Chembond Chemicals Limited — Q4 FY26 earnings call

Call held 16 May 2026

Management summary

Chembond Chemicals reported a strong Q4 and H2 FY26, with record quarterly revenue and significant growth across all segments, particularly Water Technologies. Despite input cost pressures impacting margins by about 3%, management is confident in passing on costs and expects recovery. New product commercialization and strategic geographical expansion are key focus areas for future growth.

Highlights

  • Consolidated revenue for Q4 FY26 was Rs. 101.4 crores, the highest in the last nine quarters.

  • FY26 consolidated revenue grew 12% YoY to Rs. 326.15 crores.

  • H2 FY26 saw strong recovery with consolidated revenue of Rs. 188 crores, up 35% over H1.

  • EBITDA for FY26 was Rs. 51 crores, up 7% over prior year, with a 14% EBITDA margin.

  • Three new applications have completed proof of concept and are on the full commercialization pipeline, expected to drive future growth.

Concerns

  • Input cost volatility, particularly in metals, led to an approximate 3% impact on margins in the immediate month.

  • Public sector units are refusing to amend contract terms despite force majeure, posing a challenge for pricing adjustments.

  • Realization per metric ton fell in Construction Chemicals (from Rs. 55,584 to Rs. 51,274) and Distribution (from Rs. 150,842 to Rs. 119,000) in H2 compared to H1, attributed to product mix.

Key financials

  1. Consolidated Revenue FY26 ₹326.15 Cr +12%YoY
  2. Consolidated Revenue Q4 FY26 ₹101.4 Cr
  3. Consolidated Revenue H2 FY26 ₹188 Cr
  4. EBITDA FY26 ₹51 Cr +7%YoY
  5. EBITDA Q4 FY26 ₹15.7 Cr
  6. PBT FY26 ₹45 Cr +7%YoY
  7. PBT Q4 FY26 ₹14 Cr
  8. PAT FY26 ₹34 Cr
  9. EBITDA Margin FY26 14%
  10. PAT Margin FY26 10%

What they filed

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

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue14 19 20 19 14 +7%19 −0%22 +7%18 −0%
EBITDA-1 3 3 2 1 +152%3 −11%4 +43%3 +27%
Net profit1 2 2 1 3 +109%2 +48%4 +100%3 +141%
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

SegmentShare of Total RevenueH2 FY26 Revenue Growth (over H1)H2 FY26 RevenueH2 FY26 Volume Growth (over H1)
Water Technologies87%36%₹162 Cr50%
Construction Chemicals7%20%₹13 Cr30%
Distribution Business6%40%₹12.5 Cr76%
Cleaning & Hygiene1%15%——

Capital allocation

  • Capex ₹20 Cr
    • Full year impact of demerger (assets on books)
    • Office building renovation
    Jinal Sheth: "And I noticed that the CAPEX this year has shot up to almost 20, 21 crores or so. Now, is that for the existing capacity ramp up or anything, any observations there?" Nirmal Shah: "I think what primarily is the full year of impact of the demerger. So some of the assets that were on the common books and could not have been very critically identified or tagged, they have started coming in. And of course, the office building, the improvements that we've done and the The entire renovation of the office building to house our teams, so that has taken up, but twenty-one crores, whole demerger, yeah, P.P.E. which has come into our books, so this is the demerger effect."
  • M&A Calvatis (JV partner) Joint venture · Integrated

    Cleaning and hygiene business is a JV with a German company called Calvatis.

    Nirmal Shah: "the cleaning and hygiene is a smaller business that is a GV with a German company called Calvatis."
  • M&A Malaysia JV Acquisition · Closed

    Past JV in Malaysia didn't work out well, acquired that piece to make it 100% business.

    Continuing to maintain it at that level.

    Nirmal Shah: "First is, yeah, first is we had a JV in Malaysia, which didn't really work out well. So we acquired that piece and it's 100% business. It's continuing to maintain it at that level."
  • M&A Nigeria Business Divestment · Abandoned

    Discontinued due to customer not wanting to operate with LC terms and wanting open credit, coupled with Nigerian economy issues and payment challenges.

    Nirmal Shah: "Nigeria was another pocket where we were doing significant export business for the water treatment product. We discontinued that because the customer did not want to operate with LC terms and wanted open credit. At that time, we weren't, you know, the Nigerian economy wasn't really firing on all cylinders and the payables from their side and receivables at our end would have been a challenge. And we didn't want to get into all those RBI issues on not collecting the funds. So we went away from that business. We walked away, in fact."

