Deepak Nitrite Limited — Q3 FY26 earnings call

Call held 13 Feb 2026

Management summary

Deepak Nitrite reported a mixed Q3 FY26, with consolidated revenue growing 3% YoY to INR 1,983 crore and EBITDA increasing 16% YoY to INR 219 crore, driven by improved operating efficiencies. While the Phenolics segment showed strong EBIT growth, Advanced Intermediates faced significant pricing pressures and global oversupply, impacting its EBIT. The company is progressing on strategic projects like MIBK/MIBC and polycarbonate, and anticipates improved performance in Q4 FY26 and Q1 FY27 due to integration benefits and resolution of some challenges.

Highlights

  • Consolidated total revenue stood at INR 1,983 crore, registering a growth of 3% on both a year-on-year and a quarter-on-quarter basis.

  • EBITDA for the quarter increased by 16% year-on-year to INR 219 crore, underscoring the benefits of improved operating efficiencies and prudent cost control measures.

  • The EBITDA margin improved to 11% compared to 10% in the corresponding period quarter last year.

  • The Phenolics segment delivered a consistent performance, with EBIT reaching INR 145 crore, representing a 20% year-on-year increase.

  • The Advanced Intermediates segment delivered strong topline growth with Q3 FY26 revenue of INR 652 crore, representing an 18% year-on-year growth and 11% sequential increase.

Concerns

  • Profitability during the nine-month period reflects the impact of challenging pricing conditions.

  • EBIT for the Advanced Intermediates segment stood at INR 15 crore, impacted by continued pricing pressure arising from aggressive Chinese dumping and global oversupply.

  • Finance cost for Q3 FY26 stood at INR 11 crore, reflecting higher borrowing associated with growth investments.

  • Q3 FY26 PBT includes one-time exceptional provision of INR 12.84 crore under the new labor codes.

Key financials

2 periods

Headline

  • Revenue
    ₹1,983 Cr
    YoY +3% QoQ +3%
  • EBITDA
    ₹219 Cr
    YoY +16%
  • EBITDA Margin
    11%
  • PBT
    ₹151 Cr
    YoY +12%

9M

  • FY26 Revenue
    ₹5,820 Cr
  • FY26 EBITDA
    ₹658 Cr
  • FY26 PAT
    ₹331 Cr

What they filed

Q1 FY27: revenue up 31.9%, net profit up 116.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue605 552 654 612 616 +2%694 +26%718 +10%807 +32%
EBITDA75 42 78 60 47 −37%45 +7%73 −6%110 +83%
Net profit142 17 54 30 112 −21%8 −53%39 −28%65 +117%
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
₹1,986 Cr Total
  • Phenolics ₹1,334 Cr 67.2%
  • Advanced Intermediates ₹652 Cr 32.8%

Capital allocation

medium confidence
  • Capex ₹1,200 Cr
    • R&D facility ₹100 Cr
    • Nitration, hydrogenation, fluorination, chlorination, nitric acid investments
    • MIBK/MIBC project
    • Polycarbonate project
    • High-pressure alkylation asset
    FY26 is already underway, that would involve spending of around INR 100 crore, bringing the total to approximately INR 1,200-1,300 crore. INR 2,500 crore is for FY27, not FY26.
  • Debt Debt disclosed
    Finance cost for Q3 FY26 stood at INR 11 crore, reflecting higher borrowing associated with growth investments.
  • Liquidity Liquidity disclosed The Company's financial position remains strong, providing adequate liquidity and flexibility to fund strategic growth initiatives. Consolidated net worth stood at INR 5,651 crore.
    The Company's financial position remains strong, providing adequate liquidity and flexibility to fund strategic growth initiatives, results of which shall be visible in the coming quarters. Consolidated net worth stood at INR 5,651 crore, providing strong financial flexibility to support future growth and expansion.

Guidance & targets

Performance

  • Q4 FY26 Performance Performance · Q4 FY26 · Medium confidence favourable performance
    With this positive backdrop, the Group expects a favourable performance in Q4 FY26.

    — Maulik Mehta

  • Q4 FY26 Performance vs Q3 FY26 Performance · Q4 FY26 · High confidence better than Q3 FY26
    I definitely expect Q4 FY26 to be better than Q3 FY26.

    — Maulik Mehta

  • Q1 FY27 Performance vs Q4 FY26 Performance · Q1 FY27 · High confidence better still
    Q4 FY26 will be better, but Q1 FY27 will be better still.

    — Maulik Mehta

Capacity Utilization

  • Nitric Acid Consumption Capacity Utilization · Q4 FY26 and next quarter · High confidence 100%
    This quarter and next quarter will be the first period where we would have pretty much 100% consumption of nitric acid.

    — Maulik Mehta

  • Nitration and Hydrogenation Capacities Utilization Capacity Utilization · Q4 FY26 onwards · High confidence 95-105%
    on the nitration and on the hydrogenation, we are expecting to run at 100% or close enough to 100% utilization from this quarter onwards. They may be between 95% to 100%, 105%.

