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Chembond Chemicals Limited — Q2 FY26 earnings call

Call held 21 Nov 2025

Management summary

Chembond Chemicals reported a mixed Q2 and H1 FY26, with consolidated revenue declining slightly YoY but profitability metrics like EBITDA and PBT showing robust growth due to improved margins and cost optimization. The Water Technologies segment, comprising 87% of revenue, demonstrated steady growth and a strong order book. However, Construction Chemicals and Distribution segments faced headwinds from monsoon effects and industrial slowdown, leading to revenue declines. The company is strategically focused on achieving a ₹1000 crore revenue target within four years through organic and inorganic growth.

Highlights

Consolidated EBITDA for Q2 FY26 was ₹11.08 crores, up 14% YoY from ₹9.7 crores.
Consolidated PBT for Q2 FY26 was ₹9.62 crores, up 6% YoY from ₹9.1 crores.
Half-year consolidated EBITDA was ₹21.89 crores, up 15% YoY from ₹19.10 crores.
Half-year consolidated PBT was ₹19.42 crores, up 13% YoY from ₹17.1 crores.
Water Technologies segment revenue grew 2.65% in H1 FY26 to ₹120 crores, and its share of total revenue increased from 84% to 87%.

Concerns

Q2 FY26 consolidated revenue was ₹73.04 crores, down 3% YoY from ₹75 crores.
H1 FY26 consolidated revenue was ₹138.40 crores, down 1% YoY from ₹139.8 crores.
Construction Chemicals revenue was down 6% and Distribution down 30% in H1 FY26.
Prolonged monsoon affected sales in Q1 and Q2, particularly for construction chemicals and summer chemicals.
Sluggish growth in industrial front due to project delays and price competition from smaller players.

Key financials

2 periods

Q2 FY26

Consolidated Revenue
₹73.04 Cr
YoY -3% QoQ +11.7%
Consolidated EBITDA
₹11.08 Cr
YoY +14% QoQ +26.3%
Consolidated PBT
₹9.62 Cr
YoY +6%

H1 FY26

Consolidated Revenue
₹138.4 Cr
YoY -1%
Consolidated EBITDA
₹21.89 Cr
YoY +15%
Consolidated PAT
₹13.5 Cr
YoY +9.8%

What they filed

Q1 FY27: revenue down 0.3%, net profit up 141.1% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	14	19	20	19	14 +7%	19 −0%	22 +7%	18 −0%
Expenses	15	16	18	16	14	16	18	15
EBITDA	-1	3	3	2	1 +152%	3 −11%	4 +43%	3 +27%
Margin	-7%	16%	14%	13%	4%	14%	19%	16%
Other income	2	0	0	1	3	0	0	1
Interest	0	0	0	0	0	0	0	0
Depreciation	1	1	1	1	1	1	1	1
Profit before tax	1	2	3	3	3 +232%	2 −2%	4 +48%	3 +31%
Tax rate	-52%	39%	19%	56%	5%	8%	-10%	20%
Net profit	1	2	2	1	3 +109%	2 +48%	4 +100%	3 +141%
EPS	—	—	—	0.42	1.06	0.84	1.55	1.00

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

Segment	Revenue Share (H1 FY26)	YoY Growth (H1 FY26)
Water Technologies	87%	5%
Construction Chemicals	7%	-6%
Cleaning & Hygiene	1%	3%
Distribution	6%	-30%

Guidance & targets

Revenue Growth

Water Technologies Segment Growth Revenue Growth · year on year · High confidence 10 to 15%

we would probably grow at a rate of 10 to 15% year on year.

— Nirmal Shah
Water Technologies Operating Area Growth Revenue Growth · null · High confidence 7 to 8%

the area in which we operate, the domain in which we operate in cooling water treatment and all the space is around Rs. 1500 to Rs. 1600 CR right now and this would grow at a pace of around 7 to 8%.

— Vinod Deshpande

Market Growth

Water Treatment Specialty Chemicals Market Growth (CAJR) Market Growth · next five years · High confidence 5.2%

the water treatment speciality chemicals business. If you look at the entire market within India is almost around Rs. 9500 crores. That is $1 billion. And the recent study and research shows that this would grow at the CAJR of 5.2% for the next five years

— Vinod Deshpande

Order Book Invoicing

Water Technologies New Order Book Invoicing Order Book Invoicing · this year · High confidence Rs. 40 to 45 CR

almost 40% of that total will be order book would be invoiced this year, 40 to 50%, so almost Rs. 100 CR. What we have we expect to book from this new order book that most Rs. 40 to 45 CR.