Guidance & targets

Revenue

  • Quarterly Revenue Revenue · next four quarters · Medium confidence ₹100 crores plus
    Nasser Investments: "would you see the current quarter Trend continue into the next year, sir, in terms of at least the next four quarters being 100 crore plus." Nirmal Shah: "Simple answer, yes, it's possible, but some seasonality comes into this business. Quarter one is not as fast as quarter four, but on a quarter to quarter, yes, if you compare those, yes, we see it to be an improvement over the prior year."

    — Nirmal Shah

  • Aspirational Revenue Target Revenue · within four years · Low confidence ₹1000 crores
    Lala: "in the previous call, you had said that you aspire to test 1000 quotes as a company within four years specifically." Nirmal Shah: "1000 crore is, yes, it is an aspiratory number. We are trying to ensure that we have plans in place to get to that number. It's not something that we are saying we will get to."

    — Nirmal Shah

Volume

  • Construction Chemicals Volume Growth Volume · Q1 of this year (FY27) · High confidence 15-20%
    Nirmal Shah: "Coming to quarter one of this year, we foresee around 15 to 20% of volume growth in construction chemicals."

    — Nirmal Shah

  • Water Chemicals Volume Growth Volume · Q1 of this year (FY27) · High confidence 10%
    Nirmal Shah: "Water chemicals, it would be roughly around 10%."

    — Nirmal Shah

Margin

  • Construction Chemicals PBT Margin Margin · Ongoing · High confidence 20%
    Nirmal Shah: "I'll just add that in this segment, we are operating at a PBT of about 20 odd percent which is the, I mean, I've not known any of our peers in the industry operating at those levels."

    — Nirmal Shah

Customer Concentration

  • Max Revenue from Single Customer Customer Concentration · Ongoing · High confidence 5-6%
    Nirmal Shah: "No, currently that is, we have overcome all those challenges. I would call it a challenge because I don't want to be too heavily dependent on a few. So it's a very good distribution that we have. And the 80-20 rule could apply, but there's a lot of customers in that 20%. It's not one. So no one customer of ours would contribute more than 5% to 6% of total revenue."

    — Nirmal Shah

What to watch in Q1 FY27

Margin recovery from input cost pressure

next couple of quarters
Current ~3% impact on margins due to haywire costs
Target Margins reflecting higher value contracts

Why it matters

Direct impact on profitability; management expects recovery through cost pass-through in new contracts.

Nirmal Shah: "It takes us about a couple quarters to pass them on fully. There are multiple factors in play. Some of our contracts that come up for renewal in the financial year in April. So most of them we have bid at higher value considering the higher baseline cost."

Risks & concerns

  • Input Cost Volatility

    high

    Material costs, especially metals like zinc and molybdenum, increased from March, leading to a ~3% margin impact. Management initiated force majeure and is passing on costs, expecting recovery in a couple of quarters.

    Management acknowledged

  • Public Sector Contract Rigidity

    medium

    Public sector units are refusing to amend fixed-price contract terms despite force majeure, posing a challenge for immediate cost pass-through. The company is bidding new contracts at higher prices.

    Management acknowledged

  • Seasonality in Business

    low

    Q1 is typically slower than Q4 due to seasonality, which might affect quarter-on-quarter comparisons, though the overall trend is expected to be positive YoY.

    Management acknowledged

  • Realization per Unit Decline

    low

    Realization per metric ton fell in Construction Chemicals and Distribution in H2 vs H1, attributed by management to product mix changes rather than broad price erosion.

    Analyst downplayed

Q&A highlights

7 direct
Continuity of Q4 FY26 revenue trend Direct
Simple answer, yes, it's possible, but some seasonality comes into this business. Quarter one is not as fast as quarter four, but on a quarter to quarter, yes, if you compare those, yes, we see it to be an improvement over the prior year.

Analyst sought clarity on the sustainability of the strong Q4 performance into the next financial year, addressing future revenue trajectory.

Asked by Nasser Investments

Negative other income in Q4 FY26 Direct
It's an accounting adjustment, so that is on account of net gain and net loss differential. So net gain last 31st December was lower, whereas net loss on fair value of investment is higher. So that has resulted in net effect. Yeah.

Clarified a specific financial line item, attributing the negative figure to an accounting adjustment related to fair value of investments.

Asked by Nasser Investments

Impact of input cost pressure on EBITDA margins Partial
In the immediate month, we saw about a 3% impact on our margins due to these haywire costs. ... It takes us about a couple quarters to pass them on fully. ... So if we lock those in at a higher value, then the margins will start improving.

Addressed a key concern regarding profitability, quantifying the immediate impact and outlining the strategy for cost pass-through and margin recovery.

Asked by Nasser Investments

Dominance of water business and hygiene business model Direct
Okay, so yeah, yeah, we of course we don't want anything to decrease. We want the other businesses to grow faster. So I'd be very happy if water comes down to 80 and then 70% of the total pie with the pie expanding more rapidly with the other businesses.

