Epigral Limited — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

Epigral reported a challenging Q2 FY26 with revenue declining 4% QoQ to ₹589 crores and EBITDA dropping 19% QoQ to ₹132 crores, primarily due to lower realizations in products like CPVC and hydrogen peroxide, and subdued plant utilization. Despite H1 headwinds, the company maintains a healthy EBITDA margin of 25% and significantly improved its net debt to EBITDA ratio to 0.8x. Management expects a stronger H2 FY26 with anticipated volume growth, improved utilization, and upcoming revenue contributions from new projects like Chlorotoluene, while also progressing on future CAPEX plans for diversification and import substitution.

Highlights

  • Net debt to EBITDA improved to 0.8x as of September 30, 2025, from 1.4x a year ago, indicating a comfortable debt position.

  • Strong cash flow from operations covered the H1 FY26 CAPEX of ₹236 crores.

  • CAPEX projects for CPVC, Epichlorohydrin, and power plants are on schedule for commissioning within budget and timeline.

  • Company is progressing with new project announcements for both current complex and new land, targeting import substitution products with double-digit growth potential beyond FY2028.

  • Anticipated volume growth and improved plant utilization in H2 FY26, with early signs of demand recovery post-monsoon and maintenance.

Concerns

  • Q2 FY26 revenue declined by 4% QoQ to ₹589 crores and EBITDA dropped 19% QoQ to ₹132 crores, primarily due to reduced realizations and lower plant utilization.

  • H1 FY26 revenue declined by 6% YoY to ₹1,204 crores, and EBITDA margin compressed to 25% from 28% in H1 FY25.

  • CPVC prices dropped by approximately 10% QoQ in Q2 FY26, and capacity utilization for CPVC was around 50% in Q1 and Q2 FY26.

  • Chlorotoluene value chain, commissioned in March 2025, incurred basic expenses, depreciation, and interest costs in H1 FY26 without contributing to top-line or bottom-line.

Key financials

3 periods

Headline

  • Revenue
    ₹589 Cr
    QoQ -4%
  • EBITDA
    ₹132 Cr
    QoQ -19%
  • PAT
    ₹51 Cr
  • Net Debt to EBITDA
    0.8×
  • ROCE
    21%

Q2 FY26

  • Plant Utilization
    78%

H1

  • FY26 Revenue
    ₹1,204 Cr
    YoY -6%
  • FY26 EBITDA Margin
    25%
  • FY26 Plant Utilization
    75%

What they filed

Q1 FY27: revenue up 16.1%, net profit down 38.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue626 645 628 607 587 −6%597 −7%736 +17%705 +16%
EBITDA178 183 173 163 132 −26%103 −44%169 −2%179 +10%
Net profit81 104 87 160 52 −36%39 −62%82 −6%99 −38%
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.

Capital allocation

high confidence
  • Capex Capex disclosed
    • Doubling capacity of CPVC and Epichlorohydrin
    • 19.8 Megawatt wind, solar hybrid power plants
    Our CAPEX projects of doubling capacity of CPVC and Epichlorohydrin and 19.8 Megawatt of wind, solar hybrid power plants are moving as per schedule and are expected to be commissioned within the timeline and the budget announced.
  • Debt Net ₹496 Cr · 0.8× EBITDA
    Net debt to EBITDA stood at 0.8x as on 30 September versus 1.4x as on 30 September 2024. Hence, we are in a very comfortable position in terms of our debt. Our net debt has remained flat almost at Rs. 496 CR versus Rs. 489 CR as on 31st March.
  • Liquidity Liquidity disclosed Strong cash flow from operations are good enough for the CAPEX that we had to spend.
    So, our strong cash flow from operations are good enough for the CAPEX that we had to spend.

Guidance & targets

Volume Growth

  • Volume Growth Volume Growth · H2 FY26 · Medium confidence volume growth
    and we anticipate volume growth in H2 FY 26, positioning the second half for the stronger performance compared to H1.

    — Maulik Patel

Plant Utilization

  • Plant Utilization Plant Utilization · H2 FY26 · Medium confidence better utilization levels
    As plant utilization improves in H2, further overall improvement is expected.

    — Maulik Patel

Revenue Contribution

  • Derivative and Specialty Business Revenue Contribution Revenue Contribution · High confidence 70%
    We expect this to strengthen our diversification and reach 70% revenue contribution from derivative and specialty business.

