BASF India — Q4 FY26 earnings call

Call held 22 May 2026

Management summary

BASF India reported a robust Q4 FY26 with PBT significantly improving to ₹90 crores, contributing to a full-year EBITDA of ₹656 crores. The company is actively pursuing strategic portfolio measures, including the divestment of its Coatings business for ₹230.16 crores and the demerger of Agricultural Solutions. Despite facing macroeconomic headwinds like geopolitical conflicts, inflation, and raw material price volatility, the company is focused on capacity expansions (Celesto, Dispersion Line 3) and maintaining market share, though cash flow was negative due to working capital growth.

Highlights

  • Q4 FY26 PBT improved significantly to ₹90 crores from ₹25 crores in Q4 FY25, indicating strong profitability recovery (Page 3).

  • Overall FY26 sales saw a small increase, driven by 6-7% additional volumes despite difficult market conditions (Page 3).

  • Networking capital increased by ₹600 crores, mainly due to higher receivables and lower payables, reflecting disciplined financial management (Page 3).

  • The company reported no high severity incidents or process safety incidents in the last full year, demonstrating strong safety performance (Page 2).

  • New products launched in the last four years contribute 25% to the top line in the Ag division, enhancing portfolio robustness (Page 5).

Concerns

  • Cash flow generated was negative ₹110 crores compared to positive ₹370 crores last year, primarily due to ₹800 crores working capital growth (Page 4).

  • Free cash flow after adjusting for capital investment was negative ₹300 crores (Page 4).

  • Agro volume growth was negative in FY26, despite good prices (Page 11).

  • EBITDA of ₹656 crores in FY26 is similar to ₹633 crores in FY21, indicating stagnant operating profits over six years, though management attributes this to restructuring (Page 11).

  • Operating expenses (fixed cost portion) are higher, identified as a focus area for control (Page 4).

Key financials

  1. Revenue ₹14,875 Cr
  2. PBT ₹564 Cr -6%YoY
  3. EBITDA ₹656 Cr
  4. EBIT Margin 4%
  5. ROCE 16%
  6. EPS ₹97

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
    33% Share of Sales
  • Agriculture Solution
    ₹2,000 Cr Revenue₹-120 Cr Revenue Change
  • Surface Technologies (Coatings)
    ₹595 Cr Revenue4% Share of Consolidated Sales

Capital allocation

high confidence
  • Capex ₹200 Cr
    • Celesto expansion ₹150 Cr
    • Maintenance Capex (average) ₹82 Cr
    We spent around 200 crores Capex in financial year 26. They're off around 150 crores on the Celesto expansion ongoing expansion, yeah. (Mr. Narendranath J. Baliga, Page 8); What is our annual maintenance capex on an average that we have? Rs. 82 crores, that's the range we have. (Mr. Narendranath J. Baliga, Page 10)
  • M&A Coatings business Divestment · Pending regulatory · Consideration ₹[object Object] (undisclosed)

    Strategic portfolio measure to create a leading standalone business with Carlyle.

    BASF will reinvest and hold 40% equity stake, with Carlyle taking majority and operational leadership.

    In India, the valuation of the coatings business has arrived at Rs. 230.16 crores based on independent valuation. This transaction is expected to close by the second quarter of the calendar year 2026, of course subject to customary regulatory approvals. Post the closing, BASF India Coatings Private Limited will cease to be a wholly owned subsidiary of BASF India Limited. Now, BASF, after the closing, will reinvest in the coatings business and hold 40% equity stake, but the majority and the operational leadership will be with Carlyle. (Mr. Alexander Gerding, Page 5)
  • M&A Agricultural Solutions Demerger · Pending regulatory

    Unlocking shareholder value by creating a more independent setup for the business.

    Demerger cleared by SEBI and stock exchanges; shareholders meeting on June 24, 2026, for share entitlement ratio (one to one).

