Chemplast Sanmar Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

Chemplast Sanmar reported a challenging Q2 FY26 with a net loss of ₹51 crores despite a marginal revenue increase to ₹1,033 crores and improved EBITDA of ₹43 crores. The company faced headwinds from continued dumping of Suspension PVC and low-priced Paste PVC imports, impacting margins. While the Specialty Chemicals segment showed strong growth, the Value-added Chemicals segment declined. Management highlighted ongoing capacity rationalization in Europe and China, and is awaiting clarity on regulatory measures like ADD and BIS quality control orders, which are crucial for market balance and profitability.

Highlights

  • Q2 FY26 Revenue of ₹1,033 crores, a marginal increase from ₹993 crores in the same quarter last year.

  • Q2 FY26 EBITDA of ₹43 crores, significantly up from ₹26 crores YoY and ₹17 crores QoQ.

  • Specialty Chemicals segment revenue grew 21.57% YoY to ₹372 crores in Q2 FY26, driven by new Paste PVC plant volumes.

  • Paste PVC plant at Cuddalore is consistently running at full capacity, contributing to higher sales volumes.

  • CMCD business is on track with 17 products commercialized and several more in the pipeline, showing strong customer engagement.

Concerns

  • Q2 FY26 Net Loss of ₹51 crores.

  • Continued unchecked dumping of Suspension PVC into India, with increased arrivals from China.

  • Paste PVC margins impacted by low-priced imports, especially from EU-based suppliers.

  • Value-added Chemicals segment revenue declined 12% YoY to ₹138 crores in Q2 FY26 due to lower caustic production.

  • Uncertainty regarding the implementation of Anti-Dumping Duty (ADD) for Suspension PVC and the withdrawal of BIS quality control orders for PVC.

Key financials

  1. Revenue ₹1,033 Cr +4%YoY
  2. EBITDA ₹43 Cr +65.4%YoY
  3. Net Loss ₹51 Cr

What they filed

Q1 FY27: revenue up 2.3%, net profit down 175.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue993 1,058 1,151 1,100 1,033 +4%835 −21%1,256 +9%1,125 +2%
EBITDA26 32 37 17 43 +65%-57 −278%194 +424%-115 −776%
Net profit-31 -49 -54 -64 -51 −65%-119 −143%-45 +17%-176 −175%
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
₹3,166 Cr Total
  • Suspension PVC (H1 FY26) ₹1,131 Cr 35.7%
  • Specialty Chemicals (H1 FY26) ₹726 Cr 22.9%
  • Suspension PVC (Q2 FY26) ₹523 Cr 16.5%
  • Specialty Chemicals (Q2 FY26) ₹372 Cr 11.7%
  • Value-added Chemicals (H1 FY26) ₹276 Cr 8.7%
  • Value-added Chemicals (Q2 FY26) ₹138 Cr 4.4%

Capital allocation

high confidence
  • Capex Capex disclosed
    • R32 10kt plant ₹250 Cr
    The next 10 kt plant, as I mentioned in the earlier call, is something that we are getting ready on all the engineering approvals, everything. And the actual the decision will be taken very shortly, depending on some clarity that we are seeking on regulatory approvals. The Capex for the first 2 -- for the 2 kt will not be much, will not be significant.
  • Debt Net ₹1,319 Cr
    As of September 30, 2025, the company's consolidated net debt stood at INR1,319 crores.
  • Liquidity Liquidity disclosed Management believes they will manage cash flow and balance sheet, as major capex is behind them and R32 capex will not be significant.
    The major Capex is already behind us. So we have already -- what we did was on the CMCD side or the Paste PVC side, those have already been commissioned. Paste PVC, like I mentioned, is running at over 100% utilization. Therefore, that is really the major Capex program that we had. The refrigerant gas is really not going to be that significant in expenditure. So I believe that we will manage.

Guidance & targets

Revenue

  • CSM Revenue Revenue · FY27 · High confidence ₹1,000 crores
    Good to see that there is some sequential recovery in terms of operating performance. First question is on the CSM part of the business. Do we still hold the guidance of INR1,000 crores by FY '27?

    — Krishna Rangachari

  • CMCD Self-sustaining Revenue Revenue · 2027-2028 · High confidence ₹1,000-1,200 crores
    Yes, somewhere around '27, '28 when we sort of cross INR1,000 crores to INR1,200 crores of revenue. At that point in time, we will be able to more or less be self-sustain.

    — Natarajan Muralidharan

Margin

  • CSM EBITDA Margin Margin · High confidence 20-25%
    Between 20% to 25%. Industry is operating somewhere between 23%, 25%. So it could fall. As we ramp up, it could be between 20% to 25%. Currently, we are not at that level. We are slightly lower, but we eventually would land up between -- in that range.

