Bodal Chemicals Limited — Q3 FY25 earnings call

Call held 13 Feb 2025

Management summary

Bodal Chemicals reported strong top-line and EBITDA growth in Q3 and 9M FY25, driven by volume improvements, particularly in dye intermediates. While the new benzene project's overheads impacted net profitability in the short term, management is confident in its future contribution and overall margin expansion. The company is focused on debt reduction and expects significant cash inflow from the Punjab subsidy soon.

Highlights

  • Consolidated revenue for Q3 FY25 was Rs. 446 crores, a 30% year-on-year growth.

  • Consolidated EBITDA for Q3 FY25 was Rs. 46 crores, representing a 63% year-on-year growth.

  • 9M FY25 consolidated revenue stood at Rs. 1,304 crores, a 28% growth year-on-year.

  • Dye intermediates division performed better in volume and value, with 9M FY25 revenue growing 53% year-on-year to Rs. 507 crores.

  • Chlor-Alkali business reported 9M FY25 revenue of Rs. 243 crores, a 21% year-on-year growth, led by 16% volume growth.

Concerns

  • Consolidated profit after tax for Q3 FY25 was Rs. 5.4 crores, significantly lower than standalone PAT of Rs. 7.3 crores.

  • The capitalization of the Saykha's Benzene downstream project increased interest, depreciation, and other overheads, partially offsetting profitability, with nominal topline contribution in Q3.

  • Dyestuffs segment experienced an 8% degrowth quarter-on-quarter in Q3 FY25, with revenue of Rs. 114 crores.

  • Turkish subsidiary (Sener Boya) incurred a Rs. 1.65 crore loss in Q3 FY25 due to hyperinflation.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹446 Cr
    YoY +30%
  • Consolidated EBITDA
    ₹46 Cr
    YoY +63%
  • Consolidated EBITDA Margin
    10.4%
  • Consolidated PAT
    ₹5 Cr

9M

  • FY25 Consolidated Revenue
    ₹1,304 Cr
    YoY +27.8%
  • FY25 Consolidated EBITDA
    ₹121 Cr
    YoY +35.9%
  • FY25 Consolidated PAT
    ₹4 Cr
    YoY -9.7%

What they filed

Q1 FY27: revenue up 56.9%, net profit up 190.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue423 435 446 445 472 +12%481 +11%577 +29%698 +57%
EBITDA32 46 50 50 23 −28%25 −46%70 +40%69 +38%
Net profit1 7 11 10 4 +300%2 −71%31 +182%29 +190%
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

Share of Revenue
₹1,196 Cr Total
  • Dye Intermediates (9M FY25) ₹507 Cr 42.4%
  • Dyestuffs (9M FY25) ₹373 Cr 31.2%
  • Chlor-Alkali (9M FY25) ₹243 Cr 20.3%
  • Basic Chemicals (9M FY25) ₹73 Cr 6.1%

Capital allocation

high confidence
  • Capex Capex disclosed 70% debt, 30% in-house for benzene project
    • Benzene downstream project (net project cost) ₹450 Cr
    • Benzene downstream project (CAPEX for benching) ₹400 Cr
    • Sulfuric acid plant (on hold) ₹65 Cr
    Mayur Padhya: Total cost including the land comes to almost Rs. 600 crore, but when we remove this one time or infrastructural cost that is almost about Rs. 150 crore. So for net-net project, we have spent Rs. 450 crore kind of thing and in that also, we have spent almost Rs. 65 to Rs. 70 crore for sulfuric acid which we have put hold presently. So when we consider the CAPEX, what we did for only benching kind of thing, that comes to below Rs. 400 crore kind of thing. 70% is debt and 30% is from in-house.
  • Debt Gross ₹800 Cr Cost 9%
    • Repayment Targeting Rs. 200 crore debt reduction from today to March 2026, including Rs. 60 crore by March 2026 from asset liquidation. ₹200 Cr
    Mayur Padhya: Present long-term debt is Rs. 540 crore and working capital is around Rs. 300 crore. Harshil Patel: So roughly around Rs. 260 to Rs. 280 crores is through debt. So out of this, our total debt of Rs. 800 crores, we are saying that Rs. 260 crores is towards benzene derivatives. And the remaining is for the working capital? Mayur Padhya: Yes, for infrastructure, working capital, as well as our caustic project at Punjab. Mayur Padhya: Cost of debt is around 9%.
  • M&A Sener Boya (Turkish subsidiary) Acquisition · Integrated

    Goodwill recognized from prior acquisition

    Incurred Rs. 1.65 crore loss in Q3 FY25 due to hyperinflation; goodwill impairment under review by auditors.

