Indian Emuls — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

Indian Emulsifiers reported strong H1 FY26 results with significant revenue and profit growth driven by improved capacity utilization, new products, and customer expansion. The company is actively expanding capacity and entering new markets like industrial water treatment, while its Australian subsidiary has commenced operations. Management addressed concerns regarding receivables and rights issue pricing, maintaining a positive outlook for future growth and margins.

Highlights

  • Revenue for H1 FY26 stood at ₹76.98 crores, marking a 55% increase over H2 FY25.

  • Profit before tax grew by 58% to ₹12.39 crores.

  • Profit after tax increased by 63% to ₹10.26 crores.

  • Australian subsidiary successfully executed its first order, expected to generate approximately ₹75 crores in revenue over the next 36 months.

  • Acquired additional land for a new state-of-the-art facility and developed a new range of polymers and phosphonates for the industrial water treatment industry.

Concerns

  • Receivables doubled in six months from ₹30 crores to ₹58-60 crores.

  • Average debtor cycle is currently 115-120 days, though management expects efficiency improvements.

Key financials

  1. Revenue ₹76.98 Cr
  2. Profit Before Tax ₹12.39 Cr
  3. Profit After Tax ₹10.26 Cr
  4. EBITDA Margin 20.5%

What they filed

Q4 FY26: revenue up 159.4%, net profit up 20.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue35 32 52 50 77 +120%83 +159%
EBITDA6 8 10 9 15 +150%11 +38%
Net profit4 5 7 6 10 +150%6 +20%
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.

Capital allocation

high confidence
  • Capex Capex disclosed Phase one of current expansion funded by equity component; phase two and further expansion will be debt-funded.
    • New facility construction (Phase 1) ₹6 Cr
    • New facility machinery (Phase 1) ₹11.36 Cr
    • Capacity expansion from 650 MT to 1,000 MT ₹21 Cr
    Yash Tikekar: See, ideally what is there is we had said that we would always do any form of, uh, capital expenditure in the terms of a combination of equity and debt. So ideally, what is there is for this, uh, expansion that we are doing right now, the phase one of it, we have decided to go with an equity component. For the phase two and further expansion, we would definitely review debt. So it would always be a combination. So for example, the land we had already procured from our internal accruals. Mm-hmm. So there would always be combination of multiple factors as well as the other operational aspects that come in during the, you know, working of the cash flows and, uh, that part. ... Uh, that was from the IPO proceed that we had done, so that was approximately 21 odd crores that were there.
  • Debt Debt disclosed
    Yash Tikekar: Uh, see, currently, for the immediate future, we don't have anything planned right now. Like I said, we would prefer, uh, a debt component that would be there for the additional CapEx. So currently, that is the broad thought process that is there.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · High confidence upward of 100% minimum
    Yash Tikekar: See, basically, what is there is in the presentation, uh, the, uh, the, uh, growth, growth that we've put in is, uh, the capacity that has come online. So that capacity would position us for this particular growth. And we're definitely expecting that with that additional capacity and reaching, uh, good utilization levels by the end of this month and from next month onward, we should definitely, in terms of, uh, revenue growth, if you would factor it, what would be definitely upward of 100% is what we are minimum looking at.

    — Yash Tikekar

  • Revenue Growth Revenue · FY27 · High confidence upward of 100% minimum
    Yash Tikekar: See, FY '27 and... See, EBITDA levels, uh, and bottom line levels would be... We are expecting it to be on the similar, uh, levels that are there right now. So if you take EBITDA, it would be about 19 to 21, 22% range. Similarly, for the bottom line, the similar range would be maintained. In terms of revenue growth, like I said, next year we are expecting upward of 100% minimum. And beyond that also we expect high growth to continue in that levels because our capacities are also coming online.

    — Yash Tikekar

  • Australian Subsidiary Revenue Revenue · next 36 months · High confidence 75 crores
    Yash Tikekar: Our Australian subsidiary, Southern Emulsifier Solutions (PTY) Limited, successfully executed its first order during this period, a significant milestone that marks our entry into the high-potential mining emulsifier market in Australia. The subsidiary is expected to generate approximately 75 crores in revenue over the next 36 months, trending our international footprint and diversifying our revenue base.

