Ester Industries Limited — Q1 FY26 earnings call

Call held 1 Aug 2025

Management summary

Ester Industries reported a strong Q1 FY26 with consolidated revenue growth of 19% and EBITDA margin expansion of 240 bps, driven by improved capacity utilization and robust growth in recycled PET. While exchange rate fluctuations impacted reported profitability, underlying operational performance remained strong across Polyester Films and Specialty Polymers. The company is advancing its JV with Loop Industries and focusing on value-added products to mitigate industry overcapacity and import pressures.

Highlights

  • Consolidated revenue grew by a healthy 19% YoY, driven by continued progress across both key business segments.

  • Consolidated EBITDA margin improved by 240 bps on a year-on-year basis, reaching 8.35% (or 11.8% excluding adverse exchange impact).

  • Recycled PET (rPET) revenue surged from ₹0.5 crores in Q1 FY25 to ₹14 crores in Q1 FY26, highlighting growing traction in sustainable products.

  • Polyester Films capacity utilization improved significantly to 82% in Q1 FY26 from 64% in Q1 FY25, leading to robust performance.

  • The share of value-added products in Polyester Films increased to 24% of total segmental volume, with a 37% YoY volume growth in VAS products.

Concerns

  • Adverse impact of exchange rate fluctuations and MTM losses on FCL or derivatives significantly affected reported EBITDA and PAT.

  • Specialty Polymers EBIT margin decreased to 30-35% from an exceptionally favorable 43% in Q1 FY25, aligning with usual product mix.

  • Overcapacity in the BOPET industry persists, with imports at artificially low prices limiting margin upside.

  • Delay in rPET commissioning from August 31st to September 15th, 2025.

Key financials

  1. Consolidated Revenue ₹346.85 Cr +18.6%YoY
  2. Consolidated EBITDA ₹28.96 Cr +66.5%YoY
  3. Consolidated EBITDA Margin 8.3%
  4. Consolidated EBT (excl. MTM/FC losses) ₹25.4 Cr
  5. Standalone Total Income ₹284.97 Cr +16.9%YoY
  6. Standalone EBITDA ₹31.94 Cr +88.8%YoY
  7. Standalone EBITDA Margin 11.2%
  8. Standalone PAT ₹9.64 Cr
  9. Standalone PAT Margin 3.4%

What they filed

Q1 FY27: revenue up 21.5%, net profit up 50.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue298 275 258 279 260 −13%250 −9%256 −1%339 +22%
EBITDA32 42 33 26 11 −66%10 −76%24 −27%32 +23%
Net profit12 19 12 10 -5 −142%-5 −126%4 −67%15 +50%
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

SegmentSales VolumeCapacity Utilization
Polyester Films21,531 metric tons82%
Specialty Polymers954 metric tons—
Ester Filmtech7,992 metric tons72%

Order book

low confidence
Management discussed demand-supply dynamics and capacity utilization for their products (films, polymers) rather than a traditional project-based order book.

Source: Inferred

Capital allocation

high confidence
  • Capex Capex disclosed
    • Installing additional rPET capacity of 20,000 tons per annum in Hyderabad
    • Investing ₹50 crores in a new recycling extruder machine ₹50 Cr
    We are also investing INR 50 crores in the new machine, the recycling extruder.
  • Debt Debt disclosed
    • Forex hedge Hedging for next 6 to 12 months for foreign currency loans when the right point comes, as long-term hedge is expensive.
    Both Ester Industries and Ester Filmtech have been absolutely regular with repayment of term loans as per schedule.
  • M&A Loop Industries Joint venture · Pending regulatory · Consideration ₹[object Object] (undisclosed)

    Transformational potential in the circular economy space, execution of joint venture plans advancing.

    Currently incurring some costs (approx. ₹20 lakh per quarter) for company maintenance, employees, and regulatory compliances.

    As regards to our 50-50 joint venture with Loop Industries, we are pleased to report that the execution of our joint venture plans is advancing according to the established time lines. We are diligently pursuing various activities related to implementation of the project. We remain enthusiastic about the transformational potential of this initiative in the circular economy space.
  • Liquidity Liquidity disclosed Free cash and bank balance in hand, adequate limits to sustain budgeted enhanced operations.
    Basis the budgeted improvement in profitability, coupled with free cash and bank balance in hand, we are absolutely confident of adhering to the repayment schedule. On the working capital front, both the companies have adequate limits to sustain budgeted enhanced operations.

Guidance & targets

Volume

  • Recycled PET commercial production Volume · September 2025 · High confidence Commercial production
    We are pleased to report that the project for installing additional capacity of 20,000 tons per annum in Hyderabad is progressing as per schedule and commencement of commercial production is expected by September 2025.

    — Vaibhav Jha

Capacity

  • Hyderabad rPET capacity Capacity · September 2025 · High confidence 20,000 tons per annum
    We are pleased to report that the project for installing additional capacity of 20,000 tons per annum in Hyderabad is progressing as per schedule and commencement of commercial production is expected by September 2025.