    Ankit Patel: Sener Boya, our subsidiary Company in Turkey is experiencing hyperinflation during the Q3 '25 due to the AS 29 there, is Rs. 1.65 crore loss and the same is already a part of the declared result. Mayur Padhya: It is towards acquisition of our Turkish subsidiary that running business was going on that we acquired. So at that time that goodwill was there in picture.
  • Liquidity Liquidity disclosed Expect Rs. 45 crore initial cash flow from Punjab subsidy from next quarter, followed by Rs. 20 crore annually for 7 years.
    Ankit Patel: We are expecting from next quarter some cash flow should start coming to the Company. Initially to the tune of Rs. 45 crore and annually it will be about Rs. 20 crore for a total of 7 years.

Guidance & targets

Revenue

  • Annual Turnover Revenue · within 3-4 months · High confidence Rs. 2,000 crores plus
    So in a normal scenario, within 3 to 4 months, we should be on track to do an annual turnover of Rs. 2,000 crores plus.

    — Ankit Patel

  • Benzene Project Annual Business Revenue · at optimum utilization (next couple of quarters) · High confidence Rs. 300 crores
    After that, at the optimum level of 80% to 90% utilization of that plant, which should happen in the next couple of quarters, our run rate in that business will add around Rs. 300 crores of annual business for us.

    — Ankit Patel

EBITDA

  • EBITDA Levels EBITDA · coming few quarters · High confidence 12% to 15%
    So going ahead, we feel confident about doing anywhere between 12% to 15% of EBITDA levels in coming few quarters.

    — Ankit Patel

  • EBITDA (absolute) EBITDA · within few months · High confidence Rs. 250 crores plus
    So that is our immediate target and we should be on track to do that within few months.

    — Ankit Patel

Capacity

  • Benzene Project Utilization Capacity · next couple of quarters · High confidence 80% to 90%
    After that, at the optimum level of 80% to 90% utilization of that plant, which should happen in the next couple of quarters, our run rate in that business will add around Rs. 300 crores of annual business for us.

    — Ankit Patel

  • Benzene Project Utilization Capacity · next 1-2 months · High confidence 60-70% plus

    Previously 13-14% → 60-70% plus

    I think going ahead within next 1 or 2 months, I think we should definitely be able to reach 60%-70% plus.

    — Ankit Patel

  • Benzene Project Utilization Capacity · FY26 · High confidence 80% plus
    And for the next financial year, we should have the 100% contribution, which is about 80% plus utilization and a topline of around Rs. 250 - Rs. 300 crores.

    — Ankit Patel

Debt

  • Debt to EBITDA Ratio Debt · Medium confidence within 3
    But yes, we definitely want to keep our debt EBITDA within 3.

    — Mayur Padhya

Capex

  • Major CAPEX Capex · next 4 to 6 quarters · High confidence None
    So I would say in the next 4 to 6 quarters, we are not going to do any major CAPEX.

    — Ankit Patel

What to watch in Q4 FY25

Benzene Project Utilization & Revenue Contribution

next 1-2 months (for 60-70%), FY26 (for 100% contribution, 80%+ utilization)
Current 13-14% utilization, nominal revenue contribution
Target 60-70% plus utilization, significant revenue contribution

Why it matters

The successful ramp-up and contribution of the benzene project are key to unlocking profitability and achieving overall revenue targets, given its current drag on overheads.

Ankit Patel: I think going ahead within next 1 or 2 months, I think we should definitely be able to reach 60%-70% plus. And for the next financial year, we should have the 100% contribution, which is about 80% plus utilization and a topline of around Rs. 250 - Rs. 300 crores.

Risks & concerns

  • Benzene Project Underutilization & Overheads

    high

    Capitalization of the Saykha's Benzene downstream project increased interest, depreciation, and other overheads, but it contributed nominally to topline in Q3, partially offsetting profitability of other divisions.