    — Maulik Mehta

  • Photochemical, Chlorination, Fluorination Utilization Capacity Utilization · Q1 FY27 · Medium confidence pick up
    When we are referring to photochemical, chlorination and fluorination, that we expect those utilizations to pick up in Q1 FY27.

    — Maulik Mehta

Project Commissioning

  • MIBK/MIBC Project Commissioning Project Commissioning · Q4 FY26 · High confidence within this quarter
    The MIBK/ MIBC project is progressing well and is targeted for commissioning within this quarter.

    — Maulik Mehta

  • Polycarbonate Project Commissioning Project Commissioning · by FY28/FY29 · High confidence within 2-2.5 years
    we are planning on coming online with this asset over the next 2, 2.5 years in an integrated fashion with propylene, phenol, BPA and then polycarbonates.

    — Maulik Mehta

Energy Mix

  • Hybrid Renewable Energy Sourcing Energy Mix · ongoing · High confidence 60-70%
    We are accelerating our transition towards green energy by sourcing 60% to 70% of our energy mix from hybrid renewable sources.

    — Maulik Mehta

New Products

  • New Product Pipeline New Products · ongoing · High confidence about 15 products
    At the moment, we have a pipeline of about 15 products at various stages between R&D, piloting and awaiting customer feedback with regards to samples.

    — Maulik Mehta

Project Ramp-up

  • High-Pressure Alkylation Asset Ramp-up Project Ramp-up · Q1/Q2 FY27 · High confidence over two to three months
    on the high-pressure alkylation asset, which will come in around between June and July 2026, that will have a ramp-up over two to three months basis the customer requirement.

    — Maulik Mehta

What to watch in Q4 FY26

MIBK/MIBC Project Commissioning & Ramp-up

Q1 FY27
Current Targeted for commissioning within Q4 FY26
Target Commercial operations and initial ramp-up in Q1 FY27

Why it matters

This is a key new product capacity coming online, crucial for value chain integration and future growth.

The MIBK/ MIBC project is progressing well and is targeted for commissioning within this quarter.

Risks & concerns

  • Chinese Dumping & Global Oversupply

    high

    Continued pricing pressure, especially in Advanced Intermediates, due to aggressive Chinese dumping and global oversupply.

    Management acknowledged

  • Global Chemical Industry Headwinds

    medium

    Complex operating environment characterized by persistent pricing pressures, heightened competitive intensity, and uneven demand patterns.

    Management acknowledged

  • Project Commissioning Delays

    medium

    Technical challenges in nitric acid plant commissioning and hiccups in MIBK/MIBC project led to delays, impacting Q3 margins.

    Management acknowledged

  • Customer Destocking & Inventory Rationalization

    medium

    Customers in Europe and US focused on inventory rationalization, leading to depressed operating activities and uneven demand.

    Management acknowledged

Q&A highlights

8 direct
New Product Pipeline & Commercialization Direct
At the moment, we have a pipeline of about 15 products at various stages between R&D, piloting and awaiting customer feedback with regards to samples. So the largest segments in terms of applications, would be in applications such as mining chemicals, flame retardants, personal care, flavors and fragrances and polymer applications.

Provides insight into future growth drivers and diversification strategy through new product introductions.

Asked by Nirav Jimudia

Sodium Nitrite Tariffs Removal Impact Direct
So, historically, for the last couple of years, when we exported to the U.S. specifically, it was to the tune of about 5,000 tonnes a year. And over the last 8 months, there has been a tariff overhang between antidumping duty, tariffs and other things in excess of about 105%.

Highlights a significant positive development for a specific product, potentially improving export volumes and realizations to the US market.

Asked by Nirav Jimudia

EU-India FTA Impact Direct
So what is there is a proposed FTA and it will take whatever period of time it takes six to eight months, is what we believe, in terms of full ratification by all the 20-something member countries of the EU. Along with that, I would also want to add that whether it is the U.S. or it is Europe or the U.K., all of these are unmitigated tailwinds, all positive for the Indian chemical industry, specifically also for Deepak.

Discusses a major geopolitical development and its potential long-term benefits for the company's trade and supply chain, including raw material procurement and export opportunities.

Asked by Nirav Jimudia

Nitric Acid Full Benefit Timeline Direct
So we commissioned the nitric acid plant in the middle of December 2025. This quarter and next quarter will be the first period where we would have pretty much 100% consumption of nitric acid.

Clarifies the timeline for realizing full benefits from a key backward integration project, which is expected to improve margins and raw material security.

Asked by Nirav Jimudia

Standalone Business Margin Compression & Q4 Outlook Direct
So, first of all, the two biggest pinch points that occurred to us where, as I said, that we had limited ability to control the outcome. One was the delayed announcement of the antidumping duty by the U.S. imposition on India... The second point that affected our margins was... when we had our nitration capacities commissioned and our hydrogenation capacities that were commissioned towards the tail end of Q2 FY26, it became tactically sound even though it compressed margins in Q3 FY26.

