Accent Microcell — Q4 FY25 earnings call

Call held 20 May 2025

Management summary

Accent Microcell reported a strong FY25 with an 8% YoY increase in revenue to ₹265 crores and a 10% YoY increase in PAT to ₹33 crores. The company is progressing with its Unit 3 expansion, with Phase 1 expected to commence commercial production in September-October 2025, targeting ₹70 crores in H2 FY25 revenue from confirmed orders. Management highlighted improved margins from premium products and an increasing export ratio, while addressing concerns regarding working capital and a contingent NGT liability.

Highlights

  • Revenue from operations grew 8% YoY to ₹265 crores in FY25.

  • PAT grew 10% YoY to ₹33 crores in FY25.

  • EBITDA grew 12% YoY, with consolidated EBITDA margin at 15-16% for FY25.

  • Unit 3 Phase 1 has confirmed orders for ₹70 crores revenue for H2 FY25.

  • Capacity utilization for Unit 1 (Piranha) is almost 100% and Unit 2 (HSEZ) is about 95%.

Concerns

  • Contingent liability of ₹4.11 crores related to an NGT matter.

  • Temporary increase in working capital levels due to liberal payment terms offered to new Indian MNC customers.

  • Potential future impact of US tariffs on pharmaceutical production, though management has a plan.

Key financials

  1. Revenue ₹265 Cr +8%YoY
  2. PAT ₹33 Cr +10%YoY
  3. EBITDA Growth — +12%YoY
  4. EBITDA Margin 15.5%
  5. PAT Margin 12.5%

What they filed

Q1 FY27: revenue down 4.6%, net profit down 60.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue126 5,972 139 6,087 139 +10%6,483 +9%210 +51%5,808 −5%
EBITDA19 1,116 23 778 24 +26%700 −37%33 +43%457 −41%
Net profit16 1,092 17 375 18 +13%404 −63%26 +53%147 −61%
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.

Order book

high confidence

Total value

₹70 Cr

as of 2025-03-31 quantified

Execution

for H2 FY25

Confirmed orders for Unit 3 Phase 1 revenue in H2 FY25, indicating strong demand visibility.

Source: Q&A

Capital allocation

medium confidence
  • Capex ₹55 Cr Balance of project cost for rights issue funded out of internal accruals.
    • Unit 3 Phase 1 expansion ₹55 Cr
    • Unit 3 Phase 2 expansion ₹55 Cr
    Ghanshyam Patel: Sir, the total capex required is already part of the DRHP. Tentatively, capex will be around 55 crore. ... Ghanshyam Patel: So, what we are able to understand—the approval has been received up to an amount of 940 crores, which is there in the public domain, and the balance of the project cost will be funded out of internal accruals.
  • Debt Debt disclosed
    Revenue from operations has increased by 8 %. There's an increase in PAT of around 10%. EBITDA has increased by around 12 %. The EBIT margin is unchanged, and there is a significant drop in borrowings compared with the previous year.

Guidance & targets

Capacity

  • Unit 3 Phase 1 Commercial Production Start Capacity · FY26 · High confidence September-October 2025
    Sir, as stated earlier, we expect commercial production for Unit 3 Phase 1 in September to October 2025.

    — Ghanshyam Patel

  • Unit 3 Phase 2 Commercial Production Start Capacity · FY27 · High confidence June 2026
    we expect Unit 3 Phase 2 to be commercialized by around June 2026.

    — Ghanshyam Patel

Revenue

  • Unit 3 Phase 1 Revenue (H2 FY25) Revenue · H2 FY25 · High confidence ₹70 crores
    Sanika Khemani: 6 months of operation. Okay? So, if everything goes well, we are looking at 70 crores of revenue from Unit 3 in H2 of this year. Ghanshyam Patel: Yes, please.

    — Ghanshyam Patel

  • Unit 3 Phase 1 Peak Revenue Revenue · Year 3 of operation · Medium confidence ₹150-160 crores
    Ghanshyam Patel: Sir, it will be somewhat around 150 to 160 crores.

    — Ghanshyam Patel

  • Unit 3 Phase 2 Peak Revenue Revenue · Year 3 of operation · Medium confidence ₹220-250 crores
    Ghanshyam Patel: Roughly it will be revenue of around ₹220 to ₹250 crores on a standalone basis for Phase Two.

