20 Microns — Q4 FY25 earnings call

Call held 27 May 2025

Management summary

20 Microns delivered a robust performance in Q4 and full year FY25, achieving ₹912.7 crores in annual revenue, marking a 17.4% YoY growth. The company demonstrated improved profitability with Q4 EBITDA margins at 12.7% and maintained FY25 EBITDA margins at 12.8% amidst market and geopolitical challenges. Strategic initiatives included a Malaysian acquisition, significant CapEx in the Nano subsidiary, and a continued focus on value-added products, while managing increased working capital requirements driven by strategic inventory build-up for imported raw materials.

Highlights

  • Annual revenue for FY25 reached ₹912.7 crores.

  • Annual revenue growth for FY25 was 17.4%.

  • Q4 FY25 revenue grew 6% over Q3 FY25 and Q4 FY24.

  • Q4 FY25 EBITDA margin improved to 12.7%, compared to 12.2% in Q3 FY25 and 12.5% in Q4 FY24.

  • FY25 EBITDA margins were maintained at 12.8%.

  • Q4 FY25 bottom line (PAT) augmented to 6.7%, up from 6% in Q3 FY25 and 6.4% in Q4 FY24.

  • Dividends were declared at 25%.

  • Borrowings increased from ₹121 crores to ₹165 crores in FY25, primarily for working capital due to inventory build-up.

Concerns

  • Dependency on imported raw materials (36-37% of total usage) and supply chain disruptions

Key financials

5 periods

Headline

  • Annual Revenue
    ₹912.7 Cr
    YoY +17.4%

Q4

  • Revenue Growth
    6%

Q4 FY25

  • EBITDA Margin
    12.7%
  • Bottom Line Margin
    6.7%

FY25

  • EBITDA Margin
    12.8%

FY25 end

  • Borrowings
    ₹165 Cr

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.

Segment breakdown

  • Paint Sector
    48% Revenue Share
  • Polymers
    25% Revenue Share
  • Rubber, Paper, Ceramics & Other
    5% Revenue Share9% Revenue Share (Upper Range)
  • Exports
    13% Revenue Share

Capital allocation

high confidence
  • Capex Capex disclosed
    • Calcination facility for rubber industry in 20 Microns Nano Minerals Limited ₹15 Cr
    • Calcination facility for rubber industry in 20 Microns Nano Minerals Limited ₹18 Cr
    • Generate better capacities and acquisition of more mines
    So we will be investing about 15 to 18 crores of CapEx in 20 microns Nano Minerals Limited where we are putting up a calcination facility for the rubber industry. And we will also be catering to some specialized paint grades for the clay, you know the specialized grades of Kaolins that we will be doing in the Nano with a different kind of a technology that we will be using there. So that is the kind of CapEx we have incurred in in 20 microns Nano as of now. (Page 11) So I think this year onwards, we will be investing quite a lot in the CapEx to generate better capacities and acquisition of you know more mines. So that is going to add more to the value chain overall in in 20 Microns. (Page 16)
  • Debt Gross ₹165 Cr
    • New borrowing Increase in borrowings from ₹121 crores to ₹165 crores in FY25, primarily for working capital due to additional inventory. ₹44 Cr
    as our borrowings has increased from 121 crores to 165 crores in FY 25 and our CapEx is based on internal accrual, what is the utilization of additional borrowing? (Page 8)
  • M&A GTLQ and IQ (marbles) (Malaysian subsidiaries) Acquisition · Ongoing integration

    Part of successful Malaysian acquisition, process ongoing to acquire remaining shares.

    Acquisition cost for remaining shares not yet finalized, but not expected to exceed a significant value.

