Lords Chloro Alkali Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

Lords Chloro Alkali reported strong Q2 and H1 FY26 results, with H1 total income growing 59% YoY to INR 201 crore and Q2 EBITDA margin at 20.93%. The company is actively transforming into a sustainability-driven entity, significantly reducing energy costs through renewable energy integration and planning substantial capex for capacity expansion and further green initiatives. Management expects stable caustic soda prices in the near term and aims for a 40-45% renewable energy mix by April/May next year.

Highlights

  • H1 FY26 total income of INR 201 crore, up 59% YoY.

  • Q2 FY26 EBITDA margin at 20.93%, similar to previous quarter.

  • Q2 FY26 profit of INR 9.04 crore, significantly up from INR 0.36 crore in Q2 FY25.

  • Energy cost reduced from 51% to 39% due to commissioning of 16 MW solar plant.

  • Planned capex of INR 355 crore (FY24-28) to expand capacity and integrate more renewables.

Concerns

  • Caustic soda prices are commodity-driven and hard to predict, though expected to be stable for the next two quarters.

  • Potential market upheavals from large new capacities coming online from competitors like Adani and Reliance.

  • Opaque nature of the Chinese market makes long-term impact of their capacity shifts difficult to ascertain.

Key financials

3 periods

Headline

  • Energy Cost (as % of production)
    39%
  • Capacity Utilization
    80%

Q2 FY26

  • Total Income
    ₹100 Cr
  • EBITDA
    ₹21.09 Cr
  • EBITDA Margin
    20.9%
  • Profit
    ₹9.04 Cr

H1

  • FY26 Total Income
    ₹201 Cr
    YoY +59%
  • FY26 Operating Margin
    20.8%

What they filed

Q1 FY27: revenue up 6.0%, net profit up 50.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue61 65 80 100 98 +61%94 +45%98 +23%106 +6%
EBITDA3 6 10 20 19 +533%11 +83%14 +40%23 +15%
Net profit0 1 3 10 9 5 +400%4 +33%15 +50%
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

high confidence
  • Capex ₹355 Cr Mix of debt and equity for INR 165 crore capex; INR 32 crore from warrant issue (equity route)
    • Caustic soda capacity expansion (210 to 300 TPD)
    • CPW capacity expansion (20 to 50 TPD)
    • 16 MW solar power plant in Bikaner
    • CPW capacity expansion (50 to 100 TPD)
    • 10 MW hybrid energy from Continuum Energy
    • Caustic soda expansion (300 to 400 TPD, net 360 TPD)
    • 21 MW solar plant
    • Sulfuric acid plant
    Between FY 2024 to 2025, we have invested approximately INR150 crores, primarily in expansion of caustic soda from 210 tons per day to 300 tons per day, CPW from 20 tons per day to 50 tons per day and the 16-megawatt solar power plant based in Bikaner. Ongoing and current projects approximately amount to INR40 crores. This includes CPW capacity expansion from 50 tons per day to 100 tons per day. Subsequently, I would like to talk about the capexes that we have announced yesterday and how our renewable mix will be subsequent to those capex as well. Yesterday, we announced a further capex of INR165 crores, which includes expanding our caustic soda from 300 tons to 400 tons. The total capex outlay for these 3 projects is approximately INR165 crores. And put together, between FY '24 and '28, the total capex amount is roughly INR355 crores. So, the whole INR165 crores is not just for expansion. Quite a part of it is for the solar plant also. And naturally, it will be a mix of debt and equity. So, we haven't decided, because it will all depend on the internal accruals of the company. So, but definitely some debt will come in. We have a warrant issue coming up, which will -- I think the January is the last date for completing that warrant issue. So, that warrant issue was for around INR44 crores. 25% of it has already come in. So, I see that INR32 crores of money coming through the equity route also.
  • Debt Debt disclosed
    I think 1, 1.2 is a very, very comfortable debt to equity ratio. Normally the companies are operating at 1.5 or so, but we do not plan to touch 1.5 at all.

Guidance & targets

Renewable Energy

  • Renewable power integration Renewable Energy · by April/May · High confidence 40-45%
    our renewable footprint will go up to 40% to 50% of our power requirements.

    — Ajay Virmani

  • Renewable energy mix Renewable Energy · by April/May · High confidence 40-45%
    So, at that point, in approximately by April, May, we'll be at 40% to 45% of renewable energy.

    — Madhav Dhir

Capacity

  • Caustic soda capacity Capacity · next year, sometimes in Q3 · Medium confidence 360 TPD

    From 300 TPD today

    So, our total installed capacity will be 360 tons subsequent to the expansion. See, that capacity will come up next year, sometimes in the third quarter.

