Camlin Fine

Camlin Fine Sciences reported a 2% increase in Q3 FY25 turnover, reaching Rs. 433.49 crores, up from Rs. 422.97 crores in the previous year. Gross margins expanded from 48% to 50%, and operational EBITDA improved from 10% to 12%. The company noted a foreign exchange loss in the quarter due to currency volatility, contrasting with a gain in the prior quarter, which impacted overall profitability.

The Vanillin vertical experienced improving sale prices, particularly in the US, driven by anti-dumping actions against Chinese manufacturers. Q3 FY25 output increased to approximately 600 metric tons, up from 500 metric tons last year, with average prices also rising. Management guided for the Dahej plant to reach 70% capacity utilization by the end of FY25 and maintain 75% utilization for FY26, with a long-term goal of 100% utilization by FY27. The breakeven point for Vanillin on a full-cost basis is estimated at 40% utilization, while the combined Catechol and Vanillin lines are expected to breakeven at 70% Vanillin utilization.

The Blends vertical demonstrated strong performance, particularly in the American continent, and is also improving in India. Management reiterated a growth trajectory of 15-20% for this segment over the next few years, primarily driven by new customer acquisitions across all geographies. Gross margins for the Blends business typically range from 30% to 35%, with EBITDA margins reaching up to 20% once a certain threshold is achieved, indicating a high-value product mix.

Following a successful rights issue, Camlin Fine Sciences repaid a Rs. 100 crore NCD borrowed in the previous quarter, bringing the gross debt level to approximately Rs. 600 crores, similar to September levels. The company plans to repay Rs. 45-50 crores of debt annually, aiming to reduce gross debt to around Rs. 550 crores by the end of FY26. The CAPEX plan for FY26 is projected to be Rs. 30-35 crores, primarily allocated for maintenance, reflecting a focus on optimizing existing assets.

The company reported a Rs. 17 crore loss from discontinued businesses in Q3 FY25, contributing to an overall EBITDA from continuing operations of Rs. 70 crores. Losses from the European plant, which incurred approximately Rs. 55 crores in the first nine months of FY25, are expected to significantly reduce to an annual cost of Rs. 20-25 crores by Q2 FY26. This reduction is contingent on the complete wind-down of diphenol activity and evacuation of intermediate materials, a process complicated by local regulations. The China plant also incurs a loss of Rs. 3-4 crores per quarter, which management aims to reduce in the next year.

The integration of Vitafor is complete, and the company expects substantial growth from this acquisition in FY26, targeting 20-25% growth for the year and 20% annually thereafter. Vitafor, focusing on farm products, has achieved EBITDA breakeven and is anticipated to become profitable at the bottom line next year. The acquisition has facilitated new registrations and launches in several countries, including Mexico, Colombia, Peru, India, the US, and Brazil, expanding Camlin Fine Sciences' market reach and product portfolio.

Vanillin prices in the US are currently in the $12-$13 range, with a 20% increase observed in Q3 FY25 due to the 187% preliminary anti-dumping duty imposed in January. The overall Vanillin business is expected to see a 10-15% improvement in pricing. Management anticipates that if China were to dump products again, the prices would not be less than $14-$15, further benefiting Camlin Fine Sciences' market share in the US and Europe. The cost of producing Vanillin is currently between $8.50 and $9.00, projected to fall below $8.00 at 100% utilization.