    First, the demerger process on BASF Agricultural Solutions. So the demerger was cleared by SEBI and the stock exchanges on the 2nd of February, 2026. And now the next step is on the 24th of June, 2026, we'll hold the shareholders meeting. As you know, the share entitlement ratio will be one to one. We really believe we're unlocking shareholder value with a step. (Mr. Alexander Gerding, Page 5)
  • Liquidity Cash ₹800 Cr Cash flow generated was negative ₹110 crores, and free cash flow was negative ₹300 crores, primarily due to ₹800 crores working capital growth.
    Cash flow generated is minus 110 as compared to 370 crores last year. If you see the cash flow from operations before working capital, we have earned around 700 crores positive. And like I explained in the earlier slide, there is around 800 crores of working capital growth. They have both receivables higher and lower accounts payable as resulted in net cash flow at minus 110. And that would also mean our free cash flow after adjusting for around 200 crores of capital investment is free cash flow is around negative 300 gross. (Mr. Narendranath J. Baliga, Page 4); And ROCE, this is important, written on capital employed is 16% as compared to 18.5%, 16.3% as compared to 18.5. Solid. Even better is Rono, where it is return on net operating assets. That means we have some 800 crore cash, excluding the 800 crores cash and the interest earned on that, just on the operating assets, what we have earned, excluding the cash surplus. (Mr. Narendranath J. Baliga, Page 4)

Guidance & targets

Capacity

  • Celesto Expansion Commissioning Capacity · CY26 · High confidence Commercial operations by end of this year
    Yeah, so the Celesto, the Celesto, the building that I was showing, the additional capacity will go live by the end of this year, just to be just to be clear. So the building is there, yes, but to commission the line, of course, will take a few more months, yes. So by the end of this year, the team is targeting to go live. (Page 8)

    — Mr. Alexander Gerding

  • Dispersion Line 3 Commissioning Capacity · CY27 · High confidence Commissioning by end of next year
    This will be a 15%, about a 15% increase in capacity in the country on dispersions, and the commissioning will be targeted by end of next year. (Page 4); The dispersion line, which is the other investment in Mangalore, that will be commissioned by the end of next year. (Page 8)

    — Mr. Alexander Gerding

Market context

  • India's Share of Global Chemical Market Market Share · next 10-15 years · Medium confidence 10-12%
    But India is growing significantly and probably in the next 10, 15 years, I do believe that India has the opportunity to be around 10%, 12% of the global chemical market. (Page 8)

    — Mr. Alexander Gerding

  • India GDP Growth Macroeconomic · ongoing · Medium confidence 7% year on year
    So the growth rates, if India continues to grow GDP around 7% year on year... (Page 8)

    — Mr. Alexander Gerding

  • India Manufacturing Share of GDP Macroeconomic · ongoing · Medium confidence above 20%
    and if the focus on increasing the manufacturing share of GDP, which today is still around 14, 15% of GDP, to get it above the 20% range... (Page 8)

    — Mr. Alexander Gerding

What to watch in Q1 FY27

Celesto Expansion Commissioning

Next quarter (Q1 FY27) for progress update
Current Under construction, ₹150 crores spent
Target Commercial operations by end of calendar year 2026

Why it matters

This is a key capacity expansion for the high-margin materials segment, crucial for future growth and profitability.

So the building is there, yes, but to commission the line, of course, will take a few more months, yes. So by the end of this year, the team is targeting to go live. (Mr. Alexander Gerding, Page 8)

Risks & concerns

  • Geopolitical Conflict & Supply Chain Disruptions

    high

    The Iran war and other geopolitical conflicts are causing feedstock inflation, surge in oil/gas prices, and supply chain disruptions, impacting regional and global contexts.

    Management acknowledged

  • Raw Material Price Volatility & Pass-through Challenges

    high

    Higher input costs, especially crude-linked, are challenging to pass on to customers, leading to a time lag before full realization.

    Management acknowledged

  • Inflation & Stagflation Risk

    medium

    Concerns about stagflation (inflation coupled with economic growth stagnation) are prevalent, which could impact economic growth.

