Fairchem Organics Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

Fairchem Organics faced a challenging Q2 and H1 FY26, with significant declines in revenue, EBITDA, and PAT due to global trade disruptions, U.S. tariffs, and intense competition from Chinese players. Raw material costs remained firm, further compressing margins. The company is focusing on value-added products and new animal feed initiatives, with commercial quantities expected by April-June 2026, but previous guidance for FY25/26 has been withdrawn.

Highlights

  • Q2 FY26 Revenue from operations stood at INR 112 crores, a 20% decline YoY.

  • EBITDA for Q2 FY26 was INR 4 crores, down 52% YoY, with an EBITDA margin of 3.77%.

  • PAT for Q2 FY26 was INR 0.8 crores, a PAT margin of 0.72%.

  • H1 FY26 Revenue was INR 243 crores, a 20% decline YoY.

  • H1 FY26 EBITDA was INR 9 crores, down 69% YoY, with an EBITDA margin of 3.87%.

Concerns

  • Revenue declined 20% YoY to INR 112 crores in Q2 FY26 and INR 243 crores in H1 FY26.

  • EBITDA declined 52% YoY to INR 4 crores in Q2 FY26 and 69% YoY to INR 9 crores in H1 FY26.

  • PAT declined significantly by 89% YoY to INR 2 crores in H1 FY26.

  • Imposition of a 50% U.S. tariff on certain Indian chemical products severely impacted export business to the U.S.

  • Aggressive price competition from Chinese suppliers and high raw material costs continue to pressure Dimer Acid margins.

Key financials

2 periods

Q2 FY26

  • Revenue
    ₹112 Cr
    YoY -20%
  • EBITDA
    ₹4 Cr
    YoY -52%
  • EBITDA Margin
    3.8%
  • PAT
    ₹0.8 Cr
  • PAT Margin
    72%
  • Volume Processed
    11,492 metric tons
  • Volume Sold
    10,062 metric tons

H1 FY26

  • Revenue
    ₹243 Cr
    YoY -20%
  • EBITDA
    ₹9 Cr
    YoY -69%
  • EBITDA Margin
    3.9%
  • PAT
    ₹2 Cr
    YoY -89%
  • PAT Margin
    78%

What they filed

Q1 FY27: revenue up 34.4%, net profit up 900.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue139 114 121 131 112 −19%100 −12%117 −3%176 +34%
EBITDA9 8 4 5 4 −56%4 −50%8 +100%18 +260%
Net profit4 4 1 1 1 −75%0 −100%4 +300%10 +900%
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

  • Linoleic Acid
    33% Share of Total (Q2 FY26)
  • Dimer Acid
    33% Share of Total (Q2 FY26)

Guidance & targets

New Product Commercialization

  • Animal Feed Product Commercial Quantities New Product Commercialization · Q1 FY27 · Medium confidence Start from April-June 2026 quarter
    All commercial quantities can go, but then further commercial quantity can go only after receiving the approval. The couple of months they may take.

    — Rajen Jhaveri

  • Animal Feed Product Trial Runs New Product Commercialization · Q3 FY26 · Medium confidence December 2025 or January 2026
    we may be taking some trial runs, but it is again for animal feed. And again meant for exports to Europe and USA.

    — Rajen Jhaveri

Margin

  • EBITDA Margin Margin · Once conditions stabilize · Low confidence Double digits
    And that would surely then be our EBITDA margin would be in double digits, 100%. If these things fall in line, it will be in double digits, surely.

    — Rajen Jhaveri

Previous Guidance

  • FY25/26 Revenue and EBITDA Margin Previous Guidance · FY25/26 · High confidence No longer valid

    Previously INR 1,000 crores top line and 23% EBITDA margin → No longer valid

    we had very clearly mentioned that these assumptions which we had made at the beginning of that calendar year, they no more hold good because of the reasons already mentioned there.

    — Rajen Jhaveri

What to watch in Q3 FY26

Resolution of U.S. tariff issue for Dimer Acid

Next quarter / H2 FY26
Current 50% tariff in place, no exports to U.S.
Target Tariff issue settled, exports to U.S. resume

Why it matters

Resolution of tariffs is key to restoring Dimer Acid export volumes and improving overall profitability.