    — Yash Tikekar

  • Water Treatment Vertical Contribution to Top Line Revenue · next 24-36 months · Medium confidence not more than 10%
    Yash Tikekar: Uh, see, basically what is there is we are expecting gross margin, depending on the particular kind of product, because in the group that I mentioned, there are m- multiple products that are there. So the gross margin levels would be between 25 to 35%. So obviously, there is a range in terms of the product combination, and that exact... The, the narrower range would only be available next year, once we start substantial, uh, you know, scaling that up. And secondly, at least for the next, say, 24 to 36 months, we don't see that vertical contributing more than, you could say, on the higher side, about 10% to begin with to the top line.

    — Yash Tikekar

Profitability

  • EBITDA Margin Profitability · Ongoing · High confidence 19 to 22%
    Yash Tikekar: See, s- s- see, ba- basically what is there is the current product mix that we have, the average EBITDA margins is between about 19 to 21, 22 is the range that is there. Obviously, it varies on a month-to-month basis with slight changes on various factors, but that range we expect to continue.

    — Yash Tikekar

Capacity

  • Capacity Utilization Capacity · next month onwards · High confidence upward of 90%
    Yash Tikekar: Uh, see, basically what is there is key right now, the capacity that is come online, we are expecting to start utilizing, uh, at, um, ma- maximum levels by next month onwards. So we would definitely be in upward of 90% would be the targeted utilization, which we expect to happen.

    — Yash Tikekar

  • Total Capacity (post new CapEx) Capacity · once entire capacity comes live · High confidence 1,400 to 1,500 metric tons (per month)
    Yash Tikekar: So once that entire capacity will come live, we should reach about, uh, this 1,000 plus that 400 to 500. So it'll be about 1400 to 1500 range.

    — Yash Tikekar

  • Total Capacity (per annum) Capacity · middle of next year · High confidence 18,000 metric tonnes
    Yash Tikekar: Yes. Yes, sir. So approximately maybe, uh, next year, middle, 18,000 metric tonnes, which means the capacity compared with last year, maybe more than 250%.

    — Yash Tikekar

Working Capital

  • Debtor Days Working Capital · short run · Medium confidence 90-100 days

    From 115-120 days today

    Yash Tikekar: Uh, see, in the future also, we expect, like I said, key, you know, currently, at least for the next two to three years, we would be taking payment terms that are already existent in the market. Underst- So in such cases, what is there is the efficiency improvement would be maybe like, say, moving from 115 days to maybe 100 or 95 days or 90 days. So that kind of efficiency is possible in the short run.

    — Yash Tikekar

What to watch in Q3 FY26

New Capacity Utilization

Next quarter
Current New capacity (total 1,000 MT/month) progressively coming online since September 2025.
Target Achieve >90% utilization by next month (November/December 2025).

Why it matters

High utilization of new capacity is crucial for achieving the company's ambitious FY26 revenue growth targets.

Yash Tikekar: Uh, see, basically what is there is key right now, the capacity that is come online, we are expecting to start utilizing, uh, at, um, ma- maximum levels by next month onwards. So we would definitely be in upward of 90% would be the targeted utilization, which we expect to happen.

Risks & concerns

  • Increased Receivables and Longer Debtor Cycle

    medium

    Receivables doubled to ₹58-60 crores, and the average debtor cycle is 115-120 days, though management expects efficiency improvements.

    Analyst acknowledged

  • Raw Material Price Volatility

    low

    Raw material price fluctuations are generally passed on to customers, resulting in only single-digit changes.

    Analyst downplayed

  • Competition in Water Treatment (B2C Segment)

    low

    Management acknowledges higher competition in the B2C segment of water treatment, hence their initial focus on B2B.

    Management acknowledged

  • Australian Mining Market Downturn

    low

    Management acknowledges market fluctuations but states mining is a continuous, capital-intensive process that doesn't stop suddenly, maintaining confidence in revenue targets.

