Gulshan Polyols Limited

Gulshan Polyols delivered robust financial performance in Q4 FY25, with revenue growing by 47% year-on-year to ₹2020 crores. EBITDA saw a significant increase of 64% to ₹100 crores, despite challenges in the grain segment. Profit After Tax (PAT) also rose by 39% to ₹25 crores, supported by full depreciation benefits from newly commissioned capacities. The company aims for an overall top-line of ₹2300-2400 crores going forward^⏳, driven by improved capacity utilization.

The ethanol segment was a primary growth driver, achieving a record performance with sales volume increasing by over 100% year-on-year to approximately 14 crore liters. The company expects to ramp up capacity utilization from the current 70% to 80-90% in the coming year. Management is targeting an EBITDA margin of 9-10% for the ethanol segment in the upcoming year, reflecting confidence in its continued growth and profitability.

The grain segment, particularly starch, remains a 'problem point' due to severe overcapacities in the domestic market and renewed competition from Chinese exports. High maize prices in India further exacerbate uncompetitive pricing, leading to losses in this division. To address this, Gulshan Polyols is exploring the development of more value-added products and optimizing backward cost expenses, aiming to improve profitability in the long term.

The company reported a ₹140 crore rise in inventory levels at the end of March 2025, primarily due to OMCs not taking ethanol indents. This issue is attributed to an oversupply in the market during February-April, when OMCs procure ethanol from both grain and sugar sources. Management expects this inventory to normalize by July-August as the sugar year ends and OMCs focus solely on grain-based ethanol, though it acknowledges this could be a recurring year-end phenomenon.

Gulshan Polyols is eligible for significant government incentives, including ₹1.5 per liter for its Madhya Pradesh plant (totaling ₹18 crores annually for 7 years) and ₹3 per liter for its Assam plant (totaling ₹12 crores annually). While approvals for these incentives have been received, their actual realization has been slow. The company anticipates receiving these benefits, estimated at around ₹40 crores annually, within the current financial year, which will further enhance profitability.

Maize remains a critical raw material, with the company primarily sourcing it for its plants. While FCI rice has become available at ₹22.50 per kg, its utilization is limited to 10-15% because the government has not corrected the ethanol selling price beyond ₹58.50, making it less attractive. However, management is optimistic about future maize availability and pricing, expecting increased cultivation due to government and industry focus, which could lead to more stable and potentially lower prices in the next two years.