India Glycols Limited — Q3 FY25 earnings call

India Glycols delivered a strong financial performance for Q3 and 9M FY25. For Q3 FY25, Net Revenue stood at ₹975 crores, marking a 7.9% year-on-year growth. EBITDA for the quarter increased by 21% to ₹129 crores, achieving an EBITDA margin of 13.3%. Profit After Tax (PAT) also saw a significant jump of 37% to ₹57 crores. Over the nine-month period (9M FY25), Net Revenue grew 23% to ₹2,905 crores, with EBITDA rising 19% to ₹378 crores, maintaining a 12.9% margin. PAT for 9M FY25 was ₹167 crores, up 28% YoY, reflecting overall robust growth.

The company announced a significant strategic move with the board's approval to restructure India Glycols into three distinct, separately listed entities. These will be India Glycols (focusing on Chemicals), IGL Spirits (encompassing Liquor and Bio-Fuel businesses), and Ennature Bio Pharma (for Biopharma and Biopolymer segments). This demerger aims to foster independent growth, reduce business-specific risks, and unlock greater shareholder value by attracting focused investors. The demerger is projected to be effective from April 1, 2026, with all three companies expected to be listed on the stock exchange following a 12-15 month formalization process.

In 9M FY25, the proposed India Glycols (Chemicals) segment recorded a turnover of ₹1,079 crores with a 13.6% EBITDA margin. The IGL Spirits segment, combining Liquor and Bio-Fuel, achieved a net turnover of ₹1,628 crores and a 14.4% EBITDA margin. Ennature Bio Pharma, including biopharma and biopolymer, generated ₹178 crores turnover with a 14.9% EBITDA margin. The Bio-Fuel business demonstrated exceptional growth, with sales up 135% to ₹770 crores for 9M FY25, while Potable Spirits grew 25% to ₹858 crores.

The Biofuels program continues to be a key growth area, with the government's blending targets consistently met or exceeded (14.6% achieved in FY24 against 15% target, and 18% achieved for FY25). India Glycols anticipates selling close to 15 crore liters of biofuels in FY25 and expects the 20% blending target for FY26 to be on track. While Q3 FY25 margins were impacted by higher grain prices (₹27-28 from ₹19-20) and lower DDGS prices, management expects improved margins going forward^⏳ due to the government's release of cheaper FCI rice.

The Potable Spirits business is a significant focus, with the Indian market projected to grow at 7.2% to $112 billion by 2034. India Glycols has achieved excellent growth in both IMFL and Country Liquor, leveraging its in-house Extra Neutral Alcohol (ENA) quality and integrated operations. Country liquor, which constitutes roughly 60% of the potable spirits topline, provides stable, quota-based income and higher margins in regions like Uttarakhand. Strategic partnerships, such as with Amrut, and a focus on premium brands like 'Amazing Vodka' and 'Zumba Limon' are driving market share and value creation.

Despite an apparent 8% topline degrowth in the chemicals business for 9M FY25 (attributed to reclassification of byproducts), the core chemicals segment (excluding JV and readjusted businesses) demonstrated a 13% topline growth and a 58% gross margin increase. Specifically, the glycols business saw sales increase by 26% with an 83% gross margin improvement. The company is committed to sustainable chemistry, expanding its value-added specialties portfolio, and innovating with products like bio-based amines, leveraging its green feedstocks and process development capabilities.

The Ennature Biopharma segment, despite a 14% topline growth for 9M FY25, has faced margin pressures due to policy changes in international markets and increased competition. Management is implementing a multi-pronged strategy to address this, including penetrating developed markets by upgrading facilities to US FDA audit compliance, innovating delivery formats for products like curcumin and nicotine, and focusing on branded nutraceuticals. The goal is to establish the company as a co-brand with important brands and generate significant commercial sales in the years ahead.

India Glycols' CAPEX cycle is nearing completion, with the Gorakhpur grain distillery expected to be finished by March 2025. Future CAPEX will be incremental, primarily focused on expanding ENA capacity and blending/packing lines for the liquor business, and developing value-added specialties in chemicals based on business requirements. The company currently has an outstanding term loan of approximately ₹1,200 crores, with an annual repayment obligation of ₹240 crores. Finance costs have increased due to projects moving from capitalization to expensing and a general rise in interest rates.