IOL Chemicals and Pharmaceuticals Limited — Q1 FY26 earnings call

Call held 8 Aug 2025

Management summary

IOL Chemicals reported a strong start to FY26 with robust revenue and profit growth, driven by efficient execution and margin expansion. The company is progressing on strategic initiatives like API portfolio diversification, capacity expansion, and regulatory approvals, despite facing subdued pricing in certain chemical products and increased raw material costs. Management remains optimistic about achieving its full-year targets.

Highlights

  • Revenue from operations grew 9.8% YoY to ₹552 crores (Q1 FY26 vs ₹502 crores Q1 FY25).

  • EBITDA increased 19.5% YoY to ₹69.5 crores (Q1 FY26 vs ₹58.2 crores Q1 FY25), with margin expanding 102 bps to 12.4%.

  • Profit after tax (PAT) rose 14.4% YoY to ₹34 crores (Q1 FY26 vs ₹29.7 crores Q1 FY25).

  • Cash PAT grew 16% YoY to ₹55 crores (Q1 FY26 vs ₹47 crores Q1 FY25).

  • New 10,800 MTPA Paracetamol plant commissioned and commenced exports to regulated markets.

  • Successful REACH registration for Acetic Anhydride opens EU market opportunities.

Concerns

  • Subdued pricing and soft market sentiments in the Chemical segment due to cautious downstream procurement.

  • Paracetamol demand, while recovering, still faces low prices, though above pre-COVID levels.

  • Raw material prices for some products saw an increase, impacting costs.

Key financials

  1. Revenue from Operations ₹552 Cr +9.8%YoY
  2. EBITDA ₹69.5 Cr +19.5%YoY
  3. EBITDA Margin 12.4%
  4. Profit After Tax ₹34 Cr +14.4%YoY
  5. Cash PAT ₹55 Cr +16%YoY

What they filed

Q1 FY27: revenue up 37.0%, net profit up 88.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue526 523 528 552 568 +8%580 +11%619 +17%756 +37%
EBITDA42 47 63 62 57 +36%57 +21%93 +48%104 +68%
Net profit19 21 32 34 30 +58%21 +0%53 +66%64 +88%
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.

Segment breakdown

  • Non-Ibuprofen API
    34% Share of Total API

Capital allocation

high confidence
  • Capex ₹150 Cr
    • Growth, infra, land, new software, and automation
    As we earlier said that our CAPEX for the last two years - three years is Rs. 150 crores to Rs. 200 crores annually. So, this year we also plan for Rs. 150 crores to Rs. 200 crores. And this CAPEX is for growth also infra, land and new software and automation in the current year.
  • Debt Debt disclosed
    Our balance sheet remained solid, with no leverage, thereby providing us with ample headroom to fund future growth, invest in innovation, and pursue long-term strategic initiatives while maintaining financial stability.
  • Liquidity Liquidity disclosed Ample headroom to fund future growth, invest in innovation, and pursue long-term strategic initiatives.
    Our balance sheet remained solid, with no leverage, thereby providing us with ample headroom to fund future growth, invest in innovation, and pursue long-term strategic initiatives while maintaining financial stability.

Guidance & targets

Capacity Utilization

  • Paracetamol Plant Capacity Utilization Capacity Utilization · FY26 · Medium confidence 55-60%
    Further, our new plant of 10,800 MTPA, it is totally automized and with backward integration of para aminophenol and Acetic Anhydride, we think that we may cover up a certain capacity utilization in FY '26, maybe around 55% - 60% this year and at an optimum level in the next financial year.

    — Rakesh Mahajan

  • Paracetamol Plant Capacity Utilization Capacity Utilization · Q3 FY26 · High confidence 60%

    Previously 34% → 60%

    Currently, we are using 34% capacity in the first quarter. And we hope it will increase to 60% by quarter three of the current year.

    — Pardeep Kumar Khanna

Revenue

  • Minoxidil Peak Revenue Revenue · Medium confidence ₹50-60 crores
    And at the peak level, we are expecting a revenue of 50 to 60 from Minoxidil in addition to the intermediate sales.

    — Rakesh Mahajan

  • Non-Ibuprofen Peak Revenue Revenue · 2-3 years · Medium confidence ₹900-1000 crores

    Previously ₹500 crores → ₹900-1000 crores

    It would be around Rs. 900 crores to Rs. 1, 000 crore in two years - three years.

    — Rakesh Mahajan

  • Total Revenue Growth Revenue · Current Year · High confidence 10%
    Yes, we are expecting 10% growth from the last year. In the current year, we definitely achieve.

    — Pardeep Kumar Khanna

  • Ibuprofen and Non-Ibuprofen Combined Revenue Revenue · 2 years · High confidence ₹2000 crores
    So, from the Ibuprofen and non-Ibuprofen segment, we are targeting Rs. 2000 crores in the next two years.

    — Pardeep Kumar Khanna

Portfolio Mix

  • API Portfolio Split (Ibuprofen vs Non-Ibuprofen) Portfolio Mix · High confidence 50-50
    We are targeting 50-50, 50 Ibuprofen and 50 non-Ibuprofen.

