Laxmi Organic

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.

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%.

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.

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.

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.

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.