Epigral Limited — Q4 FY26 earnings call

Call held 2 May 2026

Management summary

Epigral reported its highest ever quarterly revenue of INR 736 crores in Q4 FY26, driven by strong volume growth and normalized EBITDA margins of 23%. The company's capacity expansion projects for Epichlorohydrin and CPVC are on track, and it targets 10-12% volume growth for FY27. However, the West Asia conflict poses ongoing supply chain and raw material price volatility, and INR depreciation led to a significant increase in finance costs for FY26.

Highlights

  • Revenue reached an all-time high of INR 736 crores in Q4 FY26, marking a 22% increase QoQ.

  • Volume growth was robust at 15% QoQ and 14% YoY, driven by demand pickup and optimal plant utilization.

  • EBITDA increased by 64% QoQ to INR 169 crores, with the EBITDA margin normalizing to 23% due to better plant sweating and raw material prices.

  • Capacity expansion projects for Epichlorohydrin and CPVC are progressing on track and within budget, with double-digit CAGR growth projected for these products.

  • Chlorine captive consumption is expected to increase from 75% to 90-95% by FY28 after new capacities ramp up.

Concerns

  • The West Asia conflict disrupted global supply chains and tightened raw material availability, with inflationary pressures expected to reflect in Q1 FY27.

  • The company experienced a 1% marginal revenue drop and a 4% volume drop for the full year FY26, partly due to prolonged monsoon and PVC price volatility.

  • Finance cost increased significantly in FY26 to INR 72 crores, primarily due to mark-to-market impact from INR depreciation on a foreign exchange derivative loan.

Key financials

3 periods

Q4 FY26

  • Revenue
    ₹736 Cr
    YoY +14% QoQ +22%
  • EBITDA
    ₹169 Cr
    QoQ +64%
  • EBITDA Margin
    23%
  • PAT
    ₹82 Cr
    QoQ +134%
  • PAT Margin
    11%

FY26

  • Revenue
    ₹2,542 Cr
    YoY -1%
  • EBITDA
    ₹567 Cr
    YoY -20.3%
  • EBITDA Margin
    22%
  • ROCE
    16%
  • Net Debt
    ₹508 Cr
  • Net Debt to EBITDA
    0.9

FY26, adjusted

  • PAT
    ₹252 Cr
    YoY -29.4%

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.

Segment breakdown

  • Derivatives and Specialty Business
    54% Revenue Contribution

Capital allocation

high confidence
  • Capex Capex disclosed
    • Ongoing capacity expansion for Epichlorohydrin (ECH) and CPVC
    • New greenfield project under evaluation
    During the year, we spent around INR394 crores on the ongoing capex
  • Debt Net ₹508 Cr · 0.9× EBITDA
    • Forex hedge Mark-to-market impact on a foreign exchange derivative loan due to INR depreciation
    Our net debt stood at INR508 crores versus INR489 crores in the previous year. During the year, we spent around INR394 crores on the ongoing capex and we have generated around INR436 crores from the operations. With this, we can now open the floor for questions.
  • Liquidity Liquidity disclosed Generated around INR436 crores from operations in FY26.
    we have generated around INR436 crores from the operations.

Guidance & targets

Volume

  • Volume Growth Volume · FY27 · High confidence 10-12%
    See, I would avoid giving any number, but in terms of volume growth, we are targeting around 10% to 12% of volume growth from here on.

    — Milind Kotecha

Capacity Utilization

  • Chlorine Captive Consumption Capacity Utilization · FY28 · High confidence 90-95%

    From 75% today

    Current chlorine captive consumption is around 75%. And as we are commissioning our ECH and CPVC capacity in the Quarter 2 of FY '27, and it will run at a lower utilizations initially because it will take time to ramp up that facility. So maybe in FY '28, once we kind of reach to the optimum utilization levels, at that point of time, we expect this 75% chlorine captive consumption to reach around 90% to 95% captive consumption.

    — Milind Kotecha

  • CPVC Optimum Utilization Capacity Utilization · FY28 · High confidence 75%
    for like CPVC it will be around 75%

    — Milind Kotecha

  • ECH Optimum Utilization Capacity Utilization · FY28 · High confidence 80%
    and for ECH it will be around 80%.

    — Milind Kotecha

  • Chlorotoluene Optimum Utilization Capacity Utilization · FY28 · High confidence 70-75%
    So optimum would be in the range of 70% to 75% utilization level, which we expect to reach in FY '28.