— Vinod Deshpande

Revenue Target

Consolidated Revenue Milestone Revenue Target · about four years · Medium confidence 1000 crore

Internally, we're looking at about four years odd to hit 1000 crore milestone

— Nirmal Shah

Margin

Water Technologies Margins Margin · null · High confidence 8 to 10%

we are working in the range of 8 to 10% and we would continue to try and improve those margins.

— Vinod Deshpande

Performance Outlook

H2 FY26 Water Technologies Performance Performance Outlook · H2 FY26 · Low confidence steady rate

So we hope H2 would be we also be growing at a steady rate.

— Prachi Mahadik
H2 FY26 Construction Chemicals Performance Performance Outlook · H2 FY26 · Low confidence still more better

we hope that the second-half that is H2 would be performed still more better.

— Prachi Mahadik
Q3 & Q4 FY26 Construction Chemicals and Distribution Performance Performance Outlook · Q3 and Q4 FY26 · Low confidence go up

we expect in Q3 and Q4 these segments would go up.

— Prachi Mahadik
Distribution Business Sales Performance Outlook · years to come · Low confidence come back very heavily

sales for one year we expect it to be a little depressed, but it'll come back very heavily in the years to come.

— Nirmal Shah

What to watch in Q3 FY26

H2 FY26 Revenue Growth (Water Technologies)

next quarter (Q3 FY26 results)

Current Grew 2.65% in H1 FY26

Target Steady growth

Why it matters

Water Technologies is the largest segment (87% of revenue), and its continued growth is crucial for overall company performance.

So we hope H2 would be we also be growing at a steady rate.

Risks & concerns

Monsoon Impact on Sales
medium

Prolonged monsoon affected sales of construction chemicals and summer chemicals in Q1 and Q2 FY26.

Management acknowledged
Industrial Slowdown & Project Delays
medium

Sluggish growth in the industrial sector and delays in projects impacted invoicing, particularly in the water business.

Management acknowledged
Price Competition in Water Business
medium

Small startups and competitors breaking prices in the market create margin pressure.

Management acknowledged
Commoditization in Distribution Business
medium

Commoditization of certain products led to a pivot to a new basket of unique products, causing expected short-term depression in sales.

Management acknowledged

Q&A highlights

8 direct

Stagnant Revenue Growth & Future Outlook Direct

One of the reasons for flattish growth in the first half of the year, we have something called summer chemicals which go to some of our customers and go to those go into volumes. So this year, unfortunately, because of the prolonged monsoon, the summer chemicals could not be sold.

Addresses a key investor concern about the company's overall growth trajectory and provides specific reasons (monsoon impact on summer chemicals, industrial slowdown, project delays).

Asked by Madhur Rathi

Water Business Segment Breakdown (Chemicals vs. Equipment) Direct

90% of our water treatment business come from the chemical side of the business.

Clarifies the dominant revenue stream within the largest segment and corrects a misconception about the equipment business being EPC-type.

Asked by Varun Pinto

Water Business Order Book & Execution Timeline Direct

We have almost Rs. 100 plus CR order book which includes chemical as well as equipment's almost Rs. 85 to Rs. 90 CR is in the chemical's domain and Rs. 10 Cr. to Rs. 12 Cr. is in the equipment's domain... almost 40% of that total will be order book would be invoiced this year, 40 to 50%, so almost Rs. 100 CR. What we have we expect to book from this new order book that most Rs. 40 to 45 CR.

Provides concrete numbers for future revenue visibility and clarifies the expected invoicing timeline, which is crucial for short-term growth.

Asked by Varun Pinto

Water Business - Bio-remediation vs. Synthetic Chemicals Direct

The water technologies business operates on 4 fronts. One of them is supplying chemical solutions... In bioremediation, we're looking and working with the live microbial cultures and some enzyme formulations... The chemicals business has traditionally been the largest. In fact, it used to be 100% of our business about 10-12 years ago and now is down to about 80 odd percent. The rest coming from the other three domains.

Clarifies the nature and evolution of the water business, highlighting its diverse offerings beyond just synthetic chemicals and the growing importance of other segments like bio-remediation and equipment.

Asked by Ritesh Poladia

Equipment Business Details Direct

Our strength lies in design engineering... most of the components are bought out. So we you know outsource a lot of those vessel fabrication, piping etc. But we get them. To our plant, we assemble them, we test them... For us, absolutely it does, because if we've supplied this piece of equipment and it's a new plant that has started up, we also get a first fill from our side. So even the chemicals that are used are usually, you know, supplied by us.

Provides insight into the operational model of the equipment business (asset-light, design-focused) and confirms its strategic importance in driving recurring chemical sales.

Asked by Ritesh Poladia

Demerger Rationale & ₹1000 Crore Target Direct

We went through this whole rigmarole and hassle of this demerger because it's not an easy process and unless we were very, you know, aspirational and in it. 100% we would not have gone through the pain and the cost. So yes, to have a direct answer to your question, yes, we definitely are in this fall growth. Second, what it would take to get to say like 1000 crores, yes, it it's not so easy because we would have. To do a multiple, you know of things we would have to look at inorganic ways to grow. We would have to look at diversifications.

