% (32 bps QoQ improvement, 158 bps YoY improvement)
  • Profit after tax: ₹5.70 crore (130% sequential growth)
  • PAT margin: 1.82%
  • Cash profit: ₹13.58 crore (vs ₹10.23 crore previous quarter)

H1 FY27 Financials:

  • Consolidated operating revenue: ₹578 crore
  • EBITDA: ₹45.07 crore (vs ₹35.31 crore H1 FY26)
  • Standalone EBITDA margin: 8.6% (higher than consolidated 7.8% due to Mahad impact)
  • Profit after tax: ₹8.3 crore (vs ₹1.2 crore H1 FY26)
  • Cash profit: ₹23.8 crore (vs ₹16.7 crore H1 FY26)
  • Net debt-to-equity ratio: 0.64 as of 30th September 2026

Strategic Announcements

Unilever Partnership:

  • Entered into technical, strategic, and manufacturing arrangement with Unilever Industries Private Limited
  • Specific details including financial terms, investment requirements, and timeline not disclosed due to confidentiality
  • Management described arrangement as "work in progress" and "encouraging"
  • Expected to contribute to future growth but quantification not provided

Management Guidance and Outlook

Financial Targets:

  • Revenue growth guidance: 10-12% CAGR
  • EBITDA margin target: 10% (timeline not specified)
  • Full-year implied guidance: ₹1000 crore turnover with ₹50 crore net profit (based on advance tax payment indication)

Operational Priorities:

  • Focus on sustainable and profitable growth across all three divisions
  • Continue operational efficiency programs and cost optimization
  • Close monitoring of raw material markets, energy costs, currency movements
  • R&D pipeline strengthening in specialty aroma ingredients and fragrance creation
  • Future expansion plans (brownfield or greenfield) to be announced in coming quarters

Challenges Identified:

  • Raw material cost inflation (particularly terpene-based and petrochemical-derived materials)
  • Competitive pricing pressure in global ingredients market
  • Structural overcapacity in domestic camphor market
  • Geopolitical uncertainty affecting procurement and manufacturing costs
  • Mahad facility utilization below optimal levels impacting profitability

Capital Structure and Financial Position

Debt Position:

  • Net debt-to-equity ratio of 0.64 as of 30th September 2026
  • Increase from previous quarter's 0.56 due to higher inventory levels and receivables
  • Higher raw material costs contributing to increased working capital utilization

CAPEX Plans:

  • Currently in consolidation phase after significant past investments
  • Evaluating multiple options and products for future expansion
  • Plans to be communicated to investors in coming quarters

Q&A Session Key Points

Mahad Facility:

  • Current revenue contribution approximately ₹4 crore in Q2
  • Optimum utilization expected in 2-3 quarters
  • Break-even on EBITDA basis not specifically confirmed for current year

Competitive Landscape:

  • Camphor market facing structural overcapacity issues
  • Global ingredients business follows 2-3 year cycle for market share capture
  • Fragrance business competes with both Indian and global fragrance houses

Business Mix:

  • Maintaining approximately 1/3rd revenue distribution across three divisions
  • B2C camphor brands (Saraswati, 3 Pine) account for over 60% of camphor output
  • Both B2B and B2C camphor segments showing sluggishness due to price sensitivity