IOL Chemicals

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.

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.

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.

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.

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.

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.