Concall AI

Indian Emuls — Q4 FY25 earnings call

Call held 28 May 2025

Management summary

Indian Emulsifiers Limited reported strong financial performance for H2 and full FY25, with significant revenue and PAT growth driven by volume and new product categories. The company is aggressively expanding capacity, with an additional 300-350 metric tons/month expected by August, and targets a 40-45% revenue CAGR over the next three years. Strategic international expansion into Australia is underway, and management is focused on improving operational efficiency, particularly in inventory management, to further enhance profitability.

Highlights

H2 FY25 revenue grew by 58.03% year-on-year to INR 50 crores, demonstrating strong market penetration.
Full FY25 total income increased by 53.87% to INR 102.66 crores, driven by healthy volume and new product categories.
Net profit after tax for FY25 expanded by 50.72% to INR 13.30 crores, reflecting profitable growth and operational discipline.
EBITDA for FY25 grew by 41.97% to INR 21.05 crores, supported by efficient management and cost control.
Establishment of Southern Emulsifier, an Australian subsidiary, is a key milestone for global expansion, targeting INR 75 crores revenue over three years.

Concerns

Current inventory days are high at 90-100 days, indicating potential for working capital optimization.
Gross margin remained around 30% for both FY24 and FY25, with upward trend expected only in the next 24-36 months.

Key financials

2 periods

H2

FY25 Revenue
₹50 Cr
YoY +58%
FY25 PAT
₹6.31 Cr
YoY +25.9%

FY25

Total Income
₹102.66 Cr
YoY +53.9%
EBITDA
₹21.05 Cr
YoY +42%
Net Profit After Tax
₹13.3 Cr
YoY +50.7%
Gross Margin
30%

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY24	Q4 FY24	Q2 FY25	Q4 FY25	Q2 FY26	Q4 FY26
Revenue	35	32	52	50	77 +120%	83 +159%
Expenses	29	23	41	40	62	72
EBITDA	6	8	10	9	15 +150%	11 +38%
Margin	19%	26%	20%	19%	20%	13%
Other income	0	0	1	0	0	0
Interest	1	1	2	1	2	2
Depreciation	1	1	1	1	1	2
Profit before tax	5	6	9	8	12 +140%	7 +17%
Tax rate	18%	19%	18%	20%	17%	21%
Net profit	4	5	7	6	10 +150%	6 +20%
EPS	4.24	3.71	3.81	3.45	5.61	3.23

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

medium confidence

Capex ₹25 Cr
- Additional manufacturing capacity (300-350 metric tons/month) ₹25 Cr
That's about close to about INR 25 crores.
Debt Debt disclosed

See, the reason for the reduction in the finance cost is because our term debt that is there, that has reduced. See, ideally, the organization has not taken up any new debt in terms of term liabilities in the last 24 months. So the incremental reduction that you see, in terms of interest cost reduction is because of this because the company has not taken up more debt. The funding of the capital expenditure that took place as well as the working capital requirements of the organization in the last 24 months primarily were met through equity. So that's why there was a reduction in the interest.

Guidance & targets

Revenue

Revenue CAGR Revenue · next three years · High confidence 40% to 45%

Looking ahead, we anticipate a three-year revenue CAGR of around 40% to 45%, supported by upcoming capacity addition, further product innovations through R&D, incremental contributions from our overseas operation.

— Yash Tikekar
Australian Subsidiary Revenue Revenue · next three years · High confidence INR 75 crores

The subsidy is projected to contribute significantly to both our revenue and profitability over the next three years with a targeted revenue of INR 75 crores during this period.

— Yash Tikekar

Capacity

Capacity Expansion (short-term) Capacity · by August · High confidence 300 to 350 metric tons per month

We have additional capacity that is coming online should be around the month of August. So that capacity addition would be theoretically in the range of 300 to 350 metric tons per month.

— Yash Tikekar
Capacity Expansion (long-term) Capacity · in 18-24 months · Medium confidence 1,500 to 2,000 tons per month

Ideally, it would be anything between, say, about 1,500, 1,600 to 2,000 would be the range. So we're just working on those factors.