    Management acknowledged

  • Dyestuff Revenue Degrowth

    medium

    The dyestuffs segment experienced an 8% quarter-on-quarter degrowth in Q3 FY25 revenue.

    Management acknowledged

  • Turkish Subsidiary (Sener Boya) Loss due to Hyperinflation

    medium

    The Turkish subsidiary incurred a Rs. 1.65 crore loss in Q3 FY25 due to hyperinflation and AS 29 accounting.

    Management acknowledged

  • Delay in Punjab Caustic Soda Plant Subsidy Receipt

    medium

    While in final stages, the delay in receiving the initial Rs. 45 crore subsidy impacts immediate cash flow and finance costs.

    Analyst acknowledged

  • Raw Material Price Volatility

    low

    Management stated that their 12-13% EBITDA margin guidance is conservative and accounts for raw material price fluctuations.

    Analyst acknowledged

Q&A highlights

7 direct
Outlook on Chemical Industry Recovery & Growth Direct
I think chemical industry overall has definitely recovered. The volumes are definitely better. The overall demand has been better in the last few months. That is reflecting in our results in the last couple of quarters. We have reached the annual run rate of Rs. 1700 crore topline.

Management confirmed a broad recovery in the chemical industry, providing a positive outlook for the company's future performance and setting ambitious revenue and EBITDA targets.

Asked by Dipesh Sancheti

Debt Reduction Strategy and Asset Monetization Direct
So we are targeting by March 26 we should be able to pay off another about Rs. 60 crore of debt. So from today to March 26, about Rs. 200 crore of debt reduction we are targeting.

Management provided a clear, quantified target for debt reduction over the next year, outlining the strategy including asset liquidation, which is crucial for financial deleveraging.

Asked by Dipesh Sancheti

Benzene Project Contribution and Capacity Utilization Direct
After that, at the optimum level of 80% to 90% utilization of that plant, which should happen in the next couple of quarters, our run rate in that business will add around Rs. 300 crores of annual business for us.

This clarifies the ramp-up timeline and expected significant revenue contribution from the new benzene project, addressing concerns about its current low utilization and impact on profitability.

Asked by Dipesh Sancheti

Punjab Caustic Soda Plant Subsidy Status Direct
As far as the subsidy, we have yet not received it, but, we have crossed one important stage, that is the district level committee that has concluded and that has approved our case. So now matter has been referred to state level committee. And that is the main process which they need to complete. And we are expecting next month there should be some committee meeting which will consider our case and then it will go further. So that's the final stage, then only operational things will remain. We are expecting from next quarter some cash flow should start coming to the Company.

Management provided a detailed update on the long-pending Punjab subsidy, indicating it's in the final stages of approval and cash flow is expected from the next quarter, which is a significant liquidity event.

Asked by Shantanu B

Impact of Benzene Project on Margins Direct
No this will add to the overall margin. So presently whatever study we are doing, seems that it has a very good margin.

Management clarified that despite initial overheads, the benzene project is expected to be margin-accretive, alleviating concerns that it might dilute overall profitability once fully operational.

Asked by Shantanu B

Environmental Compliance and Plant Operations Direct
No, we did we do not have any issues or any notices or any risk as far as our manufacturing plants go. Our Saykha latest unit is a zero discharge. So, we do not discharge anything. Our Khambhat unit is also zero discharge. Also, our Baroda unit, which has a good facility of discharging our treated effluent into the sea. So all our units are complied absolutely and we do not have any risk or any issues regarding any manufacturing activity or any plants, any closing down or any risk like that we do not have.

Management provided strong assurance regarding environmental compliance and zero discharge for key facilities, mitigating potential ESG risks often associated with chemical companies.

Asked by Harshil Patel

Goodwill Impairment for Turkish Subsidiary Partial
So our auditor is constantly reviewing the things. And as per their present comment, there is not required to amortize this goodwill but it's a continuous process. So every year they review the things and whenever they feel, they will consult with us and as you mentioned correctly, a board and auditor will decide whether to amortize this or to continue this on balance sheet.

This addresses a potential financial risk related to the Turkish subsidiary's performance due to hyperinflation, indicating ongoing scrutiny by auditors but no immediate impairment.