    — Milind Kotecha

Sustainability

  • Wind-Solar Power Share Sustainability · High confidence 15%

    From 8-9% today

    And as we are further expanding into the further addition of wind-solar of around 19.50 megawatts, so once that commissions and reaches at optimum level, then around 15% of our power requirement will be coming from the wind-solar hybrid power plant.

    — Milind Kotecha

Capex

  • New Greenfield Project Announcement Capex · FY27 · High confidence This year
    So this will be announced this year only because see we are always if you look our history as well, we have always done a capex and once that capex is almost on the verge of completion, we announce the next one.

    — Milind Kotecha

What to watch in Q1 FY27

Volume Growth for FY27

FY27
Current 14% YoY in Q4 FY26, -4% for FY26
Target 10-12%

Why it matters

Key indicator of business expansion and market demand recovery, especially after a challenging FY26.

we are targeting around 10% to 12% of volume growth from here on.

Risks & concerns

  • West Asia conflict and its impact on supply chains and raw material prices

    high

    Conflict disrupts global supply chains, tightens raw material availability, and causes price volatility, with inflationary pressures expected in coming quarters.

    Both acknowledged

  • Volatility in PVC/CPVC prices and demand

    medium

    PVC price volatility, which impacts CPVC, affected demand and sales volume in H1 FY26, though FY27 is expected to be better.

    Both acknowledged

  • INR depreciation and mark-to-market impact on foreign currency debt

    medium

    Significant INR depreciation over the last 1.5 years led to a mark-to-market impact on a foreign exchange derivative loan, increasing finance costs.

    Both acknowledged

Q&A highlights

7 direct
Impact of West Asia conflict on ECU and product prices Direct
current ECU would be ranging somewhere around INR37,000 kind of thing. And considering the war situation, what we witness is that the whole cycle of the chemical segment starting from crude to chemical has been upset, even the shipping line has been upset.

Clarifies the immediate impact of geopolitical events on key commodity prices and the supply chain, indicating potential margin pressure in the coming quarter.

Asked by Priyank Chedda

Reasons for past 9 months' underperformance and current tailwinds Direct
the first half of the company we were down in terms of volume because of the two things. One, we were having a major maintenance that generally happens once in a 8 year, so that maintenance was over from October onwards. And also because of the prolonged monsoon plus there was too much volatility into the PVC, which is raw material for CPVC, the demand was bit impacted.

Provides a comprehensive explanation for the full year's volume and revenue decline, attributing it to specific, non-recurring internal and external factors, and signals a return to normalcy.

Asked by Priyank Chedda

Company's share of green/renewable energy and insulation from energy cost escalation Direct
in terms of like wind-solar energy in our total power consumption, it is currently somewhere around 8% to 9% for Epigral. And as we are further expanding into the further addition of wind-solar of around 19.50 megawatts, so once that commissions and reaches at optimum level, then around 15% of our power requirement will be coming from the wind-solar hybrid power plant.

Highlights the company's efforts in sustainability and its strategy to mitigate energy cost volatility through renewable sources, which is a key factor for chemical companies.

Asked by Priyank Chedda

Status and ramp-up plan for the new Chlorotoluene facility Direct
Chlorotoluene we commissioned in March 2025. And you can say we have passed through, I mean, in terms of the process of getting approvals and testings from the from the customer side. And that's where the capacity or you can say the revenue increasing on a month-on-month basis... So FY '27 will see a sizeable contribution from the Chlorotoluene. And further as we go in FY '28, we should be able to reach optimum utilization levels.

Provides an update on a new product line, its commercialization progress, target segments, and expected contribution, indicating future growth drivers.

Asked by Nipun Sharma

Mitigation strategy for unfavorable monsoon conditions impacting sales Direct
what you said is true for the last year, but it was not just because of the monsoon. There were many things in last year which were impacting the raw material prices, which were impact which were ultimately impacting the final, I mean, the finished good prices as well... So that's where we are confident that FY27 should be better than FY26 in terms of the volume.

Addresses a recurring seasonal risk and clarifies that past impacts were multi-faceted, providing confidence that FY27 will be less affected by similar conditions.

Asked by Nipun Sharma

Status of the new greenfield project and timeline for announcement Direct
we are working on the new chemistry for further expansion. So that is under process with the management and once it is freezed, we will be announcing that, maybe in a couple of months... So this will be announced this year only because see we are always if you look our history as well, we have always done a capex and once that capex is almost on the verge of completion, we announce the next one.