    Analyst downplayed

Q&A highlights

4 direct
Receivables Growth and Debtor Days Partial
Yash Tikekar: Uh, see, basically what is there, na, kee in terms of our, uh, very business growth that is there, on an average across industry segments, there is a debtor cycle of about 75 days, 90 days, depending the credit terms of the industry that are there. And since we are penetrating newer customers, entering newer industries, the debtor... like, the credit period that is existing in the industry is something that we have to accept. ... You could say the average debtor cycle that would be there, that is currently there also, it comes to about 115 odd days. That is, uh, 115, 120, 110. So that is the average debtor cycle that is existing. Obviously, there is scope of efficiency there that would be achieved as we start, you know, growing to a certain scale in the particular industry wherein we would be able to, you know, negotiate better with com- customers and improve that.

Analyst questioned the significant increase in receivables and the long debtor cycle, which impacts working capital. Management explained the drivers and acknowledged scope for improvement.

Asked by Deepak Poddar

Rights Issue Pricing and Promoter Participation Partial
Yash Tikekar: No, I, I, I, I... Ideally, the average price was in the range of 125, 30 in that particular range. I don't know the exact price bracket, but it was always in that range. So in terms of shareholder benefit, ideally there has to be some discount in terms of that which is beneficial to the shareholders. And we had positive feedback from our shareholders that it is, you know, all our shareholders are with us and, uh, you know, they would participate. And rights is always from, you know, focusing on the shareholders other... rather than, you know, a select few. ... Yash Tikekar: Yeah. Yes, yes. The promoter would be participating in the rights issue.

Analysts questioned the rights issue price of ₹80, which was significantly below market, and whether promoters would participate, indicating investor concern about valuation and promoter commitment.

Asked by Kedar

Australian Subsidiary Operations and Market Direct
Yash Tikekar: Oh... No, no. See, so basically what is there, na ki in terms of this particular industry, ideally what happens is normally with any customer, the average approval process is about 6 to 12 months. Primarily because what happens is at the initial stage, it is tested in a laboratory. ... So it's not that the subsidiary did not have operations for a year. The operations were ongoing in the part of marketing and customer approvals. The approval and the customer started coming online with our execution of the first order, like, uh, two and a half months ago. So that's when it started. So every... what we expected... that's why if you see the projections for our subsidiary also, we're projecting 75 crores over the next three years.

Analyst questioned the time taken to start operations in Australia and potential headwinds from market downturns, seeking clarity on the subsidiary's progress and revenue targets.

Asked by Rajesh Jain

New Water Treatment Vertical Strategy and Margins Direct
Yash Tikekar: So what we are doing is we have developed a range of products which are polymers and phosphonates that go into formulation of these products that are used in the power pla- Like for example, in the industrial water treatment segment. So as stage one, we are only making products which would be used as raw materials in the formulated product that would be used in the facility. Stage two, in the coming years, what we are looking at is moving one level up to the formulating part and participating in, you know, the actual tendering and taking contracts for these facilities. But in stage one, it would be B2B that we are looking at, and initially as per our analysis and what we have looked into, the B2B currently has slightly higher margins compared to actually the B2C part of it, because there the tendering factor comes in.

Analyst sought details on the new water treatment vertical, its market potential, and strategy, providing insight into the company's diversification efforts and margin expectations.

Asked by Aayush Shah

Overall Capacity and Future Expansion Direct
Yash Tikekar: Yes. Yes, sir. So approximately maybe, uh, next year, middle, 18,000 metric tonnes, which means the capacity compared with last year, maybe more than 250%.

Analyst sought clarification on the current and future capacity numbers, leading to a clear statement of 18,000 metric tonnes per annum by mid-next year, indicating significant growth potential.

Asked by Manikam Ravichandran

Sustainability of Low Tax Rate Direct
Yash Tikekar: No, no. Ba- basically, it's not a exemption. What was there is I think in the year 2019 or 2020, there was an option in terms of for manufacturing companies, for the selection of the tax bracket, I think it was around 19 or 20% that was there. So that was selected by us that time. So there was certain... I'm not sure about the tax factor, like, you know, that's not my scope that much. But on broadly what I'm aware of that, that was, uh, once it was selected, it was to continue unless and until some new rules and regulations change. So it was not for a particular period, it was primarily selecting that particular slab for manufacturing MSME.

