Detailed Narrative
Strong Financial Performance and Turnaround
Gulshan Polyols reported a robust Q2 FY26, marking a significant turnaround. The company achieved a 23% year-on-year growth in revenue. This strong top-line performance translated into a substantial 140% year-on-year jump in EBITDA. Profit After Tax (PAT) saw an even more impressive surge, growing by almost 1,000% year-on-year, indicating a strong bottom-line recovery and improved operational efficiencies.
PLI and Government Incentives
The company is benefiting from government Production Linked Incentives (PLI). A PLI of ₹5.34 crores was received in October and will be recognized as other income in the Q3 FY26 results. Additionally, Gulshan Polyols expects to receive another ₹14-15 crores from the MP government and ₹5 crores from the Assam government in the second half of the current financial year or early next year, further bolstering its financial position.
Ethanol Business Dynamics and Raw Material Strategy
The ethanol segment is adapting to new mandates, with OMCs requiring 40% of ethanol production from FCRIs (Food Corporation of India rice) for ESY 2025-2026. The company's raw material mix averages 40% FCI, 45% maize, and 15% DFG across its MP and Assam plants. Current maize prices are around ₹21. While the initial ethanol allocation for ESY 2025-2026 was 17.5 crore litres against a capacity of 23 crore litres, management anticipates making up the shortfall in upcoming additional tender cycles, as OMCs still require about 200 crore litres more.
Grain and Mineral Processing Segments
The grain processing division, particularly the starch business, had been incurring losses and was temporarily put on hold, contributing to the overall positive results this quarter. Management expects this division to recover and restart production in the second half of the calendar year due to corrections in raw material prices. The mineral processing business, a 40-year-old segment, continues to be stable, maintaining EBITDA margins in the 23-24% range, even if it means losing some customers to preserve profitability.
Working Capital and Borrowings
The company's working capital borrowings have increased to ₹250 crores, up from ₹157 crores in March 2025. This increase is primarily attributed to funding higher revenue growth and the shift to advance payments for 40% of raw materials sourced from FCRIs. Management stated that working capital borrowings are not expected to exceed ₹300 crores during the current financial year, indicating a controlled approach to funding growth.
Outlook and Capacity Utilization
Gulshan Polyols targets a revenue of ₹2,800 crores for FY27, based on an expected 80-90% capacity utilization across all divisions. For FY26, the company projects a 20% revenue growth over FY25 and anticipates at least a 20% improvement in capacity utilization. The management expressed confidence in turning out strong numbers quarter-on-quarter, driven by operational efficiencies and favorable market conditions.