— Yash Tikekar

Inventory

Inventory Days Inventory · this year · High confidence 60 to 70 days

Previously 90 to 100 days → 60 to 70 days

See, ideally, what is there is key right now, the inventory that is there in terms of, in days if we take, we are in the range of about 90 to 100 days that is there currently. And we are working on better optimizing and efficiently managing the inventory. So we should be looking at coming down to between 60 to 70 days this year.

— Yash Tikekar

Profitability

EBITDA Margin Profitability · FY26 · Medium confidence upward bias

From 19%, 20% today

So ideally, EBITDA margin that we are seeing in the range of currently 19%, 20% for FY 2025 can see an upward bias in FY 2026.

— Deepak Poddar

Margin

Gross Margin Margin · next 24 to 36 months · Medium confidence upward trend

From 30% today

So there would definitely be an upward trend. It's just that we can't exactly pinpoint what frame, but definitely in the next 24 to 36 months, we will have an upward trend on our gross margin.

— Yash Tikekar
Overall Gross Margin (with Australian contribution) Margin · future · Medium confidence 40% to 45% plus

From 30% today

For example, if today, our gross margin is, say, at 30%. So if you put in the Indian and the Australian context, there is a scope for final customer price, gross margin going upward to say about 45% plus, 40% to 45%.

— Yash Tikekar

What to watch in Q1 FY26

Additional Capacity Commercialization

August

Current 300-350 metric tons/month under construction

Target Commercial operations

Why it matters

Successful commissioning is vital for meeting aggressive revenue growth targets and scaling operations.

We have additional capacity that is coming online should be around the month of August. So that capacity addition would be theoretically in the range of 300 to 350 metric tons per month.

Risks & concerns

High inventory days
medium

Current inventory at 90-100 days, but management is actively working to reduce it to 60-70 days this year for better working capital efficiency.

Analyst acknowledged
Raw material price volatility
low

Management states that price changes are generally passed on to customers due to B2B nature and monthly pricing.

Analyst acknowledged
Competition from established players
low

Management believes competition is not excessive due to focus on value-added products, performance, and customer-specific solutions.

Analyst downplayed

Q&A highlights

8 direct

Demand trends and Emulsifier positioning across industries Direct

See, in terms of focus industries, right now, what we are focusing on is mining, lubricants, cleaning industry. These are three industries that we are focusing on for the next 12 to 24 months...

Clarifies the company's strategic focus areas and market outlook for the near to medium term.

Asked by Rohan Jain

Mitigation of raw material input cost volatility Direct

And since we are in the B2B segment, any changes in the pricing are pretty much passed on onto the customer, and the customer also gives that kind of price addition.

Addresses concerns about margin stability and the company's ability to pass on raw material cost fluctuations.

Asked by Rohan Jain

Details of capacity expansion and timeline Direct

We have additional capacity that is coming online should be around the month of August. So that capacity addition would be theoretically in the range of 300 to 350 metric tons per month.

Provides concrete timelines and figures for capacity growth, which is crucial for future revenue targets.

Asked by Amit Mehta

Current inventory levels and plans for reduction Direct

we are in the range of about 90 to 100 days that is there currently. And we are working on better optimizing and efficiently managing the inventory. So we should be looking at coming down to between 60 to 70 days this year.

Highlights management's focus on improving working capital efficiency and potential for cash flow generation.

Asked by Amit Mehta

Clarification on FY26 revenue growth target (40-45% vs 25-30%) Direct

No, no, no. We are looking at anything in the range of about 40% to 50% this year. Primarily, we are expecting growth across two to three of our segments that I mentioned earlier as well as contribution from our Australian operations...

Reaffirms the ambitious growth target for the current fiscal year, providing clarity to investors.

Asked by Deepak Poddar

Foreseen headwinds and risks in the near to midterm Direct

So we don't see too much headwinds from anything that would drastically change. And secondly, currently, we are at that point that we are a little diversified over a couple of industries.

Offers management's perspective on macro and industry-specific risks, suggesting a degree of resilience due to diversification.

Asked by Sanskar Bangani

Plans for the explosive chemical space and defense sector Direct

No. See, the thing is we are purely focusing right now on supplying emulsifiers to explosive industry... But primarily, we are not looking at anything with respect to manufacturing our own explosives.