    — Vaibhav Jha

Profitability

  • Specialty Polymers EBIT margin Profitability · Q1 FY26 onwards · High confidence 30% to 35%

    Previously 43% → 30% to 35%

    Quarter ended June 2025 is more aligned to usual product mix and EBIT margin of 30% to 35%.

    — Vaibhav Jha

Growth

  • Specialty Polymers business growth Growth · next 3 to 4 years · Medium confidence 20% to 25%
    So let's say, we have been projecting 20% to 25% growth. So we would stick to that kind of growth numbers in this business.

    — Vaibhav Jha

Capacity Utilization

  • Ester Filmtech capacity utilization Capacity Utilization · within 2-3 quarters · Medium confidence 100%

    From 72% today

    And we are confident that in maybe two to three quarters, we should reach that level or at least close to that level. I think we are already doing 80% plus and we will work on keeping on improving it and go towards 100%.

    — Vaibhav Jha

Project Timeline

  • Loop Industries JV commercial production Project Timeline · Q4 Calendar 2027 · High confidence Commercial production
    We are targeting commencement of commercial production by quarter 4 of calendar '27.

    — Pradeep Rustagi

Product Mix

  • VAS products share in total volume Product Mix · Q4 FY26 · High confidence 30%

    From 24% today

    Our target is that by the exit quarter, which is the last quarter of this financial year, we should be in and around 30% share.

    — Vaibhav Jha

What to watch in Q2 FY26

rPET commercial production

next quarter
Current Delayed to September 15th, 2025
Target Commercial production commenced

Why it matters

Successful commissioning of rPET capacity is crucial for sustainable product offerings and improved margins in PCR films.

We are pleased to report that the project for installing additional capacity of 20,000 tons per annum in Hyderabad is progressing as per schedule and commencement of commercial production is expected by September 2025.

Risks & concerns

  • Exchange rate fluctuations and MTM losses

    high

    Adverse impact of exchange fluctuation and mark-to-market losses on foreign currency loans and derivatives significantly impacted reported EBITDA and PAT this quarter. Management expects stabilization and hedges for 6-12 months.

    Management acknowledged

  • Overcapacity in BOPET industry

    medium

    BOPET industry settled with very high capacity and oversupply situation, leading to pressure on margins. Management expects reduction in surplus capacity over 2-3 years due to demand growth.

    Analyst acknowledged

  • Low-priced imports

    medium

    Imports from overseas geographies at low rates limit upside on margins. Management is taking steps with the government to stem this flow.

    Analyst acknowledged

  • US tariffs on Indian goods

    medium

    Potential 25% tariffs on Indian goods by the US. Management believes the situation is evolving, their exposure to the US is limited (10% of revenue), and specialty products have strong price resilience to pass on costs.

    Analyst downplayed

Q&A highlights

4 direct
Overcapacity in BOPET industry and timeline for resolution Partial
So you are right, there is overcapacity, but what we have been seeing in a sustained way is the reduction in surplus capacity. Right now, what we see is that the operating rates of the Indian capacity is in the range of 80%, which is quite healthy. And the growth in BOPET segment is likely to be nearing double-digit number of 10% year-on-year.

Analyst questioned the persistent overcapacity, and management provided an optimistic outlook on demand growth and operating rates, suggesting a gradual resolution over 2-3 years.

Asked by Aman Kumar Sonthalia

Impact of imports on margins and government intervention Partial
So we are taking steps in that direction and we are hopeful that maybe within a quarter or two quarters, we will have some positive development, which will help us stem the flow of low-priced imports.

Analyst highlighted the immediate impact of imports on price increases, and management indicated active steps with the government to address low-priced imports, which is a key risk to profitability.

Asked by Aman Kumar Sonthalia

rPET potential and margins Direct
So the margins for the PCR films with recycled content is much higher than the commodity films. And so the true margin that we will get out of the rPET investment should actually be the rPET plus the margins that we get in the film, right, So that's one part of it.

Analyst inquired about the profitability of the new rPET venture, and management clarified its strategic importance as a feedstock for higher-margin PCR films, not just a standalone commodity product.

Asked by Aman Sonthalia

US tariffs (25%) impact on Specialty Polymers margins Partial
So it's a very interesting question. So let me give you an overview of our thinking. So first of all, this is an evolving situation. And right now, it's not very clear to us what is going to be the long-term tariff implication. So right now, it's 25%, but then there is also a talk of a 10% penalty.

Analyst raised a significant geopolitical risk, and management provided a nuanced view, highlighting the evolving nature of the situation, limited exposure to the US market (10% of revenue), and strong price resilience of their specialty products.

Asked by Saransh Gupta

Ester Filmtech's path to sustained PAT level profits Direct
So we believe that the stabilization phase is here. So at least that impact will normalize in the future quarters. Next thing what we are trying to do is the scale-up of the volumes there and increasing the specialty part of the sales from EFTL. And we believe that in next couple of quarters, we should be in a position where we can start giving sustained positive PAT.

Analyst questioned the profitability of the subsidiary, and management outlined a clear strategy focusing on stabilization from forex impacts, volume scale-up, and increased specialty sales to achieve positive PAT within a few quarters.