Analyst questioned if the company's 18-19% tax rate was due to temporary exemptions, and management clarified it's a chosen tax bracket for manufacturing MSMEs, expected to continue.

Asked by Rajesh Jain

Related Party Transactions Percentage Partial
Yash Tikekar: Uh, no, no, it's- it's a small percentage. Uh, it would be declared in the thing. I would have to have to look at the- Understand. exact figure, but... I have the March end figure. I was just checking for the latest of you, that's all.

Analyst inquired about the percentage of revenue from related party transactions, a common corporate governance concern. Management stated it's a small percentage but did not provide an exact figure for the current period.

Asked by Avantika

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Detailed narrative

H1 FY26 Financial Performance Overview

Indian Emulsifiers delivered a strong performance in H1 FY26, with revenue reaching ₹76.98 crores, marking a 55% increase over H2 FY25. This growth was accompanied by a 58% rise in Profit Before Tax (PBT) to ₹12.39 crores and a 63% increase in Profit After Tax (PAT) to ₹10.26 crores. Management attributed this robust growth primarily to improved capacity utilization, the successful commercialization of new products, and an expanded customer base, rather than relying on price increases.

Capacity Expansion and Utilization Strategy

The company's current capacity has expanded to approximately 1,000 metric tons per month, with new facilities progressively coming online since September 2025. Management anticipates achieving an 'upward of 90%' utilization rate by November/December 2025. Further expansion, funded by the recent rights issue, will add 400-500 theoretical tons per month, with potential to scale to 1,000 tons per month, bringing the total theoretical capacity to a range of 1,400-1,500 tons per month. By mid-next year, total annual capacity is projected to reach 18,000 metric tonnes, representing over 250% growth compared to the previous year.

Australian Subsidiary Progress and Outlook

The Australian subsidiary, Southern Emulsifier Solutions (PTY) Limited, successfully executed its first order post-September 2025. Despite the 6-12 month approval process typical in the mining sector, the subsidiary is expected to generate approximately ₹75 crores in revenue over the next 36 months. The company is strategically engaging with four of the top six-seven mining explosive companies in Australia, initially focusing on the eastern and northern regions, with plans to expand to Western Australia next year.

Entry into Industrial Water Treatment Vertical

Indian Emulsifiers has diversified into the industrial water treatment sector, developing new polymers and phosphonates. The initial strategy is a B2B model, supplying these as raw materials for formulated products, which management believes offers slightly higher margins than a direct B2C approach. This new vertical is projected to contribute up to 10% to the company's top line over the next 24-36 months, with future plans to move into formulating and tendering for complete solutions.

Rights Issue and Capital Allocation

The company completed a rights issue at ₹80 per share, which management affirmed was compliant with SEBI norms and aimed at providing shareholder benefit. Promoters confirmed their participation, though the exact value remains privileged. The proceeds from this equity component are funding the first phase of the new facility, costing ₹17-18 crores for construction and machinery. Future expansions (Phase 2) are expected to be debt-funded, with existing banking relationships and limits already in place.

Receivables Management and Efficiency

Receivables have seen a significant increase, doubling from ₹30 crores to ₹58-60 crores in six months, leading to an average debtor cycle of 115-120 days. Management attributed this to the rapid revenue growth and the penetration of new customers and industries. While acknowledging the current debtor cycle, they expressed confidence in improving efficiency, targeting a reduction in debtor days to 90-100 days in the short term through better negotiation and scale.

Raw Material Cost and Margin Outlook

The company's raw material costs, often linked to indicators like crude oil, palm oil, or agricultural commodities, are generally passed through to customers, resulting in only single-digit price fluctuations. Management expects the average EBITDA margins to remain stable within the 19-22% range. For the Australian subsidiary, gross margins are anticipated to be around 45%, representing an additional 15% over the current 28-33% gross margins, with a clearer understanding of the bottom-line impact expected by March/April.

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