    So currently the step down subsidiary that you might be referring to which is step down subsidiary of 20 microns and the subsidiary of 20 Microns Malaysia which we recently acquired GTLQ and IQ (marbles). So in IQ (marbles) we have 86.68% ownership of the company and in GTLQ we have about 90% ownership of the company and 10% is with the minor stakeholders. And the process is ongoing to get the remaining shares through discussion with the strategy that we want to implement in the Malaysian subsidiary. (Page 5) It will be the similar amount which we have already paid at the similar share value, which is, which is there, you know, currently that we've already paid to them and which is under discussion. So we will be doing it in the same fashion. (Page 7) Yeah, we will disclose it sooner when the amount gets finalized. (Page 7) But it would not exceed a significant value than what we currently have negotiated with. (Page 7)
  • Liquidity Liquidity disclosed Cash accruals (Net proceeds of long term borrowing) from consolidated balance sheets were ₹9.79 crores.
    Ideally, if we see our cash flows, it doesn't mean that we have our cash and we spend it overall in a CapEx and everything. So if you go through our budgets, you will see that there is 979 lakh which is the cash accruals (Net proceeds of long term borrowing) from my consolidated balance sheets. (Page 16)

Guidance & targets

Revenue

  • Annual Revenue Growth Revenue · FY26 · Medium confidence 15-18%
    As you might have seen or heard some of my earlier statements in the last few years is that we traditionally you know, look at a 15 to 18% growth year on year and this is something that we are also looking at in this financial year because the trends are quite vague.

    — Atil

  • Value-added segment revenue growth Revenue · next 2-3 years · Medium confidence 18-20%
    So typically 18 to 20% growth rate is what we usually go with looking at the current market trends even in the value added segments and the approvals of the products, which take quite longer in the value added segment compared to the traditional segments that we usually are in. So that's what we look at in the next 2 to 3 years that you can estimate it to be.

    — Atil

What to watch in Q1 FY26

Finalization and disclosure of Malaysian subsidiary acquisition cost

next quarter
Current Ongoing discussion, amount not finalized
Target Specific acquisition cost disclosed

Why it matters

Provides transparency on the financial impact of a key M&A event and completes the acquisition narrative.

Yeah, we will disclose it sooner when the amount gets finalized. But it would not exceed a significant value than what we currently have negotiated with.

Risks & concerns

  • Dependency on imported raw materials (36-37% of total usage) and supply chain disruptions

    high

    This dependency necessitates building up inventory due to freight factors and vessel availability, impacting working capital.

    Management acknowledged

  • Market and geopolitical scenario, raw material imports, freight cost, and forex volatility

    medium

    Despite these challenges, the company maintained its EBITDA margins at 12.8% in FY25 through operational excellence.

    Management acknowledged

  • Global economic situations impacting supply chains and stress in the paint sector

    medium

    These factors create uncertainty and make trends vague, influencing the company's growth outlook.

    Management acknowledged

Q&A highlights

7 direct
Malaysian subsidiary acquisition details (ownership, cost of remaining shares) Partial
So in IQ (marbles) we have 86.68% ownership of the company and in GTLQ we have about 90% ownership of the company and 10% is with the minor stakeholders. And the process is ongoing to get the remaining shares... we will disclose it sooner when the amount gets finalized. But it would not exceed a significant value than what we currently have negotiated with.

Clarifies current ownership structure of the acquired Malaysian subsidiaries and indicates future disclosure on the full acquisition cost, which is a key M&A event.

Asked by Arjun Shah

Competitive advantages and customer stickiness Direct
Competitive advantage is the basket of products that we carry all the way from 20 microns to 20 microns nano minerals. We have a variety of products that we offer to the same industry... all our customers know 20 microns as a very innovative company, highly focused on research and development... 9 manufacturing locations, We have 15 warehouses and distribution sites across the country in India and we also have international subsidiaries.

Explains the company's strategic differentiators, emphasizing R&D, broad product portfolio, and extensive infrastructure as key to customer retention.

Asked by Arjun Shah

Revenue expectations from value-added niche segment for next 2-3 years Direct
So typically 18 to 20% growth rate is what we usually go with looking at the current market trends even in the value added segments and the approvals of the products, which take quite longer in the value added segment compared to the traditional segments that we usually are in. So that's what we look at in the next 2 to 3 years that you can estimate it to be.

Provides specific growth guidance for a key strategic segment, highlighting its longer approval cycles.

Asked by Divya Daga

Utilization of increased borrowings (from ₹121 crores to ₹165 crores) Direct
broadly it is the working capital for which we have used and it has increased... it's basically the working capital because of the additional inventory that we are trying to build in the organization.

Clarifies that the increased debt is primarily for funding working capital due to strategic inventory build-up.