As far as Dimer Acid is concerned, we are quite hopeful once this U.S. tariff issue settles, we are quite hopeful that we will be substantially exporting Dimer Acid to USA.

Risks & concerns

  • Global trade disruptions and competitive intensity

    high

    The quarter continued to be challenging due to global trade disruptions, raw material cost pressure and competitive intensity in the market.

    Management acknowledged

  • 50% U.S. tariff on Indian chemical products

    high

    Our performance was directly affected by the imposition of a 50% U.S. tariff on certain Indian chemical products, which includes some of our key offerings, impacting export business to the U.S.

    Management acknowledged

  • Aggressive price competition from Chinese suppliers for Dimer Acid

    high

    Our Dimer Acid segment continued to experience margin pressure due to aggressive price competition from Chinese suppliers and no corresponding relief in raw material costs.

    Management acknowledged

  • Raw material price volatility and elevated levels

    high

    Even after partial rollback of custom duty, prices remained largely firm due to elevated global vegetable oil market, impacting Dimer Acid margins.

    Management acknowledged

  • Withdrawal of previous financial guidance

    high

    Previous guidance for FY25 and FY26 (INR 1,000 crores top line and 23% EBITDA margin) is no longer valid due to current market conditions.

    Management acknowledged

  • Weaker domestic paint sector demand

    medium

    The domestic paint sector witnessed weaker demand, leading to lower off-take from one of our major customers.

    Management acknowledged

  • Regulatory compliance delays for Isostearic Acid exports

    medium

    The expected ramp-up in exports to non-U.S. market has been delayed as we work through Regulatory compliance processes mandated by 2 major European producers.

    Management acknowledged

Q&A highlights

6 direct
Impact of new competitor on Asian Paints market share and Fairchem's sales Direct
No. But then the pricing offered by this competitor also has to match with our costing, etc. If the pricing offered by them is not attractive enough for us, then we will not go for that.

Highlights that Fairchem is unwilling to compromise on pricing to compete with new entrants, even if it means losing market share with a major customer like Asian Paints.

Asked by Nirag Shah

Timeline for new product commercialization (animal feed) Partial
In particular the new product that we have been talking about since last about 1 year, is progressing well and you will see some light during the quarter of may be by March, 2026 or latest during the quarter of April to June 2026.

Provides a specific timeline for the commercial launch of a new product, which is crucial for future growth, but also indicates potential delays due to approval processes.

Asked by Nirag Shah

Margin profile of the new animal feed product compared to Isostearic Acid Direct
No, not as good as Isostearic Acid because it is a commodity and the demand is in several thousands of tons, but it is a commodity and Isostearic Acid is a specialized product and only 2 European companies manufacture this product. So, margin in Isostearic Acid is comparatively higher compared to this animal feed product.

Clarifies that while the new product offers volume, its margin profile is lower than specialty products, indicating a potential shift in product mix impact on overall profitability.

Asked by Nirag Shah

Raw material sourcing and pricing challenges despite being a major buyer Partial
See, we are taking or using the byproduct generated from the soya vegetable oil refinery. So, soya prime product pricing is not necessarily related and will behave in the same manner as the soya because, see, soya oil, vegetable oil price would behave or will vary depending upon the international prices. But as far as this byproduct is concerned, it will have its own demand-supply economics rule because this being a cheaper thing, it cannot be exported also and we cannot import also from other countries because of freight considerations.

Explains the complex dynamics of raw material pricing, where even as a major buyer of a byproduct, the company faces elevated prices due to limited export/import options and competition from other domestic buyers.

Asked by Madhur Rathi

Impact of Chinese dumping and pricing differential Direct
Historically only, ever since Chinese started exporting the Dimer Acid to India more than 10 years back, historically, what we have been doing is we have been pricing our Dimer Acid at marginally lower price than what is the landed cost of Chinese Dimer Acid plus the non-cenvatable custom duty.

