BASF India — Q2 FY26 earnings call

Call held 21 Nov 2025

Management summary

BASF India faced a challenging Q2 FY26 characterized by significant pricing pressure due to global overcapacity, particularly from China, which offset modest volume gains. While the Nutrition & Care segment showed exceptional resilience with both volume and price growth, the core Materials and Agricultural segments struggled with lower realizations and weather-related disruptions. The company is aggressively pursuing a 'differentiated steering' strategy, including the demerger of its Ag-solutions business and a partial divestment of its coatings business to Carlyle.

Highlights

  • Total sales for H1 FY26 stood at ₹7,900 crores, a 4% decline YoY.

  • Q2 FY26 Revenue was ₹4,000 crores, down 5% YoY, driven by a 7% drop in price realization despite a 2% volume growth.

  • PBT before exceptional items for Q2 fell by 16% YoY, while H1 PBT saw a sharper decline of 27% YoY.

  • Nutrition & Care emerged as the 'star' segment with H1 sales of ₹1,700 crores, achieving 8% volume growth and 4% price increases.

  • Agricultural Solutions segment H1 sales declined by approximately ₹80 crores due to an untimely and excessive monsoon.

  • Net Working Capital increased to ₹2,500 crores from ₹1,500 crores YoY, primarily due to a ₹750 crore reduction in accounts payable.

  • The demerger of the Agricultural Solutions business is on track for completion in FY27 with a 1:1 share entitlement ratio.

  • Management announced an 80% capacity expansion in the engineering plastics compounding line at the Thane site.

Concerns

  • China Industrial Overcapacity

Key financials

2 periods

Headline

  • Revenue
    ₹4,000 Cr
    YoY -5% QoQ +4%
  • PBT before Exceptional Items
    —
    YoY -16% QoQ -23%
  • Volume Growth
    2%
    YoY +2%
  • Price Realization
    -7%
    YoY -7%

H1

  • EPS
    ₹56.5

What they filed

Q1 FY27: revenue up 28.9%, net profit up 146.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,248 3,635 3,189 3,752 3,904 −8%3,877 +7%3,453 +8%4,837 +29%
EBITDA201 170 63 222 154 −23%169 −1%112 +78%505 +127%
Net profit128 104 47 147 101 −21%105 +1%64 +36%362 +146%
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

  • Materials
    27% Revenue Share₹-400 Cr H1 Revenue Impact
  • Nutrition & Care
    ₹1,700 Cr H1 Revenue8% Volume Growth4% Price Growth
  • Industrial Solutions
    ₹1,400 Cr H1 Revenue5% EBIT Margin
  • Agricultural Solutions
    17% Revenue Share₹-80 Cr H1 Revenue Impact

Guidance & targets

Other

  • Agricultural Solutions Demerger Completion Other · FY27 · High confidence FY27
    The expected demerger completion timeline will be during the financial year 2627.

    — Alexander Gerding, Managing Director

  • Coatings Business Transaction Closure Other · by Q2 2026 · High confidence Q2 CY2026
    The global transaction is expected to be close by a second quarter of calendar year 2026.

    — Alexander Gerding, Managing Director

Capacity

  • Engineering Plastics Compounding Extrusion Line Capacity Capacity · Immediate/Ongoing · High confidence 80% increase
    expanding our engineering plastics compounding extrusion line which is actually increasing 80%.

    — Alexander Gerding, Managing Director

  • Cellesto New Facility Commissioning Capacity · H2 2026 · High confidence H2 2026
    we are currently building a new facility as you see the current picture from November... second-half of 2026.

    — Alexander Gerding, Managing Director

Margin

  • Industrial Solutions EBIT Margin Margin · Mid-term · Medium confidence >5%

    From 5% today

    I also agree there is scope for more than 5% a bit margin to currently it's 5%.

    — Alexander Gerding, Managing Director

Risks & concerns

  • China Industrial Overcapacity

    high

    Management explicitly cited overcapacity in China as the primary driver for a 7% drop in price realizations.

    Management acknowledged

  • Working Capital Strain

    medium

    Net working capital jumped by ₹1,000 crores YoY, largely because payables were cleared faster while receivables remained high.

    Both acknowledged

  • Raw Material Cost Volatility

    medium

    Higher input costs and unfavorable product mix impacted PBT by 16% in the quarter.

    Management acknowledged

Areas of evasion (2)

  • Promoter stake sale plans
  • Specific Capex figures for the Cellesto expansion

Q&A highlights

2 direct, 1 evasive
Pricing environment and China dumping Direct
I think it would not be fair to say that we see an immediate sort of hockey stick type improvement... the overcapacity situation in China, especially with a geopolitical tariff... will continue to be a difficult element.

Confirms that the deflationary pressure from China is structural and unlikely to reverse in the near term, impacting realizations.

Asked by Rohit Nagraj

Promoter stake sale or deleveraging in India Evasive
At this point in time, I would not make any forward-looking statements in this area.

Management refused to comment on whether the global parent's deleveraging strategy would involve selling stakes in the Indian entity.

Asked by Nikhil Gandhi

Agricultural Solutions slowdown Direct
The last season was a very difficult one, starting with a soft commodity prices... there was also quite some given the monsoon and the excessive rains in some areas which created flooding... less applications.

Explains the revenue miss in the Ag segment as a combination of macro pricing and localized weather events.

Asked by Rohit Nagraj

2 min read 5 chapters

Detailed narrative

Pricing Deflation Offsets Volume Gains

BASF India reported a 2% volume growth in Q2 FY26, yet overall revenue declined by 5% YoY. This was primarily due to a sharp 7% reduction in price realizations across the board. Management attributed this deflationary environment to industrial overcapacity in China and geopolitical tensions, stating that they do not expect an immediate 'hockey stick' recovery in pricing.

Nutrition & Care: The Portfolio Outperformer

The Nutrition & Care segment was described as the 'star' of the quarter, contributing ₹1,700 crores to H1 sales. It achieved a rare combination of 8% volume growth and 4% price increases. Profitability in the nutrition and health sub-unit nearly doubled from ₹14 crores to ₹27 crores, benefiting from strong demand in personal care and fragrances.

Strategic Demerger and Divestment

The company is moving forward with its 'differentiated steering' strategy. The Agricultural Solutions business is being demerged into a new entity, BASF Agricultural Solutions India Limited, with a 1:1 share ratio and expected completion in FY27. Additionally, a binding agreement has been reached to carve out the coatings business into a standalone entity with Carlyle holding a 60% stake, expected to close by Q2 CY2026.

Working Capital and Cash Flow Pressure

Cash flow from operations saw a significant decline of ₹900 crores. This was driven by a ₹1,000 crore increase in net working capital, which reached ₹2,500 crores. A major factor was the ₹750 crore reduction in accounts payable as the company cleared dues on time, coupled with slightly higher inventory levels in the Agricultural segment due to monsoon-related delays.

Capacity Expansion and Localization Strategy

To reduce reliance on imports from Germany, BASF is investing in local capacity. The engineering plastics compounding line at Thane is being expanded by 80%. Furthermore, a new facility for Cellesto (polyurethane) is under construction and slated for commissioning in H2 2026, aimed at capturing growth in the Indian automotive sector, including EVs and 2-wheelers.

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