Explains the strategic intent behind the demerger (growth aspiration) and outlines the multi-pronged approach (organic, inorganic, diversification) required for the ambitious long-term revenue target.

Asked by Vedant Shah

Water Business Differentiation & Competition Direct

it is very much in the way we apply our products and the relationships and the knowledge that we bring into a customer. We've been in this business for over 45 years and that's something that every customer values because there's not a single situation... So we've also started doing business with the data centers, so we're keeping pace with the developments, but competition is doing its work too and there are many small startups... they end up spoiling the market because they break pricing, they don't deliver service at that level.

Highlights the company's competitive edge (application expertise, long-standing relationships, knowledge) and acknowledges the challenge from smaller, price-aggressive competitors.

Asked by Vedant Shah

Wage Costs & O&M Services Direct

Our business is more of application of our products. It's not just about supplying the product. So we do have very large sites on which we have to deploy our team members to monitor the treatment to also give extra value added services... we've added at least six sites where we offer Comprehensive O&M services.

Justifies the significant employee costs by linking them to value-added services and application expertise, and confirms the active pursuit of O&M contracts as a growth driver.

Asked by Samarth Singh

3 min read 7 chapters

Detailed narrative

Introduction to Chembond Chemicals

Chembond Chemicals, founded 50 years ago, currently employs 950 individuals and reported a consolidated revenue of ₹290 crores in FY25. The company recently completed the demerger of its construction chemicals and water treatment businesses. It is listed on both BSE and NSE, with its head office in Navi Mumbai and three manufacturing plants located in Gujarat, Himachal Pradesh, and Tamil Nadu.

Q2 & H1 FY26 Consolidated Financial Performance

For Q2 FY26, consolidated revenue stood at ₹73.04 crores, a 3% decline year-on-year from ₹75 crores. Despite this, consolidated EBITDA grew 14% YoY to ₹11.08 crores, and PBT increased 6% YoY to ₹9.62 crores, primarily due to improved gross margins and cost optimization. On a half-year basis, H1 FY26 consolidated revenue was ₹138.40 crores, down 1% YoY from ₹139.8 crores. However, H1 FY26 consolidated EBITDA rose 15% YoY to ₹21.89 crores, and PBT increased 13% YoY to ₹19.42 crores, with PAT reaching ₹13.5 crores, up 9.8% YoY.

Water Technologies Segment

The Water Technologies segment is the largest contributor, accounting for 85-87% of the total business. It grew 4% in Q2 FY26 and 2.65% in H1 FY26, reaching ₹120 crores. The segment holds a healthy order book exceeding ₹100 crores, comprising ₹85-90 crores in chemicals and ₹10-12 crores in equipment. The company anticipates invoicing ₹40-45 crores from this new order book within the current fiscal year and aims for 10-15% year-on-year growth, while working to maintain/improve margins in the 8-10% range.

Construction Chemicals Segment

The Construction Chemicals segment, which includes admixtures, sealants, waterproofing, and repair products, contributed 7% to total revenue in H1 FY26, down from 8% in H1 FY25. This segment experienced a 6% decline in H1 FY26 and a downward trend in Q2 FY26, largely attributed to the prolonged monsoon season impacting sales. Management expects a recovery and improved performance in the second half of FY26 as market activities pick up.

Cleaning & Hygiene Segment

The Cleaning & Hygiene segment, a joint venture with Chembond Calvatis, focuses on industrial applications (beverage, dairy, food processing) and institutional applications (kitchens, laundry, housekeeping). This segment grew 3% in H1 FY26 and maintained its 1% contribution to total revenue, indicating steady but smaller-scale expansion.

Chemical Distribution Segment

The Chemical Distribution division imports and sells specialty chemicals for various applications, including water treatment and construction chemicals. This segment saw a significant 30% decline in H1 FY26, reducing its revenue share from 8% to 6%. The company is actively pivoting its product basket towards more unique offerings to counter commoditization, expecting sales to be depressed for about a year before recovering strongly in the years to come.

Growth Outlook and Strategy

Chembond Chemicals has set an ambitious internal target to achieve a ₹1000 crore revenue milestone within approximately four years. This growth will be pursued through a multi-pronged strategy involving organic expansion, inorganic opportunities, and diversification. The company emphasizes its differentiation through application expertise, long-standing customer relationships, and deep industry knowledge, acknowledging challenges from price-aggressive competitors and industrial slowdowns but maintaining a positive revenue outlook for H2 FY26 across all business units.

This is an AI-generated summary of a publicly available earnings call transcript.

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