Clean Science and Technology Limited — Q4 FY26 earnings call

Call held 14 May 2026

Management summary

Clean Science reported a resilient Q4 FY26 with sequential improvements in standalone revenue and strong performance in its HALS business, which achieved its highest ever revenue. The Clean Fino-Chem subsidiary turned EBITDA positive. Despite persistent global challenges, including muted customer off-take and pricing pressures, the company declared a final dividend and saw promoter directors forgo a significant portion of their bonus. Strategic initiatives like HALS capacity expansion and backward integration are underway, though the FY27 outlook remains cautious due to macro uncertainties.

Highlights

  • Q4 FY26 was a resilient quarter with strong delivery despite challenging global environment.

  • Sequential improvement in overall performance in Q4, largely driven by increased customer volume off-take.

  • HALS business segment saw its highest ever revenue in Q4 FY26 with continued improvement in favorable product mix.

  • Clean Fino-Chem reported positive EBITDA of INR 7 crores in Q4, marking its first quarter of positive EBITDA.

  • Final dividend of INR 4 per equity share (400% of face value) declared for FY26.

Concerns

  • Challenging global environment and geopolitical uncertainties persisted for much of FY26.

  • Muted customer off-take, pricing pressure in selected products and geographies, and tariff-related uncertainty continued.

  • Standalone sales declined 19% Y-o-Y in Q4, primarily led by sales volume.

  • Performance Chemical 2 capex timeline changed to September '26 due to scarce manpower resources.

  • Arbitrage opportunities for Chinese producers due to better crude oil position create pricing challenges for Indian producers.

Key financials

2 periods

Q4 FY26

  • Standalone Revenue
    ₹193 Cr
    YoY -19% QoQ +8%
  • Standalone EBITDA
    ₹88 Cr
  • Standalone PAT
    ₹77 Cr
  • Standalone EBITDA Margin
    46%
  • Consolidated Revenue
    ₹246 Cr
    QoQ +14%
  • Consolidated EBITDA
    ₹96 Cr
  • Consolidated PAT
    ₹58 Cr
  • Consolidated EBITDA Margin
    33%
  • Clean Fino-Chem EBITDA
    ₹7 Cr

FY26

  • Standalone Revenue
    ₹796 Cr
    YoY -12%
  • Consolidated Revenue
    ₹945 Cr
  • Consolidated EBITDA
    ₹355 Cr
  • Consolidated PAT
    ₹230 Cr
  • Consolidated EBITDA Margin
    37%

What they filed

Q1 FY27: revenue down 5.9%, net profit down 5.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue228 232 245 220 213 −7%185 −20%197 −20%207 −6%
EBITDA95 102 105 101 92 −3%72 −29%88 −16%87 −14%
Net profit67 74 79 77 65 −3%52 −30%58 −27%73 −5%
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

  • Performance Segment (FY26 Standalone)
    72% Contribution to Revenue
  • Pharma-Agro Segment (FY26 Standalone)
    19% Contribution to Revenue
  • FMCG Segment (FY26 Standalone)
    9% Contribution to Revenue

Capital allocation

high confidence
  • Capex ₹80 Cr
    • Capital infusion in subsidiary (Clean Fino-Chem) ₹200 Cr
    • Debottlenecking HALS product lines and setting up dedicated HALS 2020 product line
    • Performance Chemical 2 commercialization
    During this year, the capital infusion in subsidiary was approximately INR 200 crores with total investments of subsidiary now standing at INR 750 crores. (Page 4); Our capex timeline of Performance Chemical 2 is as per plan, and we expect to commercialize by September '26. (Page 4); We are now planning to also debottleneck our some of our HALS product lines and also setting up a dedicated product line for HALS 2020... (Page 4); It could be in the range of max INR80 crores to INR100 crores. (Pratik Bora, Page 16)
  • Dividend ₹4/share (final)
    I am glad to inform you that the Board in today's meeting has declared a final dividend of INR 4 per equity share, amounting to 400% of face value of INR1 per share. (Page 4)

Guidance & targets

Capacity

  • HQ/Catechol Plant Optimal Operations Capacity · Following 1 to 2 quarters · High confidence Optimal operations with improved productivity and efficiency
    The Hydroquinone/Catechol plant which was established in December '25 is under initial stabilization phase, and we expect the plant to achieve optimal operations with improved productivity and efficiency in the following 1 to 2 quarters.

    — Siddharth Sikchi

  • Performance Chemical 2 Commercialization Capacity · September '26 · High confidence Commercialize
    Our capex timeline of Performance Chemical 2 is as per plan, and we expect to commercialize by September '26.

