Financial Performance (Standalone)

Q2 FY2027 (YoY):

  • Net income (including other income) increased by 21% to INR 707 crores from INR 562 crores in Q2 FY2026.
  • EBITDA declined by 27% to INR 142 crores from INR 195 crores.
  • Profit After Tax (PAT) declined by 33% to INR 87 crores from INR 129 crores.

Q2 FY2027 (QoQ):

  • Net income declined by 4% from INR 707 crores in Q1 FY2027 to INR 681 crores in Q2 FY2027.

H1 FY2027 (YoY):

  • Net income increased by 25% to INR 1,387 crores from INR 1,112 crores in H1 FY2026.
  • EBITDA declined by 10% to INR 333 crores from INR 368 crores.
  • PAT declined by 15% to INR 210 crores from INR 242 crores.

Financial Performance (Consolidated)

Q2 FY2027 (YoY):

  • Net income increased by 23% to INR 693 crores from INR 566 crores.
  • EBITDA declined by 24% to INR 138 crores from INR 183 crores.

Q2 FY2027 (QoQ):

  • Net income declined by 2% from INR 704 crores in Q1 FY2027.

H1 FY2027 (YoY):

  • Net income increased by 25% to INR 1,398 crores from INR 1,115 crores.
  • EBITDA declined by 9% to INR 318 crores from INR 350 crores.
  • PAT declined by 15% to INR 187 crores from INR 219 crores.

Operational Performance & Challenges

The business faced challenges due to prevailing market conditions, primarily the ongoing war in the Middle East. This led to:

  • An increase in raw material prices, which were largely passed on to customers.
  • An increase in energy and logistics costs, which could not be entirely passed through to customers.

This dynamic resulted in top-line growth but adversely impacted the bottom line. Logistics rates have started cooling in Q3 FY2027, with a further reduction expected in Q4, which is anticipated to positively impact profitability.

Product-Wise Performance & Outlook (H1 FY2027 Revenue Mix)

  • ATBS: Contributed 27%-28% to the top line. Demand did not pick up as anticipated due to customer destocking, impacting the half-year target. A meaningful volume recovery is expected in H2 FY2027, with Q3 looking strong.
  • IBB (Isobutylene Benzene): Contributed 12%-15% to the top line. Delivered strong performance in H1 in terms of volume and pricing. A similar performance is expected in H2.
  • Butyl Phenols: Contributed 16%-20% to the top line. Delivered a stable performance. Better performance is anticipated in H2 supported by improving demand conditions.
  • Antioxidants (AO): Contributed 15%-17% to the top line. Delivered a strong performance despite a challenging market environment. The segment is expected to maintain momentum in H2 supported by market expansion.
  • IB (Isobutylene): Reported strong performance during H1, and the performance is expected to continue in H2.

Guidance

  • Revenue: The company expects to end FY2027 with a 20%-25% improvement in the top line over the previous year, owing to improvement in volumes and pricing.
  • EBITDA Margin: The company expects to achieve an EBITDA margin of 24%-25% for FY2027. For FY2028, an EBITDA margin of 25%-26% is anticipated.

Capital Expenditure (Capex)

  • Announced Capex (INR 500 crores): A plan to develop and commercialize new specialty chemicals with applications in fragrances, personal care, water treatment solutions, oil fields, and resins.
  • The capex is entirely funded through internal accruals.
  • It is expected to be commercialized in two years.
  • The asset turnover is expected to be 1:1 or slightly higher (1.2x-1.5x).
  • The Return on Investment (ROI) is expected to be in the range of 15%-20%.
  • The products are related to existing products, offering integration or adjacencies (backward, forward, or horizontal). They have been tested over the last year.
  • The average realization for these new products is expected to be around $3 per kg (range: $2 - $4.5).
  • The sales mix is anticipated to be 65%-70% exports.
  • Additional Capex (INR 500 crores): The company is planning for an additional INR 500 crores capex and is currently working on land acquisition. More clarity is expected in the next couple of months. This capex will also be funded through internal accruals and is expected to have similar economics (15%-20% ROI).

Veeral Organics Private Limited (VOPL) Update

  • A few products at VOPL require process re-engineering, which is underway.
  • MEHQ is being manufactured at lower volumes for self-consumption to make BHA.
  • The expansion and debottlenecking of MEHQ are taking longer than expected.
  • Commercial sales of MEHQ are now expected to start from April 2027 (next financial year).
  • It will take approximately one year from commencement (April 2027) to reach optimum capacity and utilization.
  • The company expects VOPL to contribute meaningfully to the top and bottom lines of the consolidated entity after the process is complete.
  • For FY2027, VOPL revenue is guided to be in the range of INR 75 crores to INR 100 crores.
  • VOPL's product portfolio includes MEHQ, Guaiacol, Anisole, 4-Methoxyacetophenone, and isoamylene-based products (Tertiary Amyl Alcohol, PTAP). Revenue from the newer products (PTAP, etc.) is expected to start from December 2026/January 2027.

Conference Call Participants

Management:

  • Ms. Vinati Saraf Mutreja, Managing Director
  • Mr. Gulshan Sakhuja, Chief Financial Officer
  • Mr. Aditya Churiwala, DGM, Corporate Finance

Moderator:

  • Mr. Archit Joshi, Nuvama Wealth Management Limited