    — Ajay Virmani

Revenue

  • Revenue per quarter Revenue · next three quarters · High confidence INR 100 crore
    So for the next three quarters, we would expect the same kind of revenue to continue.

    — Ajay Virmani

  • Total income Revenue · this year · Medium confidence INR 400 crores or a little plus
    So roughly it should hold, and we can look at a number of INR400 crores or a little plus on that.

    — Ajay Virmani

Profitability

  • EBITDA margins Profitability · subsequent to solar project commissioning · Medium confidence improve significantly
    I would rather say that we do expect EBITDA margins to improve significantly subsequent to the solar project commissioning, other than any vagaries that comes from the price sensitive of commodity chemicals like caustic soda.

    — Madhav Dhir

Debt

  • Debt to equity ratio Debt · future extensions · High confidence around 1 to 1.2
    See, we are trying to keep it around 1 for our future extensions also. Maybe a little over 1, but not too high. I think 1, 1.2 is a very, very comfortable debt to equity ratio.

    — Ajay Virmani

Capex

  • Solar plant commissioning Capex · March, April · High confidence commissioned
    So I said that the projects commissioning's are going to start solar will start get commissioned by March, April.

    — Ajay Virmani

  • Other plants commissioning Capex · 12 to 18 months · Medium confidence commissioned
    And the other plants will take almost 12 months to 18 months to get commissioned.

    — Ajay Virmani

What to watch in Q3 FY26

21 MW Solar Plant Commissioning

March/April
Current Announced, under implementation
Target Commissioned

Why it matters

Crucial for achieving targeted renewable energy mix and further reducing energy costs, directly impacting profitability.

So I said that the projects commissioning's are going to start solar will start get commissioned by March, April.

Risks & concerns

  • Commodity price volatility

    medium

    Caustic soda is a commodity, making prices hard to predict, though stability is expected for the next two quarters.

    Management acknowledged

  • Market upheaval from new capacities

    medium

    Large new capacities from players like Adani and Reliance are expected to cause some upheaval in the market, though demand growth and European shutdowns may balance this.

    Management acknowledged

  • Chinese market opacity and capacity shifts

    medium

    The Chinese market is opaque; while some capacities shut down, new ones are coming up, making it difficult to predict the long-term impact on global supply.

    Management acknowledged

Q&A highlights

7 direct
Capex phasing and timelines for new projects Direct
So I said that the projects commissioning's are going to start solar will start get commissioned by March, April. And the other plants will take almost 12 months to 18 months to get commissioned. So the capexes will also happen as per the progress of the project. So the money will keep getting deployed over the next maybe four to five quarters or so.

Clarifies the timeline for the recently announced INR 165 crore capex, indicating a phased deployment over 4-5 quarters.

Asked by Shubham

Caustic soda price outlook and EBITDA margin stability Direct
Prices, I feel, are going to be pretty stable, you know, in the next few months or so. This is a commodity you can't predict for a very, very long time. But I would say in the coming, you know, at least the two quarters, the prices are going to be pretty stable. And your other question was about the, you know, renewable bringing stability. Of course, you know, when Madhav mentioned that, you know, the cost of power is around 50%, 55%, which is now coming down because of renewables. So, naturally, any vagaries of prices in the Indian or international markets will get even out by the renewable footprint. So, we'll bring in, you know, at least stability to the profitability of the company, for sure.

Provides management's view on commodity price stability and how renewable energy integration will de-risk profitability from price volatility.

Asked by Prachi

Rationale for caustic soda capacity expansion despite market overcapacity Direct
All the capacity expansions which are coming up are coming up in West of India. So, if anybody has to bring the material from West to up North, we'll have to spend almost INR6,000 to INR7000 as a freight on caustic soda, which roughly is around 20% to 22% of the cost of caustic soda, which is very, very huge. So, it becomes very prohibitive for any Western player to come to and sell it in North India. And secondly, if there will be some dip in caustic soda prices, the chlorine prices should be able to make up for it because these two plants will use all the chlorine captive.

Explains the strategic advantage of their North India location due to high freight costs from West India, and the benefit of captive chlorine consumption for value-added products.

Asked by Poojan Shah

Impact of Chinese capacity shutdowns and shifts on the global market Partial
I tell you, China is a very, very opaque wall, one thing. But whatever I have studied, because I was the President of Alkali Manufacturers Association for two years. I completed my two years just in September. So, I've been well entrenched into the world market on this. So, I'll tell you that the capacities -- they have shut down but they're shifting capacities. China is a big country, so they are moving to remote areas, for hazardous chemicals. So, the total capacity in China has not come down. Rather, they have announced almost 4 million tons of capacity over the next two years.

