20 Microns — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

Despite a challenging demand environment marked by macro factors, extended monsoons, and pricing pressure, 20 Microns reported resilient Q2 FY26 results. The company achieved revenue of ₹230.78 crores, though experiencing a 3.9% YoY decline. Strong cost control and efficient sourcing led to a significant EBITDA margin expansion to 13.8%, a 100 basis point improvement year-on-year. PAT grew by 5.5% YoY to ₹17.35 crores, demonstrating effective operational discipline amidst headwinds.

Highlights

  • Revenue stood at ₹230.78 crores, a decline of 3.9% YoY and 6.6% QoQ.

  • EBITDA margins expanded to 13.8%, a 100 basis point improvement YoY.

  • PAT grew by 5.5% YoY to ₹17.35 crores.

  • PAT margins improved by 7.5%.

  • EPS increased from ₹4.65 last year to ₹4.92 this quarter.

  • Operating expenses declined by 7.7% QoQ and 5% YoY.

Concerns

  • Challenging Demand Environment

Key financials

  1. Revenue ₹230.78 Cr -3.9%YoY
  2. EBITDA Margin 13.8%
  3. PAT ₹17.35 Cr +5.5%YoY
  4. EPS ₹4.92 +5.8%YoY

What they filed

Q1 FY27: revenue down 0.8%, net profit up 5.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue240 215 227 247 231 −4%215 +0%261 +15%245 −1%
EBITDA31 26 29 32 32 +3%28 +8%32 +10%32 +0%
Net profit16 13 15 17 17 +6%15 +15%18 +20%18 +6%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex Capex disclosed New plan — current lowering of the demand; new plan to be announced based on previously announced 100 crore plan
    • Expansion of calcium carbonate operations in Malaysian subsidiary
    Our planned CapEx fuelling growth in capacities has been slightly deferred but will smoothly be executive from Q4 onwards. The CapEx currently as I mentioned in my opening remarks is that it has been slightly default because of the current lowering of the demand and our Malaysian CapEx plan is on track. So we have already finalized plans of infusing funds into our Malaysian subsidiary for the expansion of our calcium carbonate operations thereafter the acquisition. And for the rest of the CapEx, we, it is, as I mentioned, it's slightly deferred in terms of the outflows, but we are revising our CapEx plans in, in that aspect. Nihad will in the in the coming months come out with hopefully a press release with the the new CapEx plan that we will be having based upon the 100 crore plan that we have announced.

Guidance & targets

Revenue

  • Full Year Revenue Growth Revenue · FY26 · Medium confidence 13%
    But we are hopeful that with the encouraging demand coming up in the next few months, we should hopefully achieve the targeted growth rate of 13% and about OK.

    — Atil Parekh

Profitability

  • EBITDA Margin Profitability · End of FY26 · Medium confidence 13 to 14%
    And even in the second-half, we are expecting that this should continue to sustained if, if that go back to the levels where we were at 12 1/2% and we will hopefully be in the 13 to 14% range at the end of the year.

    — Nihad Baluch

What to watch in Q3 FY26

New CapEx Plan Announcement

In the coming months (Q4 FY26 or early FY27).
Current Old plan deferred, new plan being revised.
Target Announcement of the new CapEx plan.

Why it matters

The CapEx plan is crucial for future capacity expansion and growth, and its revision indicates adaptation to market conditions.

Nihad will in the in the coming months come out with hopefully a press release with the the new CapEx plan that we will be having based upon the 100 crore plan that we have announced.

Risks & concerns

  • Challenging Demand Environment

    high

    Macro factors, extended monsoons, delayed festive impulses, and pricing pressure in the paint industry led to a temporary slowdown.

    Management acknowledged

  • Global Raw Material Volatility

    medium

    Polymers and rubber division growth was at a measured pace due to global raw material volatility.

    Management acknowledged

  • Increased Competition in Paint Industry

    medium

    Competition is increasing in the paint industry, leading to pressure on raw material costs and margins for suppliers like 20 Microns.

    Analyst acknowledged

Q&A highlights

4 direct
H2 Revenue Trend vs H1 Partial
Well, usually the second quarter is is sometimes at its peak, but this time due to the lower demand which has been there, we are expecting that the the third quarter and the fourth quarter should be decent compared to the last half of the OK.

Clarifies expectations for the second half of the fiscal year, indicating a potential shift from typical seasonality due to current demand conditions.

Achievement of 13% Revenue Growth Target Direct
Well, yes, the target would continue to remain the same that we had anticipated at the beginning of the year.

Reaffirms the full-year revenue growth target despite a dip in Q2 sales, indicating management's confidence in H2 recovery.

Outlook and Sustainability of EBITDA Margins Direct
And even in the second-half, we are expecting that this should continue to sustained if, if that go back to the levels where we were at 12 1/2% and we will hopefully be in the 13 to 14% range at the end of the year.