Asked by Harshil Patel

Raw Material Price Volatility and Margin Guidance Direct
It is considering all of that. We have traditionally done even up to 20%, even 17%-18% consistently for few years also. At the same time, we have also done about 8% in our challenging years recently. So this is something we feel that in a normal scenario, we should be able to do around Rs. 2,000 crores of topline and again, like I mentioned, around 12%-13% of EBITDA. That is in a normalized scenario.

Management confirmed that their margin guidance is robust and accounts for raw material volatility, providing confidence in the sustainability of future profitability.

Asked by Harshil Patel

3 min read 6 chapters

Detailed narrative

Q3 & 9M FY25 Financial Performance Overview

Bodal Chemicals reported a robust Q3 FY25 with consolidated revenue of Rs. 446 crores, marking a 30% year-on-year growth. Consolidated EBITDA stood at Rs. 46 crores, a 63% increase YoY, with an EBITDA margin of 10.4%. For the nine-month period (9M FY25), consolidated revenue reached Rs. 1,304 crores, up 28% YoY, and EBITDA grew 36% YoY to Rs. 121 crores. However, consolidated PAT for Q3 FY25 was Rs. 5.4 crores, and for 9M FY25, it was Rs. 4 crores, indicating some pressure on net profitability.

Dye Intermediates and Dyestuffs Segment Performance

The dye intermediates division showed strong performance, with 9M FY25 revenue of Rs. 507 crores, a 53% YoY growth. Q3 FY25 revenue for this segment was Rs. 179 crores, growing 4% QoQ, driven by improved volumes and realizations (H-Acid at ~Rs. 490/kg, Vinyl Sulphone at ~Rs. 242/kg). In contrast, the dyestuffs segment experienced an 8% QoQ degrowth in Q3 FY25, with revenue of Rs. 114 crores, though 9M FY25 revenue was Rs. 373 crores (up 6% YoY). The company plans to restart salt-free dye production at its Unit 4 in Ahmedabad to capitalize on new opportunities.

Benzene Downstream Project Update and Outlook

The Saykha Greenfield benzene downstream project has achieved quality norms but contributed nominally to Q3 revenue due to low utilization (13-14%). Its capitalization, however, led to increased overheads, partially offsetting profitability. Management expects significant ramp-up, targeting 60-70% plus utilization in the next 1-2 months and 80% plus utilization in FY26, which is projected to add Rs. 250-300 crores to the topline and contribute 12-14% to EBITDA annually. The project requires specific certifications to cater to the pharma industry, a major target market.

Debt Management and Capital Allocation Strategy

The company's long-term debt stands at Rs. 540 crores, with working capital debt at Rs. 300 crores. Management aims to reduce total debt by approximately Rs. 200 crores by March 2026, partly through the liquidation of non-core assets, expecting Rs. 60-70 crores from this. The benzene project was funded with 70% debt and 30% internal accruals. The cost of debt is around 9%. The company is not considering any equity raising and plans no major CAPEX in the next 4-6 quarters, focusing on consolidating existing investments.

Punjab Caustic Soda Plant Subsidy and Other Business Segments

The Rs. 45 crore subsidy from the Punjab Caustic Soda Plant is in its final approval stage at the state level, with cash flow expected from the next quarter, followed by Rs. 20 crores annually for seven years. The basic chemicals segment reported 9M FY25 revenue of Rs. 73 crores (up 18%), and Chlor-Alkali achieved Rs. 243 crores (up 21% YoY) with 16% volume growth. The Turkish subsidiary, Sener Boya, recorded a Rs. 1.65 crore loss in Q3 FY25 due to hyperinflation.

Market Outlook and Margin Guidance

Management expressed confidence in the overall chemical industry recovery, noting improved volumes and demand. They project an annual turnover exceeding Rs. 2,000 crores and 12-15% EBITDA margins in the coming quarters, considering this a normalized and stable scenario. This guidance includes the anticipated Punjab subsidy and accounts for raw material price volatility. Current capacity utilization is high across most segments (90%+ for dye intermediates, basic chemicals, caustic), with dyestuffs at 56% and benzene derivatives ramping up from 13-14%.

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