Reveals the long-standing strategy of pricing Dimer Acid just below Chinese imports, highlighting the persistent competitive pressure and the significant impact of Chinese dumping on domestic pricing.

Asked by Aashish Upganlawar

Government representation regarding tariffs and lack of relief Direct
We had made the representation to the government when they levied this additional import duty on vegetable oils and partial rollback also. But being the only manufacturer, we haven't heard from the government, and we are unlikely to get any because we are the only manufacturer of Dimer Acid in India.

Indicates that despite being the sole domestic manufacturer of Dimer Acid, the company has not received government support against import duties or Chinese dumping, leaving them vulnerable to external factors.

Asked by Aashish Upganlawar

Discrepancy between 9% export contribution and significant impact of US tariffs Direct
No, this 9% export share is mainly Isostearic export to countries other than USA, mainly Europe. Apart from Europe, the Isostearic export happened to some other countries also, but main was to Europe. And U.S., we could not make any Isostearic Acid export or Dimer Acid as good as nil during this quarter to U.S.

Clarifies that while overall exports are low, the U.S. market is crucial for specific products like Dimer Acid and Isostearic Acid, and the tariffs have completely halted these specific exports, causing a disproportionate impact on profitability.

Asked by Nishita Shanklesha

Validity of previous guidance for FY25/26 Direct
we had very clearly mentioned that these assumptions which we had made at the beginning of that calendar year, they no more hold good because of the reasons already mentioned there. So, at that time only, we had clarified that this guidance, which we had prepared somewhere in April '24, if I'm not mistaken, did not hold good when we reached December '24. So, there is no point in further discussing that. It doesn't hold good.

Management explicitly withdraws prior financial guidance, signaling a significant deterioration in the business outlook compared to earlier expectations and emphasizing the current challenging environment.

Asked by Nitya Shah

2 min read 5 chapters

Detailed narrative

Q2 and H1 FY26 Financial Performance Overview

Fairchem Organics reported a challenging Q2 FY26 with revenue from operations at INR 112 crores, a 20% decline year-on-year. EBITDA for the quarter stood at INR 4 crores, down 52% YoY, resulting in an EBITDA margin of 3.77%. Net profit after tax was INR 0.8 crores, with a PAT margin of 0.72%. For the first half of FY26, revenue was INR 243 crores (down 20% YoY), EBITDA was INR 9 crores (down 69% YoY) with a margin of 3.87%, and PAT was INR 2 crores (down 89% YoY) with a margin of 0.78%.

Operational Headwinds and Market Challenges

The company's performance was significantly impacted by global trade disruptions, persistent raw material cost pressure, and intense competitive intensity. A 50% U.S. tariff on certain Indian chemical products, including key offerings, severely affected export business to the U.S., creating near-term uncertainty in international trade flows. Domestically, the paint sector experienced weaker demand, reducing off-take from a major customer.

Raw Material Dynamics and Chinese Competition

Despite a partial rollback of additional custom duties, raw material prices remained firm due to elevated global vegetable oil markets. This led to continued margin pressure in the Dimer Acid segment, exacerbated by aggressive price competition from Chinese suppliers. The basic customs duty on imported Dimer Acid remains at 7.5%, allowing Chinese players to compete effectively, even with ocean freight costs, due to unknown export rebates from their government.

Strategic Focus on Value-Added Products and New Initiatives

Fairchem continues to focus on its value-added product, Isostearic Acid. However, the ramp-up in exports to non-U.S. markets has been delayed due to regulatory compliance processes mandated by European producers. The company is also developing a new animal feed product, with trial runs expected by December 2025 or January 2026, and commercial quantities anticipated by April-June 2026, targeting exports to Europe and USA.

Management Transition and Outlook

Mr. Rajen Jhaveri announced his relinquishment of the CFO and Company Secretary positions effective November 14, 2025, with Mr. Bhavesh Shah taking over as CFO and Mr. Jatin Jain as Company Secretary. The management withdrew its previous guidance of INR 1,000 crores top line and 23% EBITDA margin for FY25/26, stating it no longer holds good. They expressed hope for a return to double-digit EBITDA margins once trade and pricing environments stabilize, and all strategic initiatives align.

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