Provides specific guidance on expected EBITDA margin range for the full year, indicating a slight moderation from current levels but still strong.

Impact of Malaysian Mine on Margins Partial
Yes, the Malaysian mines have recently been operational and to go full-fledged it will take another few more months till we reach the optimal level where we will then be able to get a proper guidance about how much savings that we can do in terms of the margins.

Indicates that while the mine is operational, its full margin benefit and quantifiable impact are still some quarters away, delaying a key cost-saving driver.

Asked by Adarsh Jain

New Product Introductions and Performance Direct
And in this first half we have been trying to promote those products being from organic thickeners to pacifiers to flame retardants and activators to partial replacement of zinc oxide... And hopefully there are a few more products also in the pipeline, which is too early to comment on right now, but they will be introduced in the fourth quarter when we will be showcasing those products in our upcoming exhibitions for plastics, rubber and paints in February, March and April of 2026.

Highlights ongoing R&D efforts and future product pipeline, crucial for value-added segment growth and market diversification.

Exploration of Rare Earth Minerals Partial
So we are working closely and trying to explore to see if there is any potential that we can, you know, establish in terms of rare earth minerals in the future. But it's too early to comment right now because it's just a very new area to be looking into.

Reveals a potential new strategic direction for the company in a high-value, trending sector, though it's in very early stages.

Asked by Adarsh Jain

Nano Business Performance and Scale-up Target Partial
If we consider of this year versus last year, we have not seen a significant growth. We are you know, at the same levels that we were in the H1 of last year. But yes, we have significantly decreased our raw material cost in Nano in in this financial year and also that has led to increased PAT margins and PAT of 20 microns nano.

Shows that while revenue growth in Nano was flat, profitability improved due to cost efficiencies, indicating a focus on margin over top-line in this segment.

Status of 100 Crore CapEx Plan and Sustainability Initiatives Direct
The CapEx currently as I mentioned in my opening remarks is that it has been slightly default because of the current lowering of the demand and our Malaysian CapEx plan is on track... Nihad will in the in the coming months come out with hopefully a press release with the the new CapEx plan that we will be having based upon the 100 crore plan that we have announced.

Provides an update on a significant capital expenditure plan, indicating deferral and revision due to market conditions, which impacts future growth capacity.

2 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

20 Microns reported Q2 FY26 revenue of ₹230.78 crores, marking a 3.9% year-on-year and 6.6% sequential decline, primarily due to macro factors affecting the paint industry, extended monsoons, and pricing pressures. Despite these headwinds, the company demonstrated strong operational resilience, expanding EBITDA margins to 13.8%, a 100 basis point improvement over the previous year. PAT grew by 5.5% YoY to ₹17.35 crores, with EPS increasing from ₹4.65 to ₹4.92.

Cost Management and Margin Expansion

The company's focus on cost efficiencies, alternative sourcing, and manufacturing discipline translated into measurable financial gains. Operating expenses declined by 7.7% sequentially and 5% year-on-year, contributing significantly to the improved profitability. Management highlighted that EBITDA margins expanded to 13.8% due to these initiatives, and they expect to maintain a 13-14% range by the end of the fiscal year.

Segmental Performance and Diversification Strategy

The paint industry remains the largest contributor at 48% of revenue, followed by plastics at 25% and rubber at 9%. While the paint segment faced slowdowns, the polymers and rubber divisions showed significant growth in industrial applications. The company is strategically rebalancing its portfolio towards plastic and rubber segments, which offer structurally higher margins, and is expanding its B2C portfolio in construction chemicals and mineral fertilizers.

Outlook and Growth Drivers

Management anticipates a more constructive environment in H2 FY26, driven by festive and wedding seasons, infrastructure upgrades, and improving activity levels indicated by early October/November data. Export footprints are expanding into new markets like Poland, Latin America, Middle East, and South Africa, offsetting plateauing in Western European markets. The company aims for a 13% revenue growth for the full year, supported by accelerating growth in value-added segments and specialty chemicals.

Capital Expenditure and Sustainability Initiatives

The previously announced 100 crore CapEx plan has been slightly deferred due to current demand conditions, with a new revised plan expected to be announced in the coming months. However, the Malaysian CapEx plan for the expansion of calcium carbonate operations is on track. The company also emphasized its commitment to ESG practices, being Eco Wadis Gold certified, and conducting regular audits for sustainability in its operations and new product development.

Product Innovation and Market Presence

20 Microns continues to focus on product innovation and value-added formulations, promoting products like organic thickeners, pacifiers, flame retardants, and zinc oxide replacements. Several new products are in the pipeline and are slated for introduction in Q4 FY26, coinciding with upcoming exhibitions in February, March, and April 2026. Strategic R&D and customer engagement are yielding positive results, particularly in premium segments, enhancing market presence.

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