Laxmi Organic Industries Limited — Q1 FY26 earnings call

Call held 29 Jul 2025

Management summary

Laxmi Organic reported a challenging Q1 FY26 with a 4% revenue de-growth, primarily impacted by an 18% decline in the Specialty segment due to product phase-out and deferred deliveries. Despite this, the Essentials segment showed volume-driven growth. The company is actively progressing on its key capex projects at Lote and Dahej, and is focusing on cost optimization and supply chain digitization to improve efficiency and predictability, while navigating subdued raw material spreads.

Highlights

  • Overall revenue de-grew by nearly 4% in Q1 FY26, despite an 8% volume growth.

  • Profit After Tax (PAT) for Q1 FY26 was ₹214 million, with a PAT margin of 3.1% (vs 4.8% last year).

  • Essentials segment revenue grew 4%, driven by 11% volume growth, offset by a 7% decline in acetic acid feedstock prices.

  • Specialty segment revenue declined 18% due to an anticipated agro AI product phase-out (9% of Specialty sales) and deferred deliveries (4% of sales).

  • Adjusted EBITDA for Essentials was 2%, and for Specialty was 16%.

  • Lote Flouro Intermediate site ramp-up continues, targeting ₹80-120 crores (40-60% of peak ₹200 crores) revenue in FY26.

  • Dahej project is on track for mechanical completion and chemical charging by end of Q3/early Q4 FY26.

  • Hitachi Energy SF6 replacement contract targeted for Q2 FY26, with capex accommodated within the INR 1,100 crores total capex.

Concerns

  • Subdued Spreads in Essentials Business (Ethyl Acetate)

  • Degrowth in Specialty Business

Key financials

  1. Revenue Growth -4% -4%YoY
  2. PAT ₹21.4 Cr -38%YoY
  3. PAT Margin 3.1%

What they filed

Q1 FY27: revenue up 39.7%, net profit up 223.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue771 786 710 693 700 −9%719 −9%735 +4%968 +40%
EBITDA75 75 59 31 37 −51%50 −33%54 −8%114 +268%
Net profit28 29 22 21 11 −61%25 −14%22 +0%68 +224%
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

  • Essentials
    4% Revenue Growth11% Volume Growth2% EBITDA Margin
  • Specialties
    -18% Revenue Decline16% EBITDA Margin

Guidance & targets

Capacity

  • Lote Flouro Intermediate site revenue (from existing asset) Capacity · FY26 · High confidence ₹80-120 crores (40-60% of peak ₹200 crores)
    Our Lote, the Flouro Intermediate site, that building on all the consistent effort over the past quarter, our ramp up continues. And I think we remain on target to achieve, as we have always called out in FY26, somewhere between 40% to 60% of the peak revenues.

    — Rajan Venkatesh

Project Timeline

  • Hitachi Energy SF6 replacement contract signing Project Timeline · Q2 FY26 · High confidence Q2 FY26
    And we are at really the cusp and the target is in Quarter 2 of this year. So, in this quarter, we would ideally like to stitch up the contract with Hitachi.

    — Rajan Venkatesh

  • Dahej facility mechanical completion and chemical charging Project Timeline · Q3 FY26 / Q4 FY26 · High confidence End of Quarter 3, early Quarter 4
    So somewhere towards the end of Quarter 3, early Quarter 4 is where we will have the mechanical completion and thereafter chemical charging happening for all the key assets at our Dahej facility.

    — Rajan Venkatesh

Capex

  • Hitachi Energy capex accommodation Capex · High confidence Accommodated within INR 1,100 crores CAPEX
    We are happy to share that the Hitachi Energy capex that we will need to install will be accommodated in the INR 1,100 crores CAPEX that we had lined up.

    — Rajan Venkatesh

  • Dahej project capex Capex · High confidence ₹800 crores
    What we said is the key element of our capex spend, about Rs. 800 crores is primarily coming into Dahej...

