Laxmi Organic Industries Limited — Q2 FY26 earnings call

Call held 30 Oct 2025

Management summary

Laxmi Organic reported a challenging Q2 FY26 with a 9% revenue decline and a significant drop in EBITDA and PAT, primarily due to a 20% fall in Specialty Chemicals revenue driven by product phase-outs, market price moderation, and deferred orders. Despite the headwinds, the company maintained robust cash flow from operations and is progressing with its strategic expansion projects, including the operationalization of Dahej Phase 1 and the ramp-up of its fluorination business, with a focus on cost optimization and commercial excellence.

Highlights

  • Total revenue declined by 9% YoY to approximately INR 807.6 crores in Q2 FY26.

  • Specialty Chemicals revenue declined by 20% YoY to INR 183 crores, impacted by product phase-out (10%), market price moderation (7%), and deferred orders.

  • EBITDA for Q2 FY26 stood at INR 37 crores, down 50% YoY from INR 74 crores, with EBITDA margin contracting to 5.3% from 9.7%.

  • PAT for Q2 FY26 was INR 11 crores, a significant 60.7% decline from INR 28 crores YoY.

  • Cash flow from operations remained robust at INR 153 crores, and debt-to-equity ratio was healthy at 0.17.

  • Dahej Phase 1 is operational and supplying customers, with Phase 2 mechanical completion anticipated by Q4 FY26.

  • The fluorination project is ramping up, targeting 40-50% of peak revenues (INR 80-100 crores) in FY26, and the Hitachi collaboration plant is expected by Q2 FY27 with INR 75 crores capex.

Concerns

  • Global Chemical Industry Demand and Overcapacity

Key financials

  1. Total Revenue ₹807.63 Cr -9%YoY
  2. EBITDA ₹37 Cr -50%YoY
  3. EBITDA Margin 5.3%
  4. PAT ₹11 Cr -60.7%YoY
  5. Cash Flow from Operations ₹153 Cr
  6. Debt-to-Equity Ratio 0.17

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

Share of Revenue YoY Growth
0.25 Total
  • Specialty Chemicals 0.2 80.0%
  • Essentials 0.05 20.0%

Guidance & targets

Revenue

  • Fluorine Setup Revenue Revenue · FY26 · Medium confidence 40-50% of peak revenues
    That is also ramping up according to the plans that we had laid out. That is we are anticipating to have revenues, which is closer to the 40% to 50% of the peak revenues that we had called out in the past.

    — Rajan Venkatesh, MD and CEO

  • Fluorochemical Revenues Revenue · FY26 · High confidence INR 80 crores
    So Nitesh, at this point of time, the focus still remains exactly like you called out. We want to land up close to about INR 80 crores. At this point of time, we don't break it down. We're gradually ramping up, but we have a great line of sight to be at that INR 80 crores that we have lined up for this financial year.

    — Rajan Venkatesh, MD and CEO

  • Fluorochem Business Revenue (Acquired Asset) Revenue · Medium confidence Up to INR 200 crores
    And we said that, that asset that we acquired will be only able to generate up to this INR 200 crores of revenue.

    — Rajan Venkatesh, MD and CEO

Capacity

  • Dahej Phase 2 Operationalization Capacity · H2 FY26 · High confidence End of H2 FY26
    So focus moving forward also remains to to complete the Phase 2 and also operationalize the same at the Dahej facility, which we are looking forward to do towards the end of the second half of this financial year.

    — Rajan Venkatesh, MD and CEO

  • Dahej Phase 2 Ramp-up Capacity · FY27 · Medium confidence Steady ramp-up
    And then FY '27 would be the steady ramp-up that we will expect from that.

    — Rajan Venkatesh, MD and CEO

  • Hitachi Collaboration Plant (Vayu) Mechanical Completion Capacity · Q2 FY27 · High confidence Q2 FY27
    Capex is INR 75 crores and mechanical completion is anticipated by quarter 2 of the next financial year.

    — Rajan Venkatesh, MD and CEO

  • World-scale Ethyl Acetate (Lote) Mechanical Completion Capacity · Q4 FY26 · High confidence Q4 FY26
    And what will also happen at our Lote facility is our world-scale ethyl acetate, which we have called out, which should come up by quarter 4 of this financial year.

    — Rajan Venkatesh, MD and CEO

Margin

  • Specialty Margins Margin · Q4 FY26 or Q1 FY27 · Medium confidence 22-25%
    Okay. So can we expect that by end of Q4 or so like by March '26 or Q1 FY '27, we can revert back to our margins of specialty in the range of 22% to 25%?

    — Rajan Venkatesh, MD and CEO

Capex

  • Hitachi Collaboration Plant Capex Capex · High confidence INR 75 crores
    Capex is INR 75 crores and mechanical completion is anticipated by quarter 2 of the next financial year.

    — Rajan Venkatesh, MD and CEO

  • Total Capex Capitalization Capex · FY26 · High confidence INR 800 crores
    So as per my estimate, it should be around INR 800 crores capitalization in by FY '26 and rest should happen in FY '27.

    — Mahadeo Karnik, CFO

Other

  • Hitachi Project Asset Turn Other · High confidence 1.2
    So we have said, again, the capex is about INR 75 crores and asset turn is about 1.2.

    — Rajan Venkatesh, MD and CEO

Risks & concerns

  • Global Chemical Industry Demand and Overcapacity

    high

    The global chemical industry backdrop remains very demanding, shaped by regional dynamics and overall supply-side overcapacities, leading to cost optimization and restructuring.

    Management acknowledged

  • Market Price Moderation

    medium

    Market price moderation across segments, including ethyl acetate spreads ($90-100), contributed to the Q2 decline and is expected to continue depending on feedstock development.

    Management acknowledged

  • Agrochemical Product Phase-out

    medium

    An anticipated phase-out of one agrochemical product, for which Laxmi supplies an intermediate, impacted specialty revenue by 10% in Q2, though an alternative product has been mapped.

    Management acknowledged

Areas of evasion (2)

  • Quantifying deferred shipments
  • Granular breakdown of specialty revenue decline factors

Q&A highlights

1 direct, 1 evasive
Quantification of deferred shipments and specialty revenue drop Evasive
But Jainam, I would require your respect that we cannot be more granular on that topic. But we can assure that we are also very, very clear with our customers. This is something that will manifest in this second half.

Management was reluctant to provide specific financial details on deferred shipments, making it harder for investors to model H2 performance accurately.

Asked by Jainam Ghelani

Detailed bridge for specialty revenue decline and GST incentive impact Partial
So I think, Yash, it's a specific, very granular question. We are happy to clarify that. Why don't we take this as a follow-up, and then we can sort of get into that level of granularity that you're seeking.

Management avoided providing a detailed, on-call breakdown of the specialty revenue decline, suggesting a desire to control the narrative on a sensitive topic impacting profitability.

Asked by Yash Mehta

Fluorochem business revenue targets and future expansion ambition Direct
So you're correct in saying INR 200 crores is miniscule as compared to the larger piece, but ambition remains much larger also in fluorination for us, building on our first successes.

Analyst challenged the seemingly low revenue target for a key growth vertical, prompting management to clarify that current targets are from the acquired asset, but future ambition, especially with Hitachi, is significantly larger.

Asked by Saumil Shah

2 min read 5 chapters

Detailed narrative

Challenging Q2 FY26 Performance and Profitability Contraction

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.

Strategic Project Progress and Capacity Expansion

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.

Fluorination Business Ramp-up and Hitachi Partnership

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.

Capex and Financial Health

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.

Market Outlook and Future Margin Expectations

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.

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