Ester Industries Limited — Q2 FY26 earnings call

Call held 17 Nov 2025

Management summary

Ester Industries reported a mixed Q2 FY26, with consolidated revenue growing 7% YoY to INR 357 crores, driven by strong volume growth in Specialty Polymers and Ester Filmtech. However, profitability was significantly impacted by adverse exchange rate fluctuations and mark-to-market losses, leading to a 59.7% YoY decline in consolidated EBITDA to INR 17.33 crores. The company is actively pursuing its sustainability agenda through the ELITe chemical recycling JV, which has secured key offtake agreements, and has commissioned new rPET capacity.

Highlights

  • Consolidated revenue grew 7% YoY to INR 357 crores, driven by higher volumes across Polyester Films and Specialty Polymers segments.

  • Specialty Polymers segment demonstrated robust performance with 51% YoY volume growth and 39% YoY revenue growth, achieving an EBIT of INR 21.24 crores, up 45% YoY, and an EBIT margin of 37.03%.

  • Ester Filmtech Limited showed significant operational improvement with 39.7% YoY sales volume growth to 10,374 metric tons and 20.5% increase in total income to INR 119.73 crores.

  • The company commissioned 20,000 metric tons per annum rPET capacity in September 2025, and rPET sales volume increased 219% YoY to 1,046 metric tons.

  • The ELITe joint venture project for chemical recycling is progressing, with land acquisition underway and multi-year offtake agreements secured with marquee clients like Nike and Taro Plast S.p.A.

Concerns

  • Consolidated EBITDA decreased 59.7% YoY to INR 17.33 crores, with a margin of 4.85%, primarily due to adverse impact of exchange fluctuation and mark-to-market losses on foreign currency loans/derivatives.

  • Domestic margins in Polyester Films were affected by heavy imports at predatory pricing, and overseas margins by U.S. trade tariffs, leading to a marginal revenue growth of 2% for the Film SBU.

  • Ester Filmtech's EBITDA reduced to INR 3.96 crores in Q2 FY26 from INR 6.14 crores in Q2 FY25, impacted by foreign exchange fluctuation and mark-to-market losses.

  • The company reported a standalone loss of INR 4.81 crores and a net loss of INR 10.3 crores for Ester Filmtech, largely due to FX and MTM impacts.

Key financials

  1. Consolidated Revenue ₹357 Cr +7%YoY
  2. Consolidated EBITDA ₹17.33 Cr -59.7%YoY
  3. Consolidated EBITDA Margin 4.8%
  4. Adjusted Consolidated EBITDA ₹27.51 Cr
  5. Adjusted Consolidated EBITDA Margin 7.7%
  6. Standalone Total Income ₹263 Cr -12.9%YoY
  7. Standalone Loss ₹-4.81 Cr

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

  • Specialty Polymers
    39% Revenue Growth51% Volume Growth1,161 metric tons Total Sales Volume₹21.24 Cr EBIT37% EBIT Margin410 metric tons MB03 Sales Volume
  • Polyester Films
    21,329 metric tons Sales Volume₹296.82 Cr Revenue1,046 metric tons rPET Sales Volume75% Khatima Capacity Utilization85% Hyderabad Capacity Utilization79% Consolidated Capacity Utilization
  • Ester Filmtech Limited
    10,374 metric tons Sales Volume₹119.73 Cr Total Income₹3.96 Cr EBITDA₹11.22 Cr Adjusted EBITDA9.3% Adjusted EBITDA Margin₹-10.3 Cr Loss After Tax85% Capacity Utilization

Capital allocation

high confidence
  • Capex Capex disclosed
    • rPET capacity commissioning at Hyderabad plant
    We are pleased to report that the rPET capacity of 20,000 metric tons per annum has been commissioned in September 2025 at our Hyderabad plant.
  • Debt Gross ₹740 Cr · Net ₹650 Cr
    • Repayment Repayment schedule for the next 6 months ₹40 Cr
    Our current debt is around INR740 crores, which is on the gross basis. So you can adjust the... Consolidated debt. So you can -- after adjusting for the cash and cash balance, it will be roughly around INR650 crores. And at the end of the year, we will be around INR600 crores to INR610 crores.
  • M&A Ester Loop Infinite Technologies Private Limited Joint venture · Announced

    To pursue chemical recycling project, targeting up to 81% reduction in carbon emissions compared to virgin PET and creating circularity in polyester textile to textile space.

    50-50 joint venture, total capex of INR 1,600 crores, equity contribution of INR 500-600 crores (equally divided between Ester and Loop).