    — Rajan Venkatesh

  • Total capex lined up Capex · High confidence ₹1,100 crores
    We are happy to share that the Hitachi Energy capex that we will need to install will be accommodated in the INR 1,100 crores CAPEX that we had lined up.

    — Rajan Venkatesh

  • Capex completed out of ₹750 crores for current year Capex · FY26 · High confidence Nearly ₹680 crores
    So, out of Rs. 750 crores, we are now on our way to exhaust nearly Rs. 680 crores.

    — Mahadeo Karnik

  • Capex for FY27 Capex · FY27 · High confidence Around ₹100 crores
    So, ballpark around, it will be FY27 around Rs. 100 crores.

    — Mahadeo Karnik

Revenue

  • Overall revenue growth Revenue · by 2028 · Medium confidence 2X revenue growth
    Sir, as we are targeting 3X EBITDA growth and 2X revenue growth by 2028, can we expect this 15%-20% revenue growth for this year and next year?

    — Saumil Shah (referencing company target)

Profitability

  • Overall EBITDA growth Profitability · by 2028 · Medium confidence 3X EBITDA growth
    Sir, as we are targeting 3X EBITDA growth and 2X revenue growth by 2028...

    — Saumil Shah (referencing company target)

Business Outlook

  • Q2 FY26 performance Business Outlook · Q2 FY26 · Medium confidence In line with Q1 or better
    So, on Q2 specifically, let me call out, we will continue to see performance which is in line with performance of Quarter 1 or better performance. So, that is the guidance that we are giving for next quarter.

    — Mahadeo Karnik

  • Specialty business performance Business Outlook · H2 FY26 · Medium confidence Stronger as compared to H1
    What we can call out is for our Speciality business, given that there is that deferment from Quarter 1, Quarter 2 into second half, our second half for our Speciality business is anticipated to be stronger as compared to our first half.

    — Rajan Venkatesh

  • Essentials business spreads Business Outlook · Q2 FY26 · Medium confidence At the same point (as Q1)
    In Quarter 2, we are also expecting spreads to be at the same point.

    — Rajan Venkatesh

Risks & concerns

  • Subdued Spreads in Essentials Business (Ethyl Acetate)

    high

    Ethyl acetate spreads are currently around $120/metric ton, significantly below the 12-year average of $220, directly impacting Q1 performance and Q2 outlook.

    Management acknowledged

  • Degrowth in Specialty Business

    high

    Specialty segment revenue declined 18% due to the phase-out of an agro AI product (9% of sales) and deferred deliveries (4% of sales shifted to H2 FY26).

    Management acknowledged

  • Weak/Moderate Demand in Agrochemicals

    medium

    Demand in the agrochemical market remains weak to moderate, though inventory is ebbing. This segment is less than 10% of enterprise level.

    Management acknowledged

  • Muted Demand in CASE (Coatings, Additives, Sealants, Elastomers) in North America and Europe

    medium

    Global demand in CASE markets, particularly in North America and Europe, is muted, impacting certain portfolios, though management believes it's a 'passing phase'.

    Management acknowledged

  • China Overcapacity / Price Wars

    medium

    Beijing has signaled intervention in producer price wars, potentially leading to capacity moderation in China, which could improve margins across the value chain.

    Management acknowledged

Areas of evasion (1)

  • Full-year financial guidance (revenue, EBITDA) for FY26 and FY27.

Q&A highlights

1 direct, 2 evasive
FY26/FY27 Revenue and EBITDA Guidance Evasive
So, at this point of time, Saumil that is a more detailed question. I think let us follow that off offline. That is what I would request you and then we can give you granularity.

Management declined to provide specific financial guidance for future years, indicating a lack of near-term visibility or unwillingness to commit to specific numbers.

Asked by Saumil Shah

Full Year FY26 Prognosis (Revenue Growth, Blended EBITDA Margins) Evasive
Sakshi, one is we really do not give out full year prognosis. So, I would certainly respect your understanding on that.