Highlights the complexity and opacity of the Chinese market, indicating that while some plants shut down, overall capacity is not necessarily decreasing but shifting.

Asked by Poojan Shah

Percentage of internal power consumption from additional solar grid Direct
So, we have currently a 16 megawatt solar power plant in Bikaner that contributes to about 10% of our energy. We've also signed a share purchase agreement and power purchase agreement with a company called Continuum, which will provide us 10 megawatt wind solar hybrid, which will additionally contribute 15% to our renewable energy mix. In total, we'll be at 25%, subsequent to which we have also announced yesterday another 21 megawatt project in Bikaner. Put together, that will add another 15% at least. So, at that point, in approximately by April, May, we'll be at 40% to 45% of renewable energy.

Provides a clear roadmap for increasing renewable energy share and its contribution to the company's total power requirements.

Asked by Poojan Shah

Segregation of revenue between caustic soda and other products Direct
Majority, I can very broadly tell you that caustic and its products constitute the majority of the revenue. The other revenues are not very high. CSL value is about 80% of quarter...

Gives insight into the revenue mix, confirming caustic soda as the primary revenue driver (80%).

Asked by Shubham Padhiyar

Payback period for solar capex Direct
It's very encouraging and pretty good. I would say the time period is going to be much, much shorter than a normal industrial product is. Because there is a huge difference between the grid price and the power which you produce, solar power produce. So the payback is going to be much faster than a normal industrial. So normal industry we expect six to seven years for it to pay back. This should be quite accelerated from that. I would presume so, yes.

Highlights the strong economic rationale for renewable energy investments, with a payback period likely less than 5 years.

Asked by Shubham Padhiyar

Effective tax rate and its fluctuation Direct
The average tax rate is around 25%, but just that we had some, carry forward, losses from previous years, which got, absorbed in the last quarter. So, this time the tax incidence is little higher than the previous quarter.

Explains the reason for the higher tax rate this quarter (36% vs 25% last year) due to the absorption of past carry-forward losses.

Asked by Darshil Jhaveri

2 min read 5 chapters

Detailed narrative

Robust Q2 & H1 FY26 Financial Performance

Lords Chloro Alkali delivered a strong financial performance for H1 FY26, with total income reaching INR 201 crore, marking a substantial 59% year-on-year growth. For the second quarter, total income stood at INR 100 crore, maintaining consistency with Q1. The company reported a healthy EBITDA margin of 20.93% for Q2, with profit after tax significantly recovering to INR 9.04 crore compared to INR 0.36 crore in Q2 FY25. This improved profitability was partly attributed to a reduction in energy costs from 51% to 39%.

Strategic Transformation Towards Sustainability

The company is undergoing a significant strategic transformation to become a sustainability-driven chemical manufacturer. A key milestone was the commissioning of a 16-megawatt solar plant in Bikaner in FY25, which now meets 10% of the company's power requirements, resulting in annual savings of INR 12 crore. Further enhancing its green footprint, Lords Chloro has acquired a 26% equity stake in a hybrid energy park, which will provide an additional 10 megawatts of hybrid energy, bringing the renewable energy share to 25%.

Ambitious Capex Plans for Capacity Expansion and Green Initiatives

Lords Chloro has outlined a comprehensive capital expenditure plan totaling INR 355 crore for the period FY24-28. This includes INR 150 crore already invested in FY24-25 for caustic soda and CPW capacity expansion and the 16 MW solar plant. An additional INR 165 crore capex has been announced for further caustic soda expansion from 300 TPD to 400 TPD (net 360 TPD after shutting down an inefficient 40 TPD plant), a new 21-megawatt solar plant, and a sulfuric acid plant. The funding for the INR 165 crore capex will be a mix of debt and equity, with INR 32 crore expected from a warrant issue.

Enhanced Renewable Energy Integration and Cost Savings

The company aims to significantly increase its renewable energy integration, targeting 40-45% of its total power requirements by April-May next year. This aggressive push towards green energy is a core strategy for cost leadership, as it stabilizes margins and reduces exposure to volatile energy prices. Management highlighted that the payback period for these solar investments is expected to be much faster than typical industrial projects, likely less than 5 years, due to the substantial difference between grid power prices and self-generated renewable power.

Industry Outlook and Market Dynamics

Management provided an optimistic outlook for the Indian caustic soda industry, noting its 5-5.5 million tons production and 85% capacity utilization. India is emerging as an exporting hub, with around 1 million tons expected to be exported this year, driven by European capacity shutdowns due to high energy costs. While new large capacities from competitors are expected, Lords Chloro's North India location provides a competitive advantage due to high freight costs from West India, and captive chlorine consumption for value-added products helps mitigate price volatility.

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