Lords Chloro

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%.

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%.

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.

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.

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.