    As regards recycling project being pursued by a 50-50 joint venture company, namely Ester Loop Infinite Technologies Private Limited, I'm glad to inform you that all the activities related to completion of the project by December 2027 are being pursued diligently. ELITe has entered into an agreement with a group of sellers for acquisition of 90 approximately 90 acres of project land in the PCPIR zone, strategically located in Surat, Gujarat... This project is targeting up to 81% reduction in carbon emissions compared to virgin PET... So that is a project of about INR1,600 crores capex. It is going to be implemented by Ester Loop Infinite Technologies, which is a 50-50 joint venture company between Ester and Loop. And it's going to be funded by about INR500 crores to INR600 crores of equity and the balance INR1,000 crores to INR1,100 crores of debt.
  • Liquidity Cash ₹104.6 Cr Cash and cash equivalents are primarily for funding the ELITe project, with a portion from share warrants.
    So I have a couple of questions. My first question is with the cash and cash equivalents at INR104.6 crores, how do you plan to strategically allocate capital over the next 2 to 3 years? So there are 2 parts to the cash and cash balance that we have. So a part of the cash and cash balance is primarily for the purpose of funding the Loop project. So if you may recall that, we have raised the share warrant last year for the purpose of funding the Loop project. So major amount of this is going to be used for that.

Guidance & targets

Profitability

  • Specialty Polymer EBIT Margin Profitability · sustainable · High confidence 35-40%
    It should be in the same region, 35% to 40%.

    — Arvind Singhania

Debt

  • Net Debt Debt · end of year · High confidence INR 600-610 crores
    And at the end of the year, we will be around INR600 crores to INR610 crores.

    — Sourabh Agarwal

Project Timeline

  • ELITe Project Groundbreaking Project Timeline · Q1 2026 · High confidence end of Q1 next year (March/April)
    We expect to break ground by end of first quarter next year, calendar. So let's say, March, April, we break ground, and we expect to start up by end of 2027.

    — Arvind Singhania

  • ELITe Project Start-up Project Timeline · end of 2027 · High confidence end of 2027

    — Arvind Singhania

What to watch in Q3 FY26

Antidumping duty investigation outcome

next quarter
Current Investigation initiated, application made
Target Imposition of antidumping duties

Why it matters

Resolution of antidumping duties is expected to improve domestic Polyester Film pricing and margins by curbing predatory imports.

Well, we are certainly very, very hopeful that the government will take action because we have a very, very strong case and the government has -- is there to protect the Indian industry also... And the investigation has already begun.

Risks & concerns

  • Heavy imports at predatory pricing in Polyester Films

    high

    Approximately 25,000 tonnes of polyester film imported in Q2 at very low prices, preventing remunerative pricing in the domestic market and impacting margins.

    Management acknowledged

  • U.S. trade tariffs on Polyester Films

    high

    Tariffs have significantly impacted sales of value-added Polyester Films in the US market, affecting profitability.

    Management acknowledged

  • Exchange rate fluctuations and mark-to-market losses on foreign currency loans

    high

    Euro appreciation against the Rupee (from INR 88 to INR 103) led to approximately INR 10 crores in mark-to-market losses for both companies, impacting reported EBITDA and net profit.

    Management acknowledged

  • Delay in imposition of antidumping duties

    medium

    While an investigation has been initiated, the delay in imposing antidumping duties allows continued predatory imports, affecting domestic industry.

    Management acknowledged

Q&A highlights

6 direct
Impact of Polyester Film imports on spreads and current market situation Direct
So the total imports of Polyester Film, it's very difficult to give an exact number, but approximately 25,000 tonnes of material was imported in the quarter in the second quarter. That is a huge number when you're talking about a market size of ours. And more than the volume, it is the price at which it is being imported. So basically, the price is so low that it is preventing us from getting remunerated prices in the domestic market.

Highlights the significant volume and predatory pricing of imports affecting domestic Polyester Film margins, explaining the pressure on spreads.

Asked by Jatin Damania

Difference in impact of US trade tariffs on Polyester Film vs Specialty Polymers Direct
See, basically, all our value-added films go to America. And because of the tariffs, this got substantially impacted. So we lost a lot of sale in the value-added segment, the real profitable segment, we lost a lot of sales because of the U.S. tariffs in Polyester Film. But this was not the case as far as Specialty Polymers was concerned because of IP.

Clarifies that IP protection shielded Specialty Polymers from US tariffs, while the Polyester Film segment, particularly value-added products, was significantly impacted.

Asked by Jatin Damania

Foreign currency mark-to-market losses and their impact on profitability Direct
So first of all, the loss from foreign currency is not INR20 crores in quarter 2. It is around INR10 crores, both companies together. So as we have been mentioning in our previous calls also, in our subsidiary, that is Ester Filmtech, we have taken a euro loan from OLB Bank Germany. And as you know that euro has significantly appreciated against rupee in the last 1 year, if you remember, at the starting of the year, INR/Euro was at INR88. And today, it is trading at around INR103.

Explains the source and magnitude of foreign currency losses, attributing them to Euro appreciation against the Rupee, which significantly impacted reported EBITDA.

Asked by Jatin Damania

Analyst concern regarding the JV partner Loop Industries' past performance and stock price Direct
First of all, Saket ji, do you think that we would have tied up with Loop if we were not confident about Loop? Do you think we would have risked our money if we were not confident about their technology and their ability to deliver? Number one. Number two, please understand Loop is a start-up company where they have developed technology. They're not a producer of this product. This is the first plant they're going to be putting up.