Management avoided giving a comprehensive full-year outlook for FY26, which is a key investor expectation, especially after a challenging Q1.

Asked by Sakshi Pratap

Ethyl Acetate Capacity and Demand-Supply Dynamics Direct
So, Jigar, that the 200 TPD, first and foremost, this would be the single largest economy of scale line, I think, in India and also one of the economies of scale lines globally... And for us as Laxmi, the ambition has always been to be in the top quartile and hence you see that in our numbers that we are able to run our assets full, we are able to grow our volumes actually on a quarter-on-quarter basis.

This question clarified the company's strategic rationale behind its Ethyl Acetate capacity expansion, emphasizing cost leadership and volume growth despite current subdued spreads.

Asked by Jigar Shah

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

Laxmi Organic reported a challenging Q1 FY26, with overall revenue de-growing by nearly 4% year-on-year, despite an 8% volume growth. Profit After Tax (PAT) stood at ₹214 million, representing a PAT margin of 3.1%, a significant decline from 4.8% in the previous year. The company's overall cost for the quarter was ₹1,828 million, slightly lower than ₹1,839 million last year, aided by ₹110 million in cost-to-serve savings.

Segmental Performance: Essentials & Specialties

The Essentials business demonstrated resilience, growing 4% in revenue, driven by an impressive 11% volume growth. However, this was partially offset by a 7% decline in acetic acid feedstock prices. The adjusted EBITDA margin for the Essentials segment was 2%. In contrast, the Specialties segment experienced an 18% revenue decline, primarily due to the anticipated phase-out of an agro AI product (accounting for 9% of Specialty sales) and deferred deliveries of select products (4% of sales), which are expected to shift to the second half of FY26. The adjusted EBITDA margin for Specialties was 16%.

Raw Material and Market Trends

Key raw material prices, acetic acid and ethanol, continued their downward trend. Acetic acid prices dipped to around $340 per ton from an FY24 average of $450, while ethanol prices stabilized around ₹690-700 from an FY24 average of ₹840. Essentials spreads, particularly for ethyl acetate, remained subdued at around $120 per metric ton, significantly below the 12-year average of $220. Demand in printing, packaging, and pharma markets remained stable, while agrochemical demand was weak to moderate. Global demand in CASE markets (Coatings, Additives, Sealants, Elastomers) in North America and Europe was also muted.

Strategic Projects Update: Lote, Dahej, and Hitachi

The Lote Flouro Intermediate site continues its ramp-up, with the company remaining on target to achieve ₹80-120 crores (40-60% of peak ₹200 crores) of its peak revenues in FY26. The Dahej project is on track, with mechanical completion and chemical charging anticipated towards the end of Q3 or early Q4 FY26. Furthermore, Laxmi Organic expects to finalize the contract with Hitachi Energy in Q2 FY26 for the production of an eco-efficient gas (SF6 replacement), with the required capex accommodated within the previously announced ₹1,100 crores total capex.

Capex and Growth Outlook

The company has already utilized nearly ₹680 crores out of the ₹750 crores capex planned for FY26, with approximately ₹800 crores of the total ₹1,100 crores capex allocated to the Dahej project. For FY27, capex is projected to be around ₹100 crores. Laxmi Organic reiterated its long-term aspiration of achieving 2X revenue growth and 3X EBITDA growth by 2028. For Q2 FY26, management expects performance to be in line with or better than Q1, with the Specialty business anticipated to be stronger in H2 FY26.

Operational Excellence and Digitization

Laxmi Organic is intensifying its focus on productivity, commercial excellence, and cost discipline. A significant initiative is the end-to-end digitization of its supply chain operations, which commenced in Q1 FY26. This project, incurring a one-time expense of ₹79 million, is expected to enhance efficiency, predictability, reduce costs, and improve agility in serving customers.

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