    — Siddharth Sikchi

Realization

  • HALS Blended Realization Realization · Eventually · Medium confidence $7 to $7.5 per kg
    Yes, absolutely. We are aspiring to do that.

    — Siddharth Sikchi

Capex

  • FY27 Capex Budget Capex · FY27 · High confidence INR 80-100 crores
    It could be in the range of max INR80 crores to INR100 crores.

    — Pratik Bora

What to watch in Q1 FY27

HQ/Catechol Plant Optimal Operations

Following 1 to 2 quarters
Current Initial stabilization phase, 10-15% utilization
Target Optimal operations with improved productivity and efficiency

Why it matters

Successful ramp-up and optimization of this new plant are crucial for realizing backward integration benefits and contributing to future profitability.

The Hydroquinone/Catechol plant which was established in December '25 is under initial stabilization phase, and we expect the plant to achieve optimal operations with improved productivity and efficiency in the following 1 to 2 quarters.

Risks & concerns

  • Challenging Global Environment & Geopolitical Uncertainties

    high

    Muted customer off-take, pricing pressure, and tariff-related uncertainty persisted, making FY27 outlook 'very tricky'.

    Management acknowledged

  • Raw Material Price Volatility & Chinese Competition

    high

    Chinese producers' better crude oil position creates price arbitrage, impacting Indian competitiveness in commodity chemicals like MEHQ, phenol, and acetone.

    Management acknowledged

  • Scarce Manpower Resources

    medium

    Labor movement due to increased gas prices caused a delay in the commercialization timeline for Performance Chemical 2 to September '26.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
MEHQ competitiveness and pricing strategy amidst raw material price changes Partial
No, I agree with you because of the Hydroquinone prices going up, it definitely helps us in MEHQ. But also, to be honest, with the capacities of Hydroquinone in China, and they are not as impacted with the raw material prices to that extent, which we have in India. So in view of this, we have to calibrate our prices in a manner that we are able to balance all the positions and still keep our market share within China as a market.

Highlights the ongoing challenge of balancing market share and profitability in MEHQ due to Chinese competition and differing raw material cost structures.

Asked by Sanjesh Jain

Sustainability and drivers of HALS business growth, including export shift Direct
Yes. I will not get into too much of product-wise due to competitive nature of the business. But I can tell you, this was a little delayed response. I mean we were really hoping this response to come a few quarters prior. So this is not actually surprising, but it is just delayed. So of course, as customers were evaluating big accounts for testing, trials, all validations, that took a large portion of this time. But now that, as I said, you can see our export growth picking up. Earlier, we were predominantly India import substitute. We were only trying to cater majorly to Indian market. So we were roughly 80% India, 20% export. Today, we stand at 50% export in select products. So our exports have picked up dramatically.

Explains the structural drivers of HALS growth, including successful customer validations and a significant shift towards exports (from 20% to 50%), indicating sustained momentum.

Asked by Sanjesh Jain

FY27 outlook and impact of global macro environment Evasive
We are waiting for this Chinese summit to end, then this Russia summit to end to understand where the world stands in terms of crude oil, what is our supply positions in terms of crude oil. We are so dependent on macro that it is very difficult to really tell you how do we see this financial year. This is going to be a very tricky financial year for chemical industry in my view.

Management expresses significant uncertainty about the FY27 outlook due to global macro factors (crude oil, geopolitical events), signaling a cautious and unpredictable environment for the chemical industry.

Asked by Sanjesh Jain

HALS capacity expansion plans and debottlenecking initiatives Direct
I think when we try and increase capacity, we have a little longer term view because increasing capacities in chemical businesses do not happen in a few weeks. It typically takes couple of months, sometimes a larger period when you have to debottleneck in a running plant. So with all these view, we have started to understand that there will be a phase where we will run out of these capacities. And hence, we have already started looking at debottlenecking or getting backward integrated in some of our products, which I mentioned during the start of the call.

Confirms proactive steps towards HALS capacity expansion and backward integration, indicating confidence in sustained demand and a strategic move to strengthen market position and supply chain.

Asked by Ankur

Current utilization levels of the Performance Chemical 1 (HQ/Catechol) plant Direct
Very low. It's quite low compared to what we yes, it is less than -- it is 10%, 15%-odd right now. And we want to ramp up. Every quarter-on-quarter, you will see the ramp-up happening.

Reveals very low current utilization (10-15%) of the new HQ/Catechol plant, highlighting significant ramp-up potential and future volume growth from this facility as it optimizes.

