Indian Emuls

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.

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.

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.

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.

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 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.

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.