    — Ghanshyam Patel

  • Unit 3 (Phase 1 & 2) Total Revenue Revenue · FY26 (Phase 1 only) · Medium confidence ₹400-425 crores
    Ghanshyam Patel: If we talk about the total revenue from Unit 3, Unit 1 and Unit 2—that's on a consolidated basis—we roughly expect, if only Phase One is considered as of now, around ₹400 crores to ₹425 crores of revenue.

    — Ghanshyam Patel

Profitability

  • Unit 3 Premium Products Margin Profitability · Once commercialized · High confidence 25%
    Ghanshyam Patel: Once Unit 3 is commercialized, margin for the premium-range products will be roughly 25% on a bottom-line basis.

    — Ghanshyam Patel

Revenue Mix

  • Premium Range Contribution from Unit 3 Revenue Mix · Once commercialized · Medium confidence 25-30%
    Ghanshyam Patel: And if, say, the percentage of the premium range will be around 25 % to 30 % of the total revenue, that is from Unit 3.

    — Ghanshyam Patel

Efficiency

  • Asset-Turnover Ratio (Unit 3 Phase 1 + Phase 2) Efficiency · Once fully ramped up · Medium confidence 4.5-5 times
    In order to reach a conclusion—Unit Three, Phase One plus Phase Two—the asset-turnover ratio will not be less than 4.5 to 5 times.

    — Ghanshyam Patel

Working Capital

  • Additional Working Capital Requirements (Unit 1 & 2) Working Capital · Future · High confidence None
    Ghanshyam Patel: Madam, to the extent that we talk about the free cash flow we generated in the last fiscal and what we expect in the current fiscal, we don't foresee any kind of additional working-capital requirements in future, at least for Unit 1 and Unit 2.

    — Ghanshyam Patel

What to watch in Q1 FY26

Unit 3 Phase 1 Commercial Production Start

next quarter
Current Under construction, expected Sep-Oct 2025
Target Commercial operations commenced

Why it matters

Crucial for realizing new revenue streams and premium product margins.

Sir, as stated earlier, we expect commercial production for Unit 3 Phase 1 in September to October 2025.

Risks & concerns

  • Contingent liability from NGT matter

    medium

    A specific penalty amount of ₹4.11 crores is mentioned, but management classifies it as 'remote' and does not foresee an impact due to strong shareholder funds.

    Analyst downplayed

  • Increased working capital due to liberal payment terms

    medium

    The company offered liberal payment terms to new Indian MNC customers, leading to a temporary increase in working capital and receivables.

    Analyst acknowledged

  • Potential impact of US tariffs on pharmaceutical production

    low

    While no direct tariff is currently levied on their products, management stated they have a plan in place for any future eventualities.

    Analyst acknowledged

Q&A highlights

4 direct
Analyst's request for more follow-up questions Partial
Finportal: Actually, the problem is that there are too many questions, and if one person keeps on asking questions, the other people won't get the chance. Prabal Jain: You can keep—no, sir—one minute. You can keep your forty-five minutes; you can entertain forty-five people in one minute each, and everyone will be able to have satisfaction. Management is anyway not coming on a public call, right? The only time we have to interact with management is two times in one year. Finportal: The frequency will also increase, but that's okay—we'll keep it in mind. You can ask your question.

Highlights analyst frustration with limited Q&A format and management's commitment to consider increasing interaction frequency.

Asked by Prabal Jain

Contingent liability related to NGT matter Direct
Ghanshyam Patel: The penalty amount is already stated in the contingent liability. It is 4.11 crores, and looking at the strong shareholders' funds and equity that we are having, we don't see.

Clarifies the specific amount of the NGT-related contingent liability and management's view on its impact.

Asked by Manjeet Buaria

Flat export sales and increased domestic sales for H-unit Direct
Ghanshyam Patel: No, sir. As you stated, we are at such a level of production capacity where you need to understand that we are categorized—if we talk about the industry—that the capacity utilization has resulted in export sales remaining at a limited or restricted level. That has been compensated by the increase in domestic sales.

Explains the shift in sales mix (flat exports, higher domestic) as a result of full capacity utilization and strategic sales to the domestic market.

