Camlin Fine

Camlin Fine Sciences reported a Q4 FY25 turnover of INR 437 crores, a slight increase from INR 431 crores in the previous quarter. For the full year FY25, the company achieved an annualized turnover of INR 1,666 crores, marking a significant increase from INR 1,453 crores in the comparable last year, representing a ~15% year-on-year growth in the core business. Core business EBITDA improved by 12.5% to INR 208 crores in FY25, up from INR 184 crores last year, despite challenging global conditions and pricing pressures on several products.

The company has formally abandoned its Diphenol unit in Europe and Vanillin manufacturing unit in China, which had ceased operations two years prior. These are now classified as discontinued operations, with all prior quarter impacts regrouped. Management expects the cash burn from these discontinued operations to reduce substantially, projecting not more than INR 8 crores in Q1 FY26. Further reductions are anticipated, with an annualized cash burn target of INR 4-5 crores in FY27, primarily through reducing employee costs and mothballing plants.

The Aroma business, primarily driven by vanillin, contributed INR 176 crores to FY25 revenue and is a key growth driver. The company's vanillin capacity utilization currently stands at 45-50% but is targeted to reach 100% within the next two years as market conditions improve. Anti-dumping duties (ADD) imposed by the U.S. and a preliminary duty of 131% by the European Union are expected to significantly benefit vanillin prices, with current U.S. prices in the $15 range and Europe around $12. Management anticipates approximately 70% of its vanillin sales will go to these anti-dumping markets.

The Blends business demonstrated robust growth, increasing 17-18% year-on-year to INR 878 crores in FY25, up from INR 747 crores. This growth was observed across North America, Central America, South America, India, and Europe. The acquisition of CFS Vitafor in Belgium contributed around INR 85 crores in its first nine months. The company aims for a 20% growth rate in the blends business over the next 2-3 years, with EBITDA margins expected to be in the high teens, moving towards 20%. The acquisition of Vinpai is expected to be completed by July end, further boosting growth, particularly in the food segment.

Camlin Fine Sciences successfully completed a rights issue in January 2025, which contributed to an increase in equity. The company has also made significant progress in controlling its overall debt position, with net debt improving from INR 564 crores to INR 492 crores. This reduction in debt, coupled with the focus on profitable growth segments, positions the company for better financial stability and future expansion.

The company's gross margin is currently in the range of 45% to 55%. Management noted that converting Catechol to vanillin significantly improves gross margins. While there is pricing pressure on several products due to aggressive competition from China, the positive impact from the growing vanillin business and its higher margins is expected to help maintain the overall gross margin within the stated range. The company is strategically managing its sales to optimize realizations, particularly for vanillin.