    Management acknowledged

  • Demand Softness

    medium

    Inflation and uncertainty are leading to a 'wait and see' mode in some industry sectors, potentially causing a slight softening of demand.

    Management acknowledged

  • China Overcapacity

    medium

    Overcapacities built in China, especially in upstream chemical businesses, are putting pressure on margins in India and globally.

    Management acknowledged

  • Erratic Monsoons & Soft Commodity Prices

    medium

    Erratic monsoons and soft commodity prices have negatively impacted the agrochemical market, leading to negative volume growth in FY26.

    Management acknowledged

  • Higher Operating Expenses

    low

    The fixed cost portion of operating expenses is higher and identified as an area for control.

    Management acknowledged

Q&A highlights

3 direct
Agrochemicals Performance & Margins Partial
The last two seasons have not been easy in overall for the agrochemical market. And I think this is driven by multiple factors. One being erratic monsoons... fortunately, these products already represent around 25% of our total sales. So our portfolio freshness is really improving. (Mr. Alexander Gerding, Page 6)

Analyst questioned muted performance and margin compression in agrochemicals, prompting management to explain market challenges and portfolio resilience.

Asked by Mr. Rohit Nagraj

Raw Material Price Pass-through & Demand Impact Partial
So, of course, we've also been facing higher raw material costs... And I think the teams are working very hard to pass on where possible... But the key question... is the demand side. So how will the demand continue to evolve in the next few months? (Mr. Alexander Gerding, Page 7)

Analyst inquired about the company's ability to pass on rising raw material costs and the potential impact on demand, highlighting a key industry challenge.

Asked by Mr. Rohit Nagraj

OMP Business Growth Direct
Yeah, of course, our aim is to over time increase the OMP share in the segments where it makes sense. Yeah, I was mentioning Celesto expansion, which is the material segment already has a strong OMP presence in India and continues to expand. (Mr. Alexander Gerding, Page 7)

Question on the growth outlook for Own Manufactured Products (OMP) business, clarifying management's strategic focus on increasing OMP share in key segments.

Celesto Expansion Contribution Direct
Yes, Celasto is part of the materials and performance materials division, which is part of the materials segment. It's a very successful business... I think order of magnitude, you could say that the Celasto business within the performance materials operating divisions represents around 10%. (Mr. Alexander Gerding, Page 7)

Clarification on the significance and revenue contribution of the Celesto expansion within the materials segment.

Asked by Mr. Manohar Kamath

Future Capex & Land Parcel Partial
I mean, what I can tell you is that in BIL right now, we don't see a large CapEx investment, yeah, other than maintenance CapEx, of course... So right now the focus really in the company is to run all of our assets and increase capacity utilization... and regain our earnings power globally as a company before we can think about another investment cycle, larger investment cycle, let's say across the world. (Mr. Alexander Gerding, Page 8)

Analyst probed for future large-scale CapEx plans, to which management indicated a current focus on asset utilization and market share expansion rather than new mega-investments.

Asked by Ravi

Royalty & Service Payments Direct
So royalty rates are different for different products depending on the maturity cycle of the product. It ranges from 1.5% to 13% on select products. And I don't know where the number comes from, but last year we had around Rs. 130 crores of royalty paid. And this year it is around Rs. 160 crores. I think the right amount is Rs. 156 crores royalty paid. I think it's a combination of royalty and service payments. (Mr. Narendranath J. Baliga, Page 9)

Analyst questioned the increase in royalty and service payments, leading to a detailed breakdown of the components and their amounts.

Asked by Mr. Manohar Kamath

FY27/FY28 Capex Visibility Partial
Oh no, it would be more than probably Rs. 200 crore because around Rs. 150 crore is already Celesto and then we also have the dispersions going on line 3 in Mangalore, so that that's also to be included. So it will be more than that. And then we will anyway have the maintenance Capex. These are productive production capacity increasing Capex, and then you have maintenance Capex also. So Rs. 200 crores will be there. (Mr. Narendranath J. Baliga, Page 10)

Analyst sought clarity on future CapEx plans beyond FY26, receiving confirmation that FY27 CapEx would exceed ₹200 crores, including ongoing projects and maintenance.