Provided insight into the company's strategic intent to diversify revenue mix by growing other segments faster, reducing reliance on the dominant water business.

Asked by Nasser Investments

Contribution from new products/applications Direct
So 3 new applications that we picked up in the last year have been all proof of concept trials have been completed. We've been approved. in the largest of these customers and they are on the full commercialization pipeline and we expect those. ... we will see some larger upticks from those three new solutions that we have developed.

Highlighted the success of recent R&D efforts and the expectation for these new solutions to contribute to future growth, indicating pipeline strength.

Asked by Jinal Sheth

Nature of FY26 CAPEX Direct
I think what primarily is the full year of impact of the demerger. So some of the assets that were on the common books and could not have been very critically identified or tagged, they have started coming in. And of course, the office building, the improvements that we've done and the The entire renovation of the office building to house our teams, so that has taken up, but twenty-one crores, whole demerger, yeah, P.P.E. which has come into our books, so this is the demerger effect.

Clarified that the reported CAPEX was primarily for demerger-related accounting adjustments and office renovation, not for new capacity expansion, which is crucial for understanding future growth drivers.

Asked by Jinal Sheth

Outlook on growth given current environment Direct
So yeah, of course, when I say this, it's all things being equal. So current situation, the scenario, if the industry continues to grow, I don't see any hiccup in the growth momentum. At the most, there would be a temporary impact on our margins. Again, that is not something that we...overly get worried about because over time, over a couple of quarters, those start reflecting back.

Addressed concerns about the broader economic environment, reassuring investors about growth momentum while acknowledging temporary margin pressures and the ability to recover.

Asked by Jinal Sheth

Impact of Force Majeure on fixed-price contracts and client retention Direct
So private sector, private sector, we've been quite successful and we've approached this that this is a temporary phenomenon. So we need at least a temporary price increase. So several customers on the private sector have already given us increments for three months... Public sector is a different story. They are refusing to amend the terms.

Provided a detailed breakdown of pricing power and client relationship management strategies in response to raw material inflation across different customer segments (private vs. public).

Asked by Himanshu Upadhyay

2 min read 6 chapters

Detailed narrative

Q4 & H2 FY26 Financial Performance Highlights

Chembond Chemicals delivered a strong performance in Q4 FY26, with consolidated revenue reaching Rs. 101.4 crores, marking the highest quarterly revenue in the last nine quarters. The full financial year 2026 consolidated revenue stood at Rs. 326.15 crores, representing a 12% increase over the previous financial year. The second half of FY26 was particularly robust, with consolidated revenue at Rs. 188 crores, up 35% over H1, driven by broad-based growth across all segments.

Profitability and Margin Trends

For FY26, EBITDA was Rs. 51 crores, a 7% increase over the prior year, with an EBITDA margin of 14% of sales. PBT for FY26 was Rs. 45 crores (up 7% YoY), and PAT was Rs. 34 crores, representing a 10% PAT margin. While input cost volatility, particularly in metals, led to an approximate 3% impact on margins in the immediate month, management is confident in passing on these costs over a couple of quarters through higher-value contracts.

Segmental Growth Drivers

Water Technologies remains the largest segment, contributing 87% of total revenue, and grew 36% in H2 over H1, with volume increasing 50%. Construction Chemicals saw H2 revenue of Rs. 13 crores (up 20% over H1) and volume of 2590 metric tons (up 30% over H1), maintaining a PBT margin of about 20%. The Distribution business also performed well, with H2 revenue of Rs. 12.5 crores (up 40% over H1) and volume nearly doubling to 1049 metric tons.

New Product Development & Commercialization

The company's focus on innovation is yielding results, with three new applications developed in the last year successfully completing proof-of-concept trials. These applications have been approved by major customers and are now in the full commercialization pipeline. Management expects these new solutions to contribute significantly to growth in the current financial year, representing a key future growth driver.

Strategic Expansion and Customer Diversification

Chembond Chemicals is actively pursuing geographical expansion and strategic partnerships as part of its long-term aspiration to reach Rs. 1000 crores in revenue. The company has successfully diversified its customer base, with no single customer contributing more than 5-6% of total revenue. Past international ventures are being refined, including the acquisition of a Malaysian JV and the discontinuation of a Nigerian business due to payment challenges.

Capital Expenditure and Demerger Impact

The CAPEX for FY26 was approximately Rs. 20-21 crores. This expenditure was primarily attributed to the full-year impact of the demerger, including assets coming onto the company's books, and the renovation of the office building. This indicates that the CAPEX was largely for organizational restructuring and infrastructure rather than new capacity additions.

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