Asked by Dinesh Kulkarni

Strategy for Unit 3 (Kheda) expansion and EBITDA margins Direct
Ghanshyam Patel: Sir, hi, my name is Pratik. I'll respond. From Unit 3, average realization for all three products will be roughly ₹600–₹650 per kg. Regarding the rights issue you mentioned: we have already got in-principle approval from the exchanges for the DRHP, so fund-raising for that expansion is in progress. It is only a matter of time before the Board meets to decide the exact rights ratio and pricing.

Provides specific financial targets (realization, margins) for the new Unit 3 and clarifies the status of funding for its expansion.

Asked by Priyank Chheda

Raw material sourcing and price volatility Direct
Ghanshyam Patel: Sir, basically, the majority of the wood pulp used in India is from a couple of manufacturers in India, and from what we understand, the wood pulp is used captively by them. So, our wood pulp, the one we import, is basically imported from South Africa, the U.S.A., Canada, Sweden, and Indonesia as well. ... But now everything is back to pre-COVID levels. So, as of now, when we are speaking, we don't foresee any kind of major change in the price of raw material, and in case there is any increase or decrease in the price of raw material, that will be taken care of by offsetting the sales of finished goods.

Details the diverse sourcing strategy for wood pulp and management's confidence in managing price volatility.

Asked by Dinesh Kulkarni

3 min read 6 chapters

Detailed narrative

FY25 Financial Performance Overview

Accent Microcell reported a robust financial performance for FY25, with revenue from operations increasing by 8% year-over-year to ₹265 crores. The company's PAT also saw a significant rise of 10% YoY, reaching ₹33 crores. EBITDA grew by 12% YoY, contributing to a consolidated EBITDA margin of 15-16% and a PAT margin of 12-13% for the fiscal year. This growth was achieved despite a significant drop in borrowings compared to the previous year.

Unit 3 Expansion and Product Portfolio Diversification

The company is actively pursuing its Unit 3 expansion, with Phase 1 commercial production anticipated to begin in September-October 2025. This phase will introduce three new premium excipient products (CCS, CMC, SSG) and is expected to generate ₹70 crores in revenue during H2 FY25 from confirmed orders. The peak revenue potential for Phase 1 is estimated at ₹150-160 crores. Phase 2 of Unit 3, focusing on MCC production, is projected to be commercialized around June 2026, with a peak revenue potential of ₹220-250 crores on a standalone basis. The combined Unit 3 is expected to contribute ₹400-425 crores to revenue in FY26 (considering Phase 1 only).

Margin Improvement and Export Focus

Management expects significant margin improvement with the commercialization of Unit 3, targeting roughly 25% on a bottom-line basis for premium-range products. The premium-range component from Unit 3 is projected to constitute 25-30% of the total revenue from that unit. The company also aims to increase its export ratio compared to the reported period, as export margins are generally higher, particularly for sales to the U.S. market. This strategic shift towards premium products and exports is expected to enhance overall blended margins.

Capital Expenditure and Funding Strategy

The total capex for Unit 3 Phase 1 is estimated at ₹55 crores, which will be reflected in the next financials. An additional ₹55-60 crores is planned for Unit 3 Phase 2. The company has received in-principle approval for a rights issue of up to ₹940 crores to fund this expansion, with the balance of the project cost to be covered by internal accruals. The asset-turnover ratio for Unit 3 (Phase 1 + Phase 2) is projected to be between 4.5 to 5 times once fully ramped up, indicating efficient capital deployment.

Raw Material Sourcing and Price Management

Accent Microcell sources its wood pulp, a primary raw material, from diverse international suppliers including South Africa, USA, Canada, Sweden, and Indonesia. While the COVID era saw abnormal fluctuations, prices have returned to pre-COVID levels. Management does not foresee major price changes and has a system in place to manage volatility, including fixed purchase prices for one quarter and offsetting increases through finished goods sales in the export market.

Working Capital and Related Party Transactions

The company experienced a temporary increase in working capital levels due to offering liberal payment terms to new Indian MNC customers. However, management expects no additional working capital requirements for Unit 1 and Unit 2 in the future. Related party transactions have been substantially reduced in H2 FY25 and are expected to become negligible as the company focuses on in-house activities.

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