Asked by Arun Prasath

Management's decision to stop sharing segment-wise revenue and geography breakdown Direct
Abhijit, we have realized that these are fairly sensitive data points from competition perspective. And that's why we have taken a conscious call not to share that level details.

Management explicitly states a change in disclosure policy, citing competitive reasons, which reduces investor visibility into detailed business segment performance.

Asked by Abhijit

Quantification of the voluntary performance bonus reversal by Promoter Directors Direct
That is roughly amounting to about INR11-odd crores.

Quantifies the significant voluntary forgo of promoter directors' performance bonus (INR 11 crores), demonstrating alignment with shareholder interests during a challenging year.

Asked by Abhijit

Benefits of HALS backward integration and DHDT plant conversion Direct
No, we are not getting into such numbers. But yes, it will definitely help us improve our margins and supply position. So our dependence on import will dramatically drop.

Confirms that the conversion of the DHDT/pharma plant into HALS intermediates will improve margins and significantly reduce import dependence, strengthening the HALS business's cost structure and supply security.

Asked by Priyank Chheda

3 min read 6 chapters

Detailed narrative

Q4 FY26 Performance and FY26 Overview

Clean Science reported a resilient Q4 FY26 with standalone revenues improving 8% Q-o-Q to INR 193 crores, achieving EBITDA of INR 88 crores (46% margin) and PAT of INR 77 crores (40% margin). However, standalone sales declined 19% YoY, primarily volume-led. For the full FY26, standalone revenue was INR 796 crores, down 12% YoY, attributed to key account loss and pricing pressure. Consolidated revenues for Q4 increased 14% to INR 246 crores, with EBITDA of INR 96 crores (33% margin) and PAT of INR 58 crores (28% margin). Full FY26 consolidated revenue was flattish at INR 945 crores, with EBITDA of INR 355 crores (37% margin) and PAT of INR 230 crores (24% margin).

HALS Business Growth and Strategic Expansion

The HALS business segment achieved its highest ever revenue in Q4 FY26, driven by sequential improvement in customer volume off-take and a favorable product mix. Exports for select HALS products dramatically increased, now constituting 50% of sales compared to a previous 20%, indicating a shift from India import substitution to global market penetration. Management noted that this growth was a 'delayed response' following extensive customer evaluations and validations. The company is also expanding its HALS product portfolio by debottlenecking existing lines and setting up a dedicated line for HALS 2020, a key intermediate for higher-grade NOR-HALS products.

Clean Fino-Chem and Backward Integration Progress

The subsidiary, Clean Fino-Chem Limited, achieved a positive EBITDA of INR 7 crores in Q4, marking its first profitable quarter after being EBITDA neutral in the preceding quarter. The Hydroquinone/Catechol plant, established in December '25, is in its initial stabilization phase, with optimal operations expected within 1-2 quarters. This plant has already replaced imports of Hydroquinone and Catechol for captive production of TBHQ and Veratrole, leading to raw material cost moderation. Further backward integration initiatives are underway for key starting materials required for HALS production, aimed at ensuring uninterrupted supply, strengthening margins, and improving operational efficiency with minimal capital expenditure.

Capital Expenditure and Capacity Development

Clean Fino-Chem received a capital infusion of approximately INR 200 crores during the year, bringing total subsidiary investments to INR 750 crores. The commercialization timeline for Performance Chemical 2 is set for September '26, though it experienced a change due to scarce manpower resources. The company is also refurbishing its pharma plant to produce HALS intermediates, which is expected to yield better returns than the original pharma intermediate. For FY27, the projected capital expenditure budget is in the range of INR 80-100 crores, supporting ongoing debottlenecking and new product line developments.

Raw Material and Pricing Environment

The company continues to face a challenging global environment, including muted customer off-take and pricing pressure in certain products and geographies, alongside tariff-related uncertainties. While rising Hydroquinone prices benefit MEHQ competitiveness, the presence of Chinese capacities with lower raw material impact creates pricing arbitrage challenges. Management noted that they were able to import phenol and acetone from China, indicating a significant pricing differential. Despite these pressures, the company's gross margins improved in Q4, driven by a favorable product mix and increased volumes in flagship products.

Shareholder Returns and Management Alignment

The Board declared a final dividend of INR 4 per equity share for FY26, representing 400% of the INR 1 face value. In a move to align with shareholder interests during a challenging financial year, the Promoter Directors voluntarily chose to forgo a substantial portion of their performance bonus. This reduced the performance bonus for FY26 to less than 1% of PBT, compared to the entitled 4% of PBT, amounting to approximately INR 11 crores in reversal.

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