Clean Science and Technology Limited

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).

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.

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.

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.

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.

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.