    — Maulik Patel

New Project Announcement

  • New Project Announcement New Project Announcement · High confidence soon
    On the future CAPEX side, we have moved a step closer to the new project at the current complex, and we would be freezing it soon. Once approved by Board, we will announce the details.

    — Maulik Patel

New Project Growth

  • Growth from New Project New Project Growth · beyond FY2028 · High confidence sizable to drive growth
    This new project will be sizable to drive the growth beyond FY2028.

    — Maulik Patel

Interest Expense

  • Interest Expense Interest Expense · FY26 · High confidence ₹45-50 crores
    So, next year onwards, our year put together, our interest expense should be in the range of around 45 CR to 50 CR.

    — Milind Kotecha

Chlorotoluene Revenue Contribution

  • Sizable Revenue Contribution from Chlorotoluene Chlorotoluene Revenue Contribution · Q4 FY26 or Q1 FY27 · High confidence start
    So, Chlorotoluene, we expect the sizable revenue contribution should start from the Quarter 4 or Quarter 1 of next year.

    — Milind Kotecha

New CAPEX Announcement

  • New CAPEX Announcement New CAPEX Announcement · FY26 · High confidence this year
    Mostly this year we will announce the CAPEX.

    — Milind Kotecha

What to watch in Q3 FY26

H2 FY26 Volume Growth

H2 FY26
Current Marginal 2% QoQ growth in Q2 FY26
Target Volume growth in H2 FY26

Why it matters

Volume growth is a key indicator of demand recovery and overall business performance, especially after a subdued H1.

and we anticipate volume growth in H2 FY 26, positioning the second half for the stronger performance compared to H1.

Risks & concerns

  • Geopolitical Uncertainty

    medium

    Persistent geopolitical uncertainty impacting the chemical market.

    Management acknowledged

  • Subdued Demand and Lower Capacity Utilization

    medium

    Subdued demand and lower capacity utilization impacted H1 FY26 performance.

    Management acknowledged

  • Price Volatility and Return on Capital for New CAPEX

    medium

    Concern that overcapacity and low prices could lead to low return on capital for new investments, given prices are not under company's control.

    Analyst acknowledged

  • Seasonal Demand and Slower Recovery

    low

    Slower recovery attributed to early and prolonged monsoon season and subdued demand.

    Management acknowledged

Q&A highlights

6 direct
CPVC Resin vs. Compound Strategy Direct
But as of now, we believe that the majority of the people in India is converting more and more to the resin rather than in the compound. So, they prefer to buy a resin rather than the compound buying from the market.

Clarifies Epigral's focus on CPVC resin production, catering to customers who prefer to do in-house compounding, and explains why resin capacity expansion is prioritized over compound capacity.

Asked by Nipun Sharma

Chlorotoluene (CT) Chain Competition and Target Customers Direct
So, currently, we have identified, so you can make 15 products in the same plant, which we have already set up for CAPEX. Out of that, we have targeted 8 to 9 products in the first phase. We will target these products based on the current customer base and the current market scenario.

Addresses concerns about competition from players like Aarti Industries in the CT chain by outlining Epigral's phased product strategy focusing on current customer base and market scenario.

Asked by Nipun Sharma

Revenue Contribution from CT, ECH, and CPVC Resins Partial
So, as we have disclosed in the presentation, 50% revenue is from the Chlor alkali and 50% from the derivatives and the specialty business. So, we are not giving product-wise revenue.

Management declined to provide specific product-wise revenue breakdown, only offering a broad category split, which limits investor visibility into individual product performance.

Asked by Nipun Sharma

CPVC Market Price Trends and Anti-Dumping Duty Impact Direct
So, Sanket, the current PVC market is on the bottom. So, the pressure is also on the price of CPVC also. So, CPVC price has also gone down based on the PVC prices has gone down in last one year. But at the same time, as you said, if anti-dumping duty will come, the PVC price may increase, and it can increase the CPVC price also along with it.

Explains the current weakness in CPVC prices due to PVC market conditions and confirms that anti-dumping duty on PVC could positively impact CPVC prices with a lag of 3-4 months.

Asked by Sanket Baheti

Impact of Price Volatility on CAPEX Decisions Direct
But you don't have any control over the prices. So, how are you able to do that? What is your internal calculation? ... See, considering the way India demand is growing, we see there is a potential for all the products that we are expanding into. ... But whenever we put any CAPEX, our horizon is of 5 to 10 years.