    — Natarajan Muralidharan

Capacity

  • R32 2kt Swing Plant Commissioning Capacity · Q3 FY26 · High confidence Ready by January 1, 2026
    The first 2 kt is actually a swing plant. We are converting the existing R22 plant into a swing plant. That should be ready any time now, maybe within the next 1 month or so. I think definitely by 1st of January, we should have that ready.

    — Ramkumar Shankar

  • R32 Second 2kt Plant Commissioning Capacity · Q4 FY26 · High confidence Ready by April 2026
    The second 2 kt plant should be ready by around April or so.

    — Ramkumar Shankar

Regulatory

  • R32 Quota Determination Regulatory · 2027 · High confidence By 2027
    No, R32 quota will not be determined anytime now. It will be determined only by around 2027 or so. So I think the full clarity will come in only by then.

    — Ramkumar Shankar

What to watch in Q3 FY26

R32 2kt Swing Plant Commissioning

By January 1, 2026
Current Under conversion/setup
Target Commercial operations

Why it matters

Represents the first new capacity for the strategic R32 refrigerant gas, crucial for future growth.

The first 2 kt is actually a swing plant. We are converting the existing R22 plant into a swing plant. That should be ready any time now, maybe within the next 1 month or so. I think definitely by 1st of January, we should have that ready.

Risks & concerns

  • Dumping of Suspension PVC into India

    high

    Continued unchecked dumping, especially from China, impacting market balance and prices.

    Management acknowledged

  • Low-priced Paste PVC Imports from EU

    high

    Imports from EU impacting Paste PVC margins, attributed to cross-subsidization by European producers.

    Management acknowledged

  • Uncertainty of Suspension PVC ADD Implementation

    high

    Non-implementation of ADD for Suspension PVC would be detrimental to domestic producers and downstream consumers.

    Management acknowledged

  • Withdrawal of BIS Quality Control Orders for PVC

    high

    Setback for public health and safety, potentially leading to lower quality imports; management hopes for a rethink.

    Management acknowledged

  • Agrochemical Slowdown impacting CMCD

    medium

    Impacting ramp-up of new molecules in CMCD, leading to slower growth than anticipated.

    Management acknowledged

  • Softness in Caustic Soda & Chloromethanes Business

    medium

    Due to excess capacity in India, impacting prices and margins.

    Management acknowledged

  • High Net Debt relative to current EBITDA

    medium

    Net debt of ₹1,319 crores as of Sep 30, 2025, considered high by analysts relative to current EBITDA, though management states debt has peaked.

    Analyst downplayed

Q&A highlights

6 direct
R32 Capacity Planning and Regulatory Framework Direct
We are still working on the actualization of the capacities on refrigerant gas. Work has already started on the swing plant of our existing R22 plant in Mettur. And there is another -- we are replicating that another 2 kt plant as well, is being set up. The plan currently is to put up one more 10 kt plant there. So this is really where we are. But we are -- obviously, all of this depends a lot on the regulatory framework in the country, and we will be getting into more detail as we get clearer on that.

Reveals the company's strategic move into R32 refrigerant gas and highlights the critical dependency on regulatory clarity for future expansion.

Asked by Sanjesh Jain

Standalone Business Profitability and Paste PVC Softness Direct
Key reason is still the softness in the Paste PVC business. As you see today, we have almost 110,000 tonnes capacity of Paste PVC. That's the dominant product even today in the stand-alone business. And that prices continues to be quite soft, and the margins continue to be soft. That's the key driver.

Identifies the primary drag on profitability for the standalone business, attributing it to external competitive pressures and low-priced imports in the Paste PVC segment.

Asked by Sanjesh Jain

PVC ADD Implementation and BIS Quality Control Orders Direct
If the ADD is allowed to elapse or it does not become effective, we believe that it will be detrimental to the country's interest on many grounds because it is absolutely crucial that we should have it. ... So it is actually a setback that we have a reversal of the quality control order, it's actually a setback on public health norms and safety norms. And I believe that and I hope that the government will soon have a rethink on this.

Highlights critical regulatory issues (non-implementation of ADD, withdrawal of BIS orders) that are vital for domestic industry protection and product quality, directly impacting the company's core business.

Asked by Rohit Nagraj

Cash Flow Management and High Net Debt Direct
The major Capex is already behind us. So we have already -- what we did was on the CMCD side or the Paste PVC side, those have already been commissioned. ... The refrigerant gas is really not going to be that significant in expenditure. So I believe that we will manage.