Clarifies the company's strategy in a specialized market, distinguishing between supplying components and manufacturing end-products.

Asked by Sanskar Bangani

Competitive intensity and differentiation against established players Direct

So there has to be some value addition that has to be there from the product. There has to be some performance parameter that needs to be there in the product.

Explains the company's competitive strategy, focusing on product performance, value addition, and cost-effectiveness rather than direct price competition.

Asked by Moksha Anka

3 min read 7 chapters

Detailed narrative

Robust Financial Performance in H2 and Full FY25

Indian Emulsifiers Limited delivered strong financial results for H2 FY25, with revenue growing by 58.03% year-on-year to INR 50 crores and PAT increasing by 25.91% to INR 6.31 crores. For the full fiscal year 2025, the company's total income reached INR 102.66 crores, marking a substantial 53.87% growth compared to INR 66.71 crores in FY24. This growth was underpinned by a healthy uptick in volume and the successful ramp-up of new product categories. EBITDA for FY25 increased by 41.97% to INR 21.05 crores, while net profit after tax saw a significant 50.72% rise to INR 13.30 crores, reflecting strong operational discipline.

Aggressive Capacity Expansion and Long-Term Growth Targets

The company is pursuing an aggressive growth strategy, targeting a three-year revenue CAGR of 40% to 45%. To support this, current manufacturing capacity of approximately 650 metric tons per month is set to expand significantly. An additional 300-350 metric tons per month of capacity, requiring a capital expenditure of INR 25 crores, is expected to come online by August 2025, representing about a 50% increase. Longer-term plans aim for a total capacity of 1,500-2,000 tons per month within the next 18-24 months, which will necessitate acquiring additional land.

Strategic Entry into the Australian Market

A key strategic move in FY25 was the establishment of Southern Emulsifier, a wholly-owned Australian subsidiary. This initiative is designed to penetrate the high-growth mining emulsifier market in Australia, with a projected revenue contribution of INR 75 crores over the next three years. Initially, Phase 1 will involve manufacturing in India and warehousing in Australia, leveraging local expertise. This expansion is expected to provide a 10-15% value-added margin, potentially elevating the overall gross margin to 40-45%.

Enhanced Operational Efficiency and Working Capital Management

Management is focused on improving operational efficiency, particularly in working capital. Current inventory levels are high, ranging from 90 to 100 days, attributed to the scaling of new products and a conservative approach. The company aims to reduce these inventory days to 60-70 days within the current fiscal year. This optimization, coupled with efficient procurement strategies such as larger-scale purchases and direct sourcing, is expected to contribute positively to the bottom line and cash flow.

Product Diversification and Competitive Advantage

Indian Emulsifiers boasts a diverse product portfolio of over 125 products, with 60-70 actively sold across various industries including mining, lubricants, and cleaning. The company differentiates itself by offering value-added products with performance parameters comparable to multinational standards (98-99% equivalence) at competitive prices. Management notes that competition is not excessive, typically involving only 2-3 suppliers per customer, allowing the company to focus on niche, specialty chemical solutions rather than commoditized offerings.

Stable Margins with Future Upside Potential

The company maintained a gross margin of approximately 30% for both FY24 and FY25. While raw material price fluctuations are generally passed on to customers, management anticipates an upward trend in gross margins over the next 24-36 months. This improvement is expected to be driven by increased scalability, enhanced procurement efficiencies, and the higher-margin contributions from the Australian subsidiary, which is projected to boost overall gross margins to 40-45%.

Commitment to Environmental Sustainability

Indian Emulsifiers demonstrated its commitment to environmental responsibility through its operations at the Lote Parshuram facility. The plant utilizes an effluent treatment plant (ETP) to process wastewater to standards prescribed by the Maharashtra Pollution Control Board, with treated effluent sent to a common ETP. Furthermore, the company employs biofuel and CNG for its boiler, highlighting its efforts to minimize air pollution and adopt cleaner energy sources in its manufacturing processes.

This is an AI-generated summary of a publicly available earnings call transcript.

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