Addresses a critical investor concern about the credibility and financial stability of the JV partner, with management defending their due diligence and the partner's technology.

Asked by Saket Kapoor

Status and impact of Extended Producer Responsibility (EPR) regulations Direct
So the direct impact of EPR is that now polyester has become the preferred substrate for the brand for all their flexible packaging needs. So this is likely to have 2 direct impact. One is the demand is likely to increase as we expect some switch from other substrates like BOPP into BOPET. The second impact is that there is going to be a higher demand for PCR films, which contain the recycled content and which sell at a premium to the regular films. Now we are seeing strong momentum in these directions.

Explains how EPR regulations are driving demand for polyester and PCR films, indicating a positive long-term trend for the company's products despite a one-year relaxation.

Asked by Saket Kapoor

Funding structure and equity contribution for the ELITe JV project Direct
Yes. So out of INR1,600 crores, INR500 crores to INR600 crores will be equity, which will be equally divided between Loop and Ester. So if Ester has to put about INR250 crores, let us say, INR250 crores, INR270 crores, out of which INR175 crores has already been raised through warrants, whatever is the difference, we will raise further as equity and that will be invested.

Provides a clear breakdown of the ELITe project's funding, including Ester's equity commitment and how it's being raised, which is crucial for understanding future capital needs.

Asked by Saket Kapoor

3 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

Ester Industries reported a consolidated revenue of INR 357 crores for Q2 FY26, marking a 7% year-on-year growth. This growth was primarily driven by higher volumes in both the Polyester Films and Specialty Polymers segments. However, consolidated EBITDA saw a significant decline of 59.7% year-on-year, reaching INR 17.33 crores, with the EBITDA margin at 4.85%. This decline was largely attributed to adverse exchange rate fluctuations and mark-to-market losses on foreign currency loans/derivatives, which amounted to approximately INR 10 crores for both companies combined.

Specialty Polymers Segment Strength

The Specialty Polymers segment demonstrated robust performance, recording a 51% year-on-year volume growth and a 39% year-on-year revenue growth, with total sales reaching 1,161 metric tons. EBIT for this segment increased by 45% year-on-year to INR 21.24 crores, and the EBIT margin improved by 146 basis points to 37.03%. Management indicated that this strong performance was due to IP protection, shielding it from U.S. trade tariffs, and that a sustainable EBIT margin range of 35-40% is expected going forward.

Polyester Films Segment Challenges and rPET Growth

The Polyester Films segment experienced a marginal revenue growth of 2% and sales volume growth of 8.72% to 21,329 metric tons. Domestic margins were pressured by heavy imports at predatory pricing, with approximately 25,000 tonnes of material imported in Q2. Spreads in the September quarter were INR 19-20/kg, improving marginally to INR 22/kg in October and currently ranging INR 22-25/kg. Despite these challenges, the company commissioned a 20,000 metric tons per annum rPET capacity in September 2025 at its Hyderabad plant, and rPET sales volume surged by 219% year-on-year to 1,046 metric tons, reflecting growing traction in sustainable product categories.

Ester Filmtech Limited's Operational Improvement

Ester Filmtech Limited showed significant operational improvement, with capacity utilization increasing to 85% from 61% in Q2 FY25. Sales volume grew by 39.7% year-on-year to 10,374 metric tons, and total income increased by 20.5% to INR 119.73 crores. However, its reported EBITDA reduced to INR 3.96 crores from INR 6.14 crores in Q2 FY25, primarily due to the adverse impact of foreign exchange fluctuations and mark-to-market losses on its Euro-denominated loan. Excluding these impacts, adjusted EBITDA would have been INR 11.22 crores, with a 9.3% margin.

ELITe Chemical Recycling Project Update

The 50-50 joint venture, Ester Loop Infinite Technologies Private Limited (ELITe), is progressing diligently towards its December 2027 completion target. The project, with a total capex of INR 1,600 crores, aims to reduce carbon emissions by 81% compared to virgin PET. ELITe has secured approximately 90 acres of land in Surat and has signed multi-year offtake agreements with international clients like Nike and Taro Plast S.p.A. The groundbreaking for the plant is expected by the end of Q1 next year (March/April 2026), with start-up by the end of 2027. Ester's equity contribution to the JV is estimated at INR 250-270 crores, with INR 175 crores already raised through warrants.

Capital Structure and Debt Management

The company's gross debt stood at approximately INR 740 crores, with net debt (after adjusting for cash and cash equivalents of INR 104.6 crores) at around INR 650 crores. Management targets to reduce net debt to INR 600-610 crores by the end of the year. Repayments for the next six months are estimated at INR 40 crores. The ELITe project's debt component of INR 1,000-1,100 crores is currently in the process of being tied up, with management noting that the export-oriented nature of the JV's production will provide a natural hedge against foreign exchange fluctuations for its debt.

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

More Capital Goods earnings calls