Addresses investor concerns about financial leverage (net debt of ₹1,300 crores) and the company's ability to fund future growth, with management indicating major capex is complete and future capex will be manageable.

Asked by Sanjesh Jain

European Dumping of Paste PVC Direct
Their cost levels, they are complaining when they are filing for antidumping on various others on PVC, they are complaining about their cost levels being high. Therefore, it is definitely not any cost advantage that they have. We believe that there is cross-subsidization where they keep their domestic prices high and cross-subsidize their exports. And that is exactly what the entire antidumping application is about.

Explains the competitive dynamics and pricing pressure in the Paste PVC segment, attributing low-priced European imports to cross-subsidization rather than cost advantage.

Asked by Vatsal Parag Shah

China's Role in PVC Market and Anti-Involution Partial
Absolutely. I fully agree with you. From the demand side, there still is no real signs of a recovery in China. So -- and that is the reason why I think the Chinese authorities are also talking about this anti-involution, et cetera. But while there's a lot of talk about that, right now, we haven't seen anything really happening on the ground. We'll have to wait and see how that plays out.

Provides insight into the global PVC market dynamics, particularly China's continued influence on supply and pricing despite talks of anti-involution measures.

Asked by Sanjesh Jain

India's Position as PVC Importer vs. Exporter Direct
No, no. India, I don't think -- I don't see India being a net exporter of PVC in the near future because India's demand is so high and the gap in India is also equally high. Last year, for instance, the demand in India for Suspension PVC was 4.3 million tonnes and the domestic production is around 1.5 million tonnes.

Clarifies the long-term structural position of the Indian PVC market, indicating continued reliance on imports due to a significant demand-supply gap, despite capacity additions.

Asked by Pujan Shah

2 min read 7 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

Chemplast Sanmar reported a Q2 FY26 revenue of ₹1,033 crores, a marginal increase from ₹993 crores in the same quarter last year. EBITDA for the quarter stood at ₹43 crores, showing significant growth from ₹26 crores in the previous year and ₹17 crores in the previous quarter. However, the company recorded a net loss of ₹51 crores for the quarter. For H1 FY26, revenue was ₹2,133 crores, EBITDA ₹60 crores, and net loss ₹115 crores.

Segmental Performance Highlights

The Specialty Chemicals segment delivered a revenue of ₹372 crores in Q2 FY26, marking a 21.57% year-on-year growth from ₹306 crores, primarily driven by increased volumes from the new Paste PVC plant at Cuddalore. The Value-added Chemicals segment saw a 12% year-on-year decline in revenue to ₹138 crores due to lower caustic production. Suspension PVC business revenue remained flat year-on-year at ₹523 crores.

Challenges in PVC Business (Suspension & Paste)

The company continues to face significant challenges in its PVC businesses. Unchecked dumping of Suspension PVC into India, particularly from China, is impacting market balance. Paste PVC margins were adversely affected by low-priced imports, especially from EU-based suppliers, which management believes is due to cross-subsidization. The new Paste PVC plant at Cuddalore is running at full capacity, but margins remain soft.

Regulatory Uncertainty: ADD and BIS Orders

A major concern is the uncertainty surrounding the implementation of Anti-Dumping Duty (ADD) for Suspension PVC, with the final findings recommended on August 14, 2025, but implementation still pending. Management stressed that non-implementation would be detrimental to the domestic industry. Additionally, the recent withdrawal of BIS quality control orders for PVC is viewed as a setback for public health and safety, potentially allowing lower-quality imports.

Custom Manufactured Chemicals (CMCD) Outlook

The CMCD business performance remained on track, with dispatches progressing as scheduled and 17 products commercialized, with several more in the pipeline. While the long-term demand and forecast remain strong, the agrochemical slowdown has led to a slower ramp-up of new molecules. Management maintains a revenue guidance of ₹1,000 crores by FY27 for CSM, with an EBITDA margin target of 20-25%.

Refrigerant Gas (R32) Expansion Plans

Chemplast Sanmar is actively pursuing expansion in the R32 refrigerant gas segment. Work has commenced on converting an existing R22 plant into a 2kt swing plant, expected to be ready by January 1, 2026, with a second 2kt plant targeted for April 2026. Plans for a larger 10kt plant are also underway, with a capex of approximately ₹250 crores, pending regulatory clarity on quotas expected around 2027.

Debt and Capital Expenditure

As of September 30, 2025, the company's consolidated net debt stood at ₹1,319 crores. Management indicated that the significant portion of capex for CMCD and Paste PVC expansions is already complete, and the capex for R32 will not be substantial. They expressed confidence in managing cash flow and believe the debt level has peaked, with future profitability improvements from new capacities and green power initiatives expected to reduce leverage.

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