Management Participants

The call was led by Mr. Nilesh Koul (Managing Director), Mr. Raj Gupta (Chief Financial Officer), Mr. Rohit Narang (CEO, Aquapharm Chemical), and Mr. Pankaj Kedia (Executive Director, Investor Relations).

Quarterly Financial Performance (Consolidated)

For the quarter ended 30th September 2026 (Q2 FY27):

  • Revenue from Operations: ₹2,474 crores (14% YoY growth)
  • EBITDA: ₹310 crores (12% YoY growth)
  • Profit After Tax (PAT): ₹74 crores (20% YoY growth)
  • The EBITDA includes a one-time benefit of ₹33 crores from a US tariff refund. Excluding this, the underlying EBITDA per tonne was approximately ₹17,500.

Operational Highlights (Q2 FY27)

  • Carbon Black Sales Volume: 134,180 tonnes
  • Domestic Volume: 92,843 tonnes
  • Export Volume: 41,337 tonnes (down 18% QoQ due to deliberate volume rationalization in low-margin geographies)
  • Carbon Black Product Mix:
  • Tyre Grades: 77,914 tonnes
  • Performance Chemicals: 39,698 tonnes
  • Specialty Grades: 16,568 tonnes
  • Power Generation: 186 million units
  • External Sales: 108 million units at an average realization of ₹5.34 per unit

Market Context & Challenges

Management cited significant market volatility driven by:

  • Geopolitical conflicts in West Asia and Russia-Ukraine disrupting trade routes.
  • Elevated crude oil prices (~$110/bbl during the call), influencing customer destocking behavior.
  • A sharp rise in freight and logistics costs due to vessel shortages and longer transit times.
  • Tight global feedstock (CBFS) availability, exacerbated by multi-decade low throughput at Russian refineries.
  • Firming coal tar prices in China, supporting medium-term carbon black prices in Southeast Asia.

Strategic Initiatives & Guidance

  • Pricing Discipline: The company emphasized a strategy of prioritizing margins over volume, leading to a withdrawal from unprofitable spot markets, particularly in Southeast Asia.
  • Cost Savings (Project Alchemy): A program to deliver ₹200-250 crores in savings is underway. Initiatives are being proven and horizontally deployed, with an acceleration of benefits expected from Q4 FY27 onwards.
  • EBITDA Guidance: The company reiterated its guidance of achieving double-digit growth in average EBITDA per tonne over FY26 levels.
  • Exports & Infrastructure: The company is strengthening its presence in Europe and North America via its Antwerp warehouse and US entity. Infrastructure for railcar shipments in the US is being set up to unlock future volume growth.
  • Specialty Carbon Blacks: Progress is being made on expanding the product portfolio and customer engagements. The focus is on improving raw material (feedstock) availability to dial up volumes from the enhanced Mundra Line 6 capacity.
  • Advance Battery Materials: The strategy is evolving from supplying nano-silicon additives to developing silicon-carbon composite anode solutions.
  • A pilot project in Palej is producing samples for internal qualification and subsequent customer validation.
  • A Super Conductive Black facility has been commissioned.
  • The Acetylene Black project is on track and has received necessary approvals.
  • The global silicon carbon anode market is estimated at ~$1.2 billion in 2025 and is projected to grow at over 25% annually through 2035.
  • Backward Integration: A coal tar distillation capex plan (~₹300 crores total FY27 capex) is in the final stages of approval regarding technology and supplier contracts.

Aquapharm Chemicals Performance (Q2 FY27)

  • Sales Volume: 24,253 metric tonnes
  • Revenue: ₹433 crores
  • EBITDA: ₹42 crores
  • Segment-wise Volume Performance:
  • Home Care: +7% YoY
  • Water Solutions: -20% YoY (steady sequentially)
  • Oil & Gas: -20% YoY (steady sequentially)
  • Application-specific solutions: +15% YoY
  • Strategic Focus: Scaling Green Chelates, ramping up PBTC, improving plant utilization, and strengthening raw material security. The company is targeting double-digit revenue growth for FY27, driven by new product commercialization (e.g., PBTC, GLDA, synthetic thickeners, biocides, corrosion inhibitors).
  • Antidumping Duty: Provisional duties on HEDP and ATMP have been imposed by DGTR. The financial impact has not been incorporated into forecasts yet, but it is expected to benefit margins.

Raw Material (Feedstock) Sourcing

  • The company is actively diversifying its CBFS sourcing to derisk from US supplies, exploring options in Southeast Asia (Korea, Malaysia, Thailand).
  • A 1-2% cost premium is anticipated for feedstock from these new geographies.
  • The quality and yield of alternate feedstocks are key considerations in the optimization process.

Outlook

  • Management remains constructive on the medium-term outlook, citing structural tailwinds, India's trade agreements, and a tight global feedstock environment.
  • Near-term buying patterns are expected to improve gradually as price clarity emerges.
  • The volume growth guidance for FY27 (previously ~7%) is now considered challenging due to raw material availability and competitive markets, though the EBITDA guidance remains unchanged.
  • Domestic demand is supported by strong OEM performance and festive season activity, though tyre manufacturers face margin pressure from overall cost inflation.