Asked by Vidhith Shah

Delay in rPET commissioning at Hyderabad Direct
We were targeting 31st August. Now it is getting commissioned by 15th September. So there is no delay actually.

Analyst sought clarification on a potential delay, and management confirmed a slight shift in the commissioning date but downplayed it as not a significant delay for the overall project.

Asked by Vidhith Shah

Land acquisition for Loop JV Direct
So for the land, we are looking at multiple options as far as the land acquisition for the new project is concerned. And going forward in the next 5 to 6 months, we should be able to have the possession of land in our control.

Analyst inquired about a critical step for the JV, and management provided a clear timeline for land possession, indicating progress despite the complexity.

Asked by Chandrasekar

Finance cost concerns, especially for Filmtech, and cost arbitrage on Euro loans Partial
So the arbitrage has to be seen in relative terms. That is point number one. So while there has been a rate reduction in India by almost 100 basis points in the last 6 to 8 months, we should also understand that there has been a parallel rate reduction across, right, So because of which the interest cost on a euro loan has also decreased from where we were in the past.

Analyst raised concerns about finance costs and the rationale for Euro loans, and management explained the relative arbitrage and hedging strategy, acknowledging the MTM impact as temporary.

Asked by Saket Kapoor

3 min read 8 chapters

Detailed narrative

Q1 FY26 Consolidated Performance Overview

Ester Industries delivered a strong Q1 FY26, with consolidated revenue growing by 19% year-on-year. The company achieved an EBITDA margin of 8.35%, representing a 240 basis points improvement compared to the previous year. Excluding the adverse impact of exchange rate fluctuations and MTM losses, the EBITDA margin would have been 11.8%, and EBT improved significantly from a negative ₹1.46 crores in Q1 FY25 to a positive ₹25.4 crores in Q1 FY26.

Refreshed Brand Identity

On July 11, 2025, Ester Industries unveiled a refreshed company logo, aligning with its long-term strategic focus on innovation and sustainability. This new identity reflects an evolving mindset, commitment to high-performance materials, and a sharper response to industry dynamics. The transformation marks a significant step in how the company presents itself to stakeholders and sets the tone for its future journey.

Polyester Films Segment Performance

The Polyester Films business showed robust performance, with capacity utilization improving to 82% from 64% in Q1 FY25. Sales volumes grew by 22.57% to 21,531 metric tons, leading to a 20.7% increase in revenue to ₹276.07 crores. The share of value-added products (VAS) in total segmental volume increased to 24%, with VAS product volumes growing 37% year-on-year. Recycled PET (rPET) revenue surged from ₹0.5 crores in Q1 FY25 to ₹14 crores in Q1 FY26, driven by significant volume expansion.

Specialty Polymers Segment Performance

The Specialty Polymers business recorded a 4% year-on-year volume growth, with total sales reaching 954 metric tons in Q1 FY26. The EBIT margin for the quarter was 30% to 35%, which is more aligned with the usual product mix, compared to an exceptionally favorable 43% in Q1 FY25. The company aims for healthy double-digit growth of 20-25% in this segment over the next 3-4 years, focusing on product mix optimization and innovation.

Ester Filmtech Limited Performance

Ester Filmtech, a subsidiary, demonstrated notable improvement with capacity utilization at 72% compared to 49% in Q1 FY25. Sales volumes grew 22.93% to 7,992 tons, and total income increased by 16.32% to ₹94.13 crores. Despite a reported EBITDA loss of ₹2.69 crores due to exchange fluctuations and MTM losses, the underlying EBITDA (excluding these impacts) was positive at ₹9.23 crores, with a healthy margin of 9.8%. The company expects to achieve sustained positive PAT within a couple of quarters by scaling volumes and increasing specialty sales.

Joint Venture with Loop Industries

The 50-50 joint venture with Loop Industries is progressing as per established timelines, with various activities related to implementation underway. The company is enthusiastic about the transformational potential of this initiative in the circular economy space. Commercial production for the JV is targeted by Q4 Calendar 2027. Currently, the JV incurs approximately ₹20 lakh per quarter in expenses for company maintenance, employees, and regulatory compliances.

Industry Outlook and Demand-Supply Dynamics

The BOPET industry continues to face overcapacity, but operating rates in India are healthy at around 80%. Domestic demand is expected to grow at 10% year-on-year, adding 80-85 kt annually, while exports add another 90-100 kt. The current surplus capacity is estimated at 250,000 tons, which is expected to be absorbed in 2-3 years. The implementation of PWMR rules from April 1, 2025, is enhancing demand for BOPET films with varied PCR content levels, positioning Ester Industries favorably.

Capital Allocation and Debt Management

Ester Industries is investing ₹50 crores in a new recycling extruder machine and is installing an additional 20,000 tons per annum rPET capacity in Hyderabad, expected by September 2025. Both Ester Industries and Ester Filmtech have been regular with term loan repayments. The company manages foreign currency exposure through hedging, with current hedging focused on 6-12 month periods due to the high cost of long-term hedges. Free cash and bank balances, along with adequate working capital limits, ensure financial stability.

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