Addresses the core reasons for margin pressure in Q3, attributing it to external factors and tactical decisions related to new capacity ramp-up, and provides context for expected Q4 improvement.

Asked by Sanjesh Jain

MIBK/MIBC Project Delay Direct
Krishan, first of all, it hasn't been a delay of two years. There has been a delay, no doubt about it. Honestly, if I'm being very frank, we attempted something which generally is not practiced in the chemical industry... we went ahead with a technology, which is new to this space... there were a lot of hiccups that took place.

Explains the technical challenges and strategic choices behind the MIBK/MIBC project timeline, providing transparency on a key growth initiative.

Asked by Krishan Parwani

Phenol Spreads vs. Gross Margins Direct
The spreads you are referring to are based on international indices, as are the cracks you mentioned. In terms of our margins, one contributing factor is the increased pressure on suppliers in India. So we have been able to see that our raw material procurement and our FG pricing, the cracks there are slightly different compared to global cracks. And secondly, there is a value add that comes from increased capacity utilization...

Clarifies how the company manages to maintain margins in the Phenolics segment despite external pricing pressures, highlighting internal efficiencies and procurement strategies.

Asked by Sanjesh Jain

Polycarbonate Project Commissioning Timeline Direct
Rohit, we gave certain anticipated timelines. Plus/ minus a couple of months, it is basically aligned with that. December 2027 is the timeline we had discussed for being onstream. So we are roughly on track.

Confirms the timeline for a major transformational project, providing clarity on its expected operationalization.

Asked by Rohit Nagraj

3 min read 7 chapters

Detailed narrative

Q3 FY26 Performance Overview

Deepak Nitrite reported a mixed Q3 FY26, with consolidated total revenue reaching INR 1,983 crore, marking a 3% growth both year-on-year and quarter-on-quarter. EBITDA for the quarter increased by 16% year-on-year to INR 219 crore, improving the EBITDA margin to 11% from 10% in the corresponding period last year, driven by enhanced operating efficiencies and cost control. For the nine-month period, consolidated revenue stood at INR 5,820 crore with an EBITDA of INR 658 crore and PAT of INR 331 crore.

Segmental Performance

The Phenolics segment delivered a consistent performance, with revenues from operations at INR 1,334 crore and EBIT at INR 145 crore, a 20% year-on-year increase, due to higher plant utilization and process optimization. The Advanced Intermediates segment recorded stable revenue growth of 18% year-on-year and 11% sequentially, reaching INR 652 crore. However, EBIT for this segment was INR 15 crore, impacted by persistent pricing pressures, global oversupply, and aggressive import competition.

Strategic Projects & Capacity Expansion

The company is actively progressing on several key projects. The MIBK/MIBC project is targeted for commissioning within Q4 FY26, while the polycarbonate project, India's first integrated propylene to polycarbonate manufacturing, is seeing dismantling activities underway in Germany for relocation to India, with commissioning expected in the next 2-2.5 years. The nitric acid plant, along with nitration and expanded hydrogenation plants, were commissioned in mid-December 2025, with 100% utilization expected from Q4 FY26 onwards, enhancing raw material security and margins.

Market Dynamics & Headwinds

The global chemical industry faces a complex operating environment marked by persistent pricing pressures, heightened competitive intensity, and uneven demand, largely influenced by global trade flows, protectionism, and aggressive Chinese dumping. These factors have led to margin compression in select product lines and impacted profitability during the nine-month period. The company acknowledged that some Q3 margin impacts were self-inflicted due to tactical decisions to maintain market presence by buying raw materials at spot prices.

Green Energy & Sustainability Initiatives

Deepak Nitrite is accelerating its transition towards green energy, aiming to source 60% to 70% of its energy mix from hybrid renewable sources. This initiative is part of a broader commitment to improving energy efficiency and embedding green chemistry principles across all operations, aligning with responsible care and sustainability goals.

New Product Development & Geographical Expansion

The company has a pipeline of about 15 new products in various stages of R&D and piloting, targeting applications in mining chemicals, flame retardants, personal care, flavors, fragrances, and polymers. Commercialization of some of these products is expected in the first half of FY27. Additionally, favorable shifts in US-India tariff policy and the complete removal of anti-dumping duty on sodium nitrite exports to the US are expected to boost export opportunities.

Capital Expenditure Plans

The company plans to spend approximately INR 1,200-1,300 crore in FY26, with an additional INR 2,500 crore planned for FY27. These investments are directed towards expanding specialty and commodity chemical manufacturing capacities, including the integrated complex for polycarbonate and other advanced derivatives, as well as the R&D facility, with about INR 100 crore allocated for the R&D facility.

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

More Chemicals earnings calls