Indian Emuls

Indian Emulsifiers Limited reported a strong FY26, with revenue growing 57% year-on-year to ₹159.87 crores. EBITDA increased 24.22% to ₹26.15 crores, and Profit After Tax (PAT) rose 21.83% to ₹16.20 crores. Operating profit before working capital changes also saw a healthy increase of 19.12% to ₹25.94 crores, reflecting the resilience of the business model despite a challenging global environment.

While the company achieved significant growth, EBITDA margins moderated during FY26 as a strategic choice to prioritize volume expansion and geographic reach. Debtor days increased from approximately 110 to 131 days, attributed to engaging with larger customers who typically have longer credit cycles. However, creditors' days improved, and the cash conversion cycle remained broadly stable even with rapid business scaling.

The company is making substantial investments in its future, with long-term debt increasing by ₹25.95 crores to fund a new quality control and R&D facility, infrastructure for a certified food-grade emulsifier range, and additional equipment. Construction of the Greenfield manufacturing facility at C3 is on track to be operational by the end of FY27, which will significantly expand capacity. The current theoretical capacity can support ₹230-260 crores in revenue, with the new Greenfield facility adding 400-500 metric tons per month, and a new QC/R&D and food setup adding 200-250 tons.

Indian Emulsifiers is expanding its international footprint, with the Australia market targeted for ₹75 crores in cumulative revenue over FY26-FY28, following initial shipments in Q4 FY26. The recently established American subsidiary is also expected to contribute to revenue growth starting this year, focusing on customers in the oil and gas and other industries. These platforms aim to diversify the revenue base and position the company closer to high-value markets.

Management addressed significant shareholder concerns regarding a second rights issue following a recent one, and the impact of dilution on share price. They clarified that each fundraise serves distinct objectives for growth and capacity expansion. The company also acknowledged the impact of unsubstantiated claims and misleading narratives on social media affecting its share price, stating they are exploring legal remedies and urged reliance on official communications.

The proposed acquisition of a 10% stake in Chemical Brothers, a promoter-owned unlisted company, is positioned as a strategic first step towards consolidation. Management emphasized that this move is intended to benefit Indian Emulsifiers by providing access to Chemical Brothers' customer base and additional manufacturing business, not to divert funds. The valuation of Chemical Brothers, with a FY25 PAT of ₹27 lakhs and a proposed valuation of ₹55 crores, was defended based on intangible assets like customer relationships and market access, rather than solely on PAT multiples.

The company experienced raw material price volatility, particularly linked to crude oil, exacerbated by the Middle East supply crisis. A strategic inventory build-up was undertaken at year-end to mitigate disruptions. Management confirmed that cost increases have been successfully passed on to customers, with new pricing structures being accepted, which is expected to help maintain and potentially improve bottom-line margins.