Reveals that a significant new greenfield project is in advanced stages of evaluation and will be announced this year, signaling future large-scale growth plans.

Asked by Shubhanshu

Expected ramp-up and utilization levels for CPVC and ECH capacities after commissioning Direct
So once we commission in Q2, so the ramp-up will be gradual. It will start maybe around 15%, 20% and then gradually every quarter that capacity utilization should go up. And maybe in FY28, we should be able to reach at optimum utilization levels... for like CPVC it will be around 75% and for ECH it will be around 80%.

Provides specific timelines and targets for the commercialization and stabilization of key capacity expansion projects, crucial for forecasting future revenue and profitability.

Asked by Shubhanshu

Significant increase in finance cost for FY26 compared to guidance Partial
it was majorly because of one of the loan that where we had we had a mark-to-market impact... it's just a mark-to-market impact which has been there in the interest cost put together... because of the loan that we had taken where we have a foreign exchange derivative.

Explains the deviation from finance cost guidance, attributing it to forex volatility and mark-to-market adjustments on debt, highlighting a financial risk factor.

Asked by Shubhanshu

3 min read 7 chapters

Detailed narrative

Q4 FY26 Performance Highlights

Epigral achieved its highest-ever revenue of INR 736 crores in Q4 FY26, marking a 22% quarter-on-quarter increase. This growth was primarily driven by a robust 15% QoQ and 14% YoY volume increase, supported by demand pickup from mid-November and optimal utilization of the caustic soda plant post-maintenance. The company's EBITDA for the quarter surged by 64% QoQ to INR 169 crores, with the EBITDA margin normalizing to 23% due to improved plant efficiency and stable raw material prices.

Full Year FY26 Review and Challenges

For the full fiscal year 2026, Epigral reported a marginal 1% decline in revenue to INR 2,542 crores, accompanied by a 4% drop in volume. This was attributed to a major maintenance shutdown in H1 FY26, prolonged monsoon conditions, and volatility in PVC prices impacting CPVC demand. Despite these challenges, the company achieved an EBITDA of INR 567 crores (22% margin) and an adjusted PAT of INR 252 crores (excluding a one-time deferred tax benefit of INR 81 crores).

Capacity Expansion and Future Growth Drivers

Epigral's capacity expansion projects for Epichlorohydrin (ECH) and CPVC are progressing on schedule and within budget, with commissioning expected in Q2 FY27. Management anticipates these projects, along with Chlorotoluene (commissioned March 2025), to drive significant top and bottom-line growth, targeting a 10-12% volume growth for FY27. The company projects ECH and CPVC to reach optimum utilization levels of 80% and 75% respectively by FY28.

Strategic Focus on Specialty Chemicals and Captive Consumption

The contribution from derivatives and specialty businesses increased to 54% of revenue in Q4 FY26, up from 52% in the previous quarter, reflecting a strategic shift towards higher-margin products. Furthermore, the company aims to increase its chlorine captive consumption from the current 75% to 90-95% by FY28, leveraging the expanded ECH and CPVC capacities for greater integration and efficiency.

Raw Material and Geopolitical Headwinds

The West Asia conflict has introduced volatility in global supply chains and raw material prices, with energy costs increasing by approximately 15%. While the impact on Q4 FY26 was minimal, inflationary pressures are expected to be more pronounced in Q1 FY27. Epigral's diversified product portfolio is expected to provide resilience against these market fluctuations, though management noted that stabilization of supply lines will take time.

Finance Costs and Forex Impact

The company's finance cost for FY26 significantly exceeded initial guidance, reaching INR 72 crores. This increase was primarily due to a mark-to-market impact on a foreign exchange derivative loan, stemming from an unusual depreciation of the Indian Rupee (more than the historical 2-3% over the last 1.5 years). Management acknowledged the unexpected volatility and stated that the finance team is actively working on mitigation strategies.

Greenfield Project and Sustainability Initiatives

Epigral is evaluating new greenfield projects for further expansion, with an announcement expected within FY27, aiming for consistent growth beyond FY29-30. In its sustainability efforts, the company currently sources 8-9% of its power from wind-solar energy. With an additional 19.50 MW wind-solar capacity, this share is projected to increase to approximately 15% of its total power requirement.

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

More Chemicals earnings calls