Analyst questioned the rationale for large CAPEX given price volatility. Management responded by emphasizing long-term demand growth in India and a 5-10 year investment horizon, rather than short-term price fluctuations.

Asked by Bobby Jay

Borrowing Figure Mismatch and Interest Expense Outlook Direct
See, that is the simple way of explaining in the presentation. It is just that the long-term loans which are maturing in a year's time, that has moved to the current maturities. That is why in the balance sheet, you will see the difference. ... So, next year onwards, our year put together, our interest expense should be in the range of around 45 CR to 50 CR.

Clarified a discrepancy in borrowing figures between the presentation and balance sheet, attributing it to reclassification of long-term loans maturing within a year. Also provided a clear FY26 interest expense target.

Asked by Shubhanshu

Chlorotoluene Revenue Contribution Timeline Direct
From next year only, the revenue contribution, see that is always going to happen. ... So, things should improve once it starts contributing and which is expected to happen from Q1 of FY '27.

Provides a clear timeline for when the Chlorotoluene plant, already incurring expenses, will start contributing meaningfully to revenue and profitability (Q1 FY27), which is crucial for future earnings models.

Asked by Shubhanshu

Update on New Chemistry Project Partial
We are working on it. So, once it is freezed and once the Board approves, we will announce. So, that will be soon. But too difficult to give any further details on this as of now. Mostly this year we will announce the CAPEX.

Management confirmed progress on a new chemistry project, indicating an announcement this year, but provided limited details, leaving investors awaiting specifics on this future growth driver.

Asked by Shubhanshu

2 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

Epigral reported a challenging Q2 FY26, with sales volume showing a marginal 2% QoQ growth, but revenue declined by 4% QoQ to ₹589 crores due to reduced realizations in certain product categories. EBITDA saw a significant drop of 19% QoQ to ₹132 crores, resulting in a Profit After Tax of ₹51 crores. The company attributed this performance to an extended monsoon, subdued demand, and ongoing plant maintenance work.

H1 FY26 Financials and Margin Compression

For the first half of FY26, plant utilization stood at 75%, a decrease from 83% in H1 FY25, leading to a 6% YoY decline in revenue to ₹1,204 crores. The EBITDA margin for H1 FY26 compressed to 25% from 28% in H1 FY25. This margin contraction was primarily due to lower realizations for several products and reduced utilization levels, impacting overall profitability.

Debt Management and Capital Efficiency

Epigral demonstrated strong debt management, with its net debt to EBITDA ratio improving significantly to 0.8x as of September 30, 2025, compared to 1.4x a year prior. Net debt remained relatively flat at ₹496 crores. The company's ROCE stood at 21% including capital work in progress, and 24% excluding it, indicating efficient capital deployment despite the current market conditions. Strong cash flow from operations adequately funded the H1 FY26 CAPEX of ₹236 crores.

CAPEX Projects and Diversification Strategy

The company's ongoing CAPEX projects, including doubling capacity for CPVC and Epichlorohydrin, and establishing 19.8 MW wind/solar hybrid power plants, are progressing on schedule and within budget. These expansions are expected to increase revenue contribution from derivative and specialty businesses to 70%. Additionally, Epigral is advancing plans for two new projects, one at the current complex and another greenfield site, targeting import substitution products for long-term growth beyond FY2028.

Chlorotoluene Value Chain and Future Growth Drivers

The Chlorotoluene value chain, commissioned in March 2025, is currently incurring basic expenses, depreciation, and interest costs without contributing to the top or bottom line. Management expects a sizable revenue contribution from this segment to commence from Q4 FY26 or Q1 FY27. This project, along with other planned expansions, is anticipated to be a key driver for growth from FY27 onwards, aligning with the company's strategy for sustainable expansion.

CPVC Market Dynamics and Pricing

The CPVC market is currently at a bottom, with prices dropping by approximately 10% QoQ in Q2 FY26, influenced by the decline in PVC prices over the last year. Capacity utilization for CPVC was around 50% in both Q1 and Q2 FY26. Management believes that any anti-dumping duty on PVC could lead to an increase in PVC prices, which would subsequently impact CPVC prices positively, albeit with a lag of three to four months, with recovery expected from Q4 FY26 onwards.

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

More Chemicals earnings calls