    — Pardeep Kumar Khanna

Exports

  • Export Revenue Share Exports · 2 years · High confidence 40%

    Previously 25% → 40%

    Actually, the current situation of export and domestic is 75% approximately and 25% export. And we are targeting to increase the export to 40% of total revenue in the coming two years.

    — Pardeep Kumar Khanna

Profitability

  • Blended EBITDA Margin Profitability · Medium confidence 14-15%

    Previously 15% → 14-15%

    No, we never said that we will be crossing the 15% mark. We are saying that last year we were having something around 12%. This year, we are close to 13% by now. And what we are estimating and that we will be reaching somewhere 14% to 15% something.

    — Abhay Raj Singh

  • Chemical Segment EBITDA Margin Profitability · FY26 · High confidence 5-6%
    It is 5% to 6%, we are hoping.

    — Pardeep Kumar Khanna

Project Completion

  • Minoxidil Unit 9B Completion Project Completion · Q3 FY26 · High confidence Completed
    initiated setting up Unit 9Bs by carving out part of existing Unit 9 for manufacturing Minoxidil and its intermediates, which is expected to be completed by Q3 FY'26.

    — Abhay Raj Singh

What to watch in Q2 FY26

Paracetamol Capacity Utilization

Q3 FY26
Current 34%
Target 60%

Why it matters

Ramp-up of the new Paracetamol plant is key to revenue and margin expansion, especially given its cost-competitive nature.

Currently, we are using 34% capacity in the first quarter. And we hope it will increase to 60% by quarter three of the current year.

Risks & concerns

  • Subdued pricing and soft market sentiments in Chemical segment

    medium

    Q1 FY26 marked by steady demand but subdued pricing across key products and cautious downstream procurement.

    Management acknowledged

  • Pricing pressures in some API products

    medium

    Certain API products continue to face pricing pressures, though some prices have bottomed out.

    Management acknowledged

  • US FDA regulatory process and inspections

    medium

    Queries received on DMF from US FDA, but process is ongoing. Company has prior approvals without physical inspections and relies on mutual agreements with other regulatory bodies.

    Analyst downplayed

  • Raw material price increase

    low

    Raw material expenses increased by approximately ₹50 crores, partially offset by inventory changes.

    Analyst acknowledged

Q&A highlights

7 direct
Outlook for Paracetamol and Acetic Anhydride demand and pricing Direct
As regarding Paracetamol, the prices are no doubt at a very low level, but the demand is there, not at that level which was during the COVID period. But it is already above the pre-COVID arena area. The demand level is more than pre-COVID area, maybe some growth rate of 3% 4% in Paracetamol. So, no doubt the prices of Acetic Anhydride are also down presently.

Clarifies the current demand and pricing environment for two key products, indicating low prices but stable demand for Paracetamol and subdued prices for Acetic Anhydride.

Asked by AB Rafe

Impact of Middle East Ethyl Acetate plant shutdown on IOL's volumes and prices Direct
Middle East, there is a plant shut. I think, we have not seen any encouraging change with respect to the pricing, because pricing is totally bottomed out for Ethyl Acetate. But yes, we have exports for Ethyl Acetate, but they are in line with our previous trends only.

Indicates that even a competitor's plant shutdown has not led to an improvement in Ethyl Acetate pricing, suggesting persistent market oversupply or weak demand.

Asked by AB Rafe

Peak revenue potential from new APIs like Minoxidil and overall non-Ibuprofen portfolio Direct
As regarding the export of Ibuprofen in the regulated market, of total export of Ibuprofen, around 70% in our regulated market, namely Europe and Latin America, and balance 25% to 30% in non-regulated market. And also, as regard to your second question in Minoxidil, we are setting up a capacity of around 120 tonnes of Minoxidil. And at the peak level, we are expecting a revenue of 50 to 60 from Minoxidil in addition to the intermediate sales. ... It would be around Rs. 900 crores to Rs. 1, 000 crore in two years - three years. Currently, we are approximately at 500.

Provides specific revenue targets for new products and the overall non-Ibuprofen portfolio, highlighting the company's diversification strategy and growth potential.

Asked by Surabhi

Transition strategy to regulated markets and export revenue targets Direct
Actually, the current situation of export and domestic is 75% approximately and 25% export. And we are targeting to increase the export to 40% of total revenue in the coming two years. ... Actually, our new products which are set up in the last two- three years years like Clopidogrel, Pantoprazole and Fenofibrate, we are converting it to regulated market.

Outlines the company's clear strategy to increase its presence in regulated markets and grow export revenue, which is crucial for higher realizations and sustainable growth.

Asked by Devanshi Shah

Metformin capacity utilization and expansion plans Direct
Yes, it is more than 90% as of now. Yes. ... By virtue of setting up the new Paracetamol plant, the earlier plant where we were making the Paracetamol, that was previously being used for the Metformin. Once we shift all the productions to the new plant of Paracetamol, that plant will be used for the Metformin again. which will be having the capacity of 4000 MTPA.