Asked by Mr. Girish Raj

EBITDA Stagnation (FY21 vs FY26) Partial
So, Ravi, there have been certain restructuring that have happened, like we have sold our construction chemicals business. So, some such structural changes have happened and hence it's not exactly comparable to financial year 21. (Mr. Narendranath J. Baliga, Page 11)

Analyst questioned the lack of EBITDA growth over six years, prompting management to explain the impact of significant restructuring and divestments on comparability.

Asked by Ravi

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Detailed narrative

Q4 FY26 and Full Year Performance Overview

BASF India reported a robust Q4 FY26, with Profit Before Tax (PBT) significantly improving to ₹90 crores compared to ₹25 crores in Q4 FY25. For the full fiscal year 2026, PBT stood at ₹564 crores, down from ₹600 crores in the previous year, while EBITDA was ₹656 crores. The company achieved a 10% increase in Q4 revenue, primarily driven by 12-15% volume growth, despite price impacts. Full-year sales saw a small increase with 6-7% additional volumes, indicating resilience in a challenging market.

Segmental Performance and Product Mix

The company's business is spread across six segments, with Materials contributing almost one-third of total sales. Nutrition and Care saw strong performance with both volumes and prices increasing. Industry Solutions experienced volume growth but faced significant price pressure. Agriculture Solution, while down ₹120 crores, maintained sales around ₹2,000 crores, with new products contributing 25% to its top line. The Coatings business generated ₹595 crores in sales, representing 4% of consolidated sales.

Strategic Investments and Capacity Expansion

BASF India is actively investing in capacity expansion. The Celesto expansion, part of the materials segment, has already seen ₹150 crores spent and is targeted for commissioning by the end of calendar year 2026. Additionally, the third Dispersion Line in Mangalore, which will increase capacity by 15%, is targeted for commissioning by the end of next year (CY27). The company's total CapEx for FY26 was around ₹200 crores, with an average annual maintenance CapEx of ₹82 crores.

Portfolio Restructuring: Divestments and Demerger

The company is undergoing significant portfolio restructuring. The divestment of its Coatings business to Carlyle is progressing, with a valuation of ₹230.16 crores, and is expected to close by Q2 CY26. BASF will retain a 40% equity stake. Concurrently, the demerger of BASF Agricultural Solutions has been cleared by SEBI and stock exchanges, with a shareholders meeting scheduled for June 24, 2026, to approve a one-to-one share entitlement ratio, aiming to unlock shareholder value.

Market Outlook and Macroeconomic Headwinds

The company acknowledges a dynamic and challenging market environment, citing the Iran war, feedstock inflation, rising oil and gas prices, and supply chain disruptions. The Indian rupee's depreciation and concerns about stagflation (inflation with economic stagnation) are also noted. Management highlighted that erratic monsoons and soft commodity prices impacted the agrochemical market. Despite these challenges, India's chemical market is projected to grow significantly, potentially reaching 10-12% of the global market in the next 10-15 years, up from the current 3-3.5%.

Capital Allocation and Working Capital Management

The company's cash flow generated was negative ₹110 crores in FY26, a decrease from ₹370 crores last year, primarily due to an ₹800 crores increase in working capital. Free cash flow after capital investment was negative ₹300 crores. Net working capital increased by ₹600 crores, mainly from higher receivables and lower payables. The company maintains tight control over receivables, with 65 days and an 8% overdue rate, and is comfortable with a slight increase in inventory to capitalize on market opportunities.

Safety and Sustainability Initiatives

Safety remains a top priority, with no high severity or process safety incidents reported in the last full year. The company conducts annual manufacturing meets to share best practices and improve safety, efficiency, and productivity. BASF India is also expanding its R&D and manufacturing footprint, including setting up two new global hubs in Hyderabad for digital and business services, which will create employment and enhance its presence in India.

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