Aether Industri.

Aether Industries delivered robust financial results in Q2 FY26, with consolidated revenue from operations growing 38% year-on-year to ₹2,751 million. EBITDA surged by 70% to ₹853 million, leading to a significant EBITDA margin expansion to 31% from 25% in the prior year. Profit after tax also saw a healthy increase of 55% to ₹540 million, with PAT margin improving to 19% from 17%.

The company's strategic focus on higher-margin contract and exclusive manufacturing (CEM) and contract research and manufacturing services (CRAMS) is progressing well. For the first time, these segments collectively contributed over 50% of total sales in Q2 FY26, aligning with the long-term vision of achieving 60-70% contribution within the next two years. The sales mix for the quarter was approximately 47% from CEM, 41% from large-scale manufacturing (LSM), and 9% from CRAMS.

Aether Industries deployed ₹245 crores in CAPEX during the current financial year, with all new sites on schedule. The dedicated Site-3+ for Milliken is expected to commence production in Q4 FY26. Furthermore, the first two production blocks of Site-5 (Panoli) are targeted for commissioning by the start of Q4 FY26. The total CAPEX for Site-5 is projected to be ₹2,200-2,300 crores until FY30, with future funding primarily from debt.

The company is significantly expanding its R&D infrastructure, adding two new labs, including an engineering lab, which will increase fume hoods by 24 in the existing facility. A new R&D plant extension is also under construction, expected to add over 130 fume hoods. Currently, Aether has over 55 projects ongoing in R&D, with a target to reach over 120 projects within the next 1.5 years, primarily focusing on non-ag and non-pharma sectors.

Aether successfully reduced its overall working capital cycle to 149 days as of September 30, 2025, a significant improvement from 194 days as of March 31, 2025. This was achieved through a reduction in the inventory cycle to 160 days from 173 days and a decrease in the data cycle to 106 days from 126 days, reflecting enhanced operational efficiency.

Despite the favorable shift in business mix, management expects PAT margins to stabilize around 19-20% going forward^⏳, primarily due to increased depreciation and finance costs from ongoing aggressive CAPEX. EBITDA margins are projected to remain sustainable at 30%+. Pricing for large-scale manufacturing (LSM) products is anticipated to remain stable, with no significant uptrend expected in the near future unless extraordinary global events occur.

The company received ₹250 million from its insurance claim for fixed assets this quarter. Out of an approximate total claim of ₹100 crores, ₹60 crores has already been received, with an additional ₹3.5 crores earmarked for loss of profit. Management expects all remaining claims to be settled by the end of December. The impact of increased insurance premiums (exceptional item^📎s) is expected to reduce and cease by the end of FY27.