Laxmi Organic

Laxmi Organic reported a demanding Q2 FY26, with overall revenue declining by 9% year-on-year to approximately INR 807.6 crores. This was primarily driven by a 20% decline in Specialty Chemicals revenue, which fell from INR 230 crores in Q2 FY25 to INR 183 crores in Q2 FY26. Essentials revenue also saw a 5% decline, mainly due to price moderation linked to feedstock costs. The company's profitability was significantly impacted, with EBITDA for Q2 FY26 dropping to INR 37 crores from INR 74 crores in the prior year, leading to an EBITDA margin contraction from 9.7% to 5.3%. Net Profit After Tax (PAT) also saw a sharp decline, coming in at INR 11 crores compared to INR 28 crores in Q2 FY25.

Despite the challenging quarter, Laxmi Organic is actively progressing with its strategic expansion projects. Phase 1 of the Dahej facility is now operational and supplying customers, with Phase 2 mechanical completion anticipated by Q4 FY26. The world-scale ethyl acetate plant at Lote is also expected to be mechanically complete by Q4 FY26. The company aims to be a globally top 3 producer in diketene derivatives with its expanded capacity.

The fluorination project at Lote is ramping up, with the company anticipating revenues closer to 40-50% of its peak revenues in FY26, translating to INR 80-100 crores for the year. The Hitachi collaboration plant (Vayu) for SF6 replacement is targeted for mechanical completion by Q2 FY27 with a capex of INR 75 crores. Management highlighted that the electrochemical fluorination technology platform has 'started firing' and they aim for much larger ambition in this vertical beyond the initial INR 200 crores revenue capacity of the acquired asset. The Hitachi project, with an asset turn of 1.2, is expected to generate approximately INR 90 crores in revenue on top of existing fluorochem targets.

The company expects to capitalize around INR 800 crores by the end of FY26, with the remaining capex in FY27, primarily focused on the Dahej facility. Despite the profit decline, cash flow from operations remained robust at INR 153 crores, and the debt-to-equity ratio stood at a healthy 0.17, indicating a strong financial position to support ongoing investments. The company also noted a nearly 5% year-on-year decline in total expenses, reflecting ongoing cost control efforts.

Management acknowledged the demanding global chemical industry backdrop, characterized by overcapacities and cost optimization efforts. They are focusing on productivity, commercial excellence, and cost discipline. The company expects specialty margins to revert to the 22-25% range by Q4 FY26 or Q1 FY27, aided by the Dahej ramp-up and alternative product mapping for the phased-out agrochemical intermediate. Ethyl acetate spreads remained at the 'bottom of the bottoms' in the $90-100 range.