Reveals high utilization for Metformin and a clear plan to expand capacity by repurposing an existing plant, indicating strong demand and efficient asset utilization.

Asked by Maulik Varia

Details on Minoxidil expansion project and its strategic role Direct
So, basically, as you know, we have a earlier plant which was used for manufacturing of Gabapentin. So, it was having two parts. So, out of that, one part is converted into dedicated facility of Minoxidil. And why this Minoxidil is selected? The reason is Minoxidil was a product which is having good demand from some of our customers, number one. And number two, the product was already there on shelf, all the validation, all stability, all shelf life was assigned to that product.

Explains the rationale behind selecting Minoxidil for expansion, emphasizing existing demand and readiness for market entry, which de-risks the new project.

Asked by Raj Patel

Timeline for achieving 15-20% EBITDA margins Partial
Actually, you see last year, for the financial year '25, we have at 10% to 11%. Now, we are near to 13%. So, we hope, we will achieve shortly 14 to 15%. And you see the growth from the last two quarters - three quarters, our EBITDA margin is better. ... See, this is like we are having very clear cut and focus, vision and we are just going all those, our strategies are just getting through. So, we are pretty sure that we will be having it. It is a matter of sometime only.

Addresses a long-standing analyst concern about margin targets, providing an updated, slightly lower range (14-15%) and a qualitative commitment to achieve it, indicating ongoing efforts.

Asked by Shaik Mohammad Riaz

Current and planned Paracetamol capacity utilization and its impact Direct
Currently, we are using 34% capacity in the first quarter. And we hope it will increase to 60% by quarter three of the current year. And as you know, we have fully automated and backward integrated plant of Paracetamol. So, we are hoping that we are cost competitor to other peers.

Highlights the significant ramp-up expected in Paracetamol production and its strategic importance as a cost-competitive, backward-integrated product.

Asked by Dheeraj Shah

3 min read 6 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

IOL Chemicals reported a strong Q1 FY26, with revenue from operations growing 9.8% year-on-year to ₹552 crores, up from ₹502 crores in Q1 FY25. EBITDA saw a significant increase of 19.5% year-on-year, reaching ₹69.5 crores compared to ₹58.2 crores in the prior year, leading to an EBITDA margin of 12.4%, an improvement of 102 basis points. Profit after tax (PAT) also rose by 14.4% to ₹34 crores, demonstrating resilient financial performance and strong cash generation with cash PAT at ₹55 crores.

API Segment Growth and Diversification

The API market experienced steady demand across most therapeutic categories, with non-Ibuprofen APIs like Metformin, Paracetamol, Clopidogrel, Pantoprazole, and Fenofibrate operating at optimum utilization levels. The company's newly commissioned 10,800 MTPA automated Paracetamol plant has begun exporting to European and other regulated markets. IOL is actively diversifying its API portfolio, targeting a 50-50 split between Ibuprofen and non-Ibuprofen, with non-Ibuprofen contributing 34% in Q1 FY26. The company aims for ₹900-1000 crores in non-Ibuprofen revenue within 2-3 years, up from the current ₹500 crores.

Chemical Segment Performance and Strategic Initiatives

The Chemical segment experienced steady demand in Q1 FY26, but faced subdued pricing across key products and soft market sentiments due to cautious downstream procurement. Despite this, the successful REACH registration for Acetic Anhydride under EU regulations is a significant milestone, enabling expansion into European markets. The company utilizes about 40% of its Acetic Anhydride production in-house for captive consumption, with the surplus being sold in markets offering better price realization, particularly in Europe.

Capacity Expansion and New Projects

IOL is expanding its manufacturing capabilities, with the Minoxidil and its intermediates manufacturing unit (Unit 9B) expected to be completed by Q3 FY26. This unit, repurposed from an existing Gabapentin facility, is projected to generate ₹50-60 crores in peak revenue. The Metformin plant is operating at over 90% utilization, and an additional 4000 MTPA capacity will be added by repurposing the old Paracetamol plant. The company plans an annual CAPEX of ₹150-200 crores for FY26, allocated for growth, infrastructure, land, new software, and automation.

Market Penetration and Regulatory Focus

The company is strategically shifting its focus towards regulated markets to achieve better price realizations and enhance its global footprint. Currently, 75% of revenue is domestic and 25% is from exports, with a target to increase exports to 40% of total revenue within the next two years. New products like Clopidogrel, Pantoprazole, and Fenofibrate are being converted for regulated markets. IOL has received approvals for Fenofibrate and Levetiracetam from the US FDA, and is addressing queries on its DMF, leveraging its strong track record with regulatory audits.

Sustainability and Financial Outlook

IOL Chemicals earned the EcoVadis Silver Medal, placing it among the top 15% globally for environmental, social, and ethical performance, underscoring its commitment to sustainable growth. The company maintains a solid balance sheet with no leverage, providing ample headroom for future growth and strategic investments. Management is guiding for a blended EBITDA margin of 14-15% and a 10% year-on-year revenue growth for the current fiscal year, with the chemical segment's EBITDA margin expected to be 5-6% for FY26.

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