Asked by Divya Daga

Guidance for FY25-26 top line and bottom line Direct
we traditionally you know, look at a 15 to 18% growth year on year and this is something that we are also looking at in this financial year because the trends are quite vague.

Reaffirms the company's consistent revenue growth target despite current market uncertainties.

Asked by Adarsh Jain

Reason for inventory jump (over 40% this year) Direct
The supply chain related situation is kind of, you know playing a very important role in the raw materials for 20 microns and 20 microns Nano Minerals Limited. So we are quite dependent on imported raw materials which account for 36 to 37% of our total raw material usage... you have to build up on inventory because there is you know dependency on the freight factor, there is dependency on the availability of the vessels... So we need to build up the inventory in India because just in time does not work for these kind of minerals.

Explains a significant increase in inventory as a strategic response to supply chain volatility and dependency on imported raw materials.

Asked by Divya Daga

CapEx for 20 Microns Nano subsidiary and its revenue numbers Direct
we will be investing about 15 to 18 crores of CapEx in 20 microns Nano Minerals Limited where we are putting up a calcination facility for the rubber industry... 24-25 we closed Nano at 104 crores. Last year as in 23-24 we were at I think 88 crores.

Provides specific CapEx plans and strong revenue growth figures for a key subsidiary, highlighting investment in specialized facilities.

Asked by Mahek (Dhiraj Kaswan)

Rationale for borrowing despite having cash accruals Direct
Ideally, if we see our cash flows, it doesn't mean that we have our cash and we spend it overall in a CapEx and everything... we would like to keep the reserves for the CapEx rather than you know spend it on the working capital.

Clarifies the company's capital allocation strategy, prioritizing CapEx reserves and funding working capital through borrowing.

Asked by Mahek (Dhiraj Kaswan)

2 min read 6 chapters

Detailed narrative

Q4 FY25 and Full Year Performance Highlights

20 Microns reported a strong close to FY25, with annual revenue reaching ₹912.7 crores, reflecting a 17.4% year-on-year growth. Q4 FY25 revenue saw a 6% increase compared to both Q3 FY25 and Q4 FY24. Profitability also improved, with Q4 FY25 EBITDA margins at 12.7%, up from 12.2% in the previous quarter, and the full-year EBITDA margins maintained at 12.8%.

Strategic Product Portfolio and Market Reach

The company's diversified product portfolio includes non-metallic industrial minerals like Calcium carbonate, Talc, Kaolin, and specialty chemicals. The paint sector remains the largest contributor at 48% of revenue, followed by polymers at 25%. Exports contributed 13% to the total revenue. 20 Microns operates across 65 countries with over 200 clients, supported by 9 manufacturing locations and 15 warehouses across India.

Malaysian Acquisition and International Strategy

20 Microns successfully completed a Malaysian acquisition, including GTLQ and IQ (marbles), where it holds 90% and 86.68% ownership respectively. The process to acquire the remaining minority shares is ongoing, with management indicating that the final amount will be disclosed once finalized and is not expected to be significantly higher than current negotiations. Mining operations in Malaysia are expected to commence within the next two months, which will reduce dependency on external suppliers and potentially enhance margins.

Capital Allocation and Debt Management

The company's borrowings increased from ₹121 crores to ₹165 crores in FY25. This increase was primarily driven by the need for working capital to support additional inventory build-up, a strategic move to mitigate supply chain risks associated with imported raw materials. Management emphasized a strategy of reserving cash accruals for CapEx, which is expected to be significant this year for capacity expansion and mine acquisitions, rather than using it for working capital.

R&D and Competitive Edge

20 Microns highlights its competitive advantage through a comprehensive product basket, ranging from traditional minerals to advanced nano minerals. The company's strong focus on research and development, supported by well-equipped R&D facilities and application centers, enables it to innovate and offer import substitutes. Recent recognition from DSIR (Government of India) further validates its R&D capabilities, offering benefits like discounts on machinery imports and enhanced credibility with customers.

Outlook and Industry Dynamics

For FY26, 20 Microns targets a 15-18% year-on-year revenue growth, acknowledging the vague trends in the market and stress in sectors like paint. The value-added segments are expected to grow at an 18-20% rate over the next 2-3 years. The company anticipates increased demand for paints in India due to urbanization and low per capita consumption compared to Western markets, despite current industry conditioning.

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