Laxmi Organic Industries Limited

The global chemical industry remains challenging, marked by cost optimization, shutdowns of subscale assets, and supply chain rerouting due to evolving tariffs. However, recent shutdowns in Europe and China's anti-involution policy, along with the signed EU-India FTA, are seen as potential positive catalysts. Demand signals from key end-user segments like packaging, inks, adhesives, and pharmaceuticals remained stable, while agrochemicals were moderate and paints/coatings weak to moderate.

Laxmi Organic reported a challenging Q3 FY26 with revenues decreasing by nearly 9% year-on-year. EBITDA was nearly INR 50 crores, down 33% from the previous year, and PAT stood at INR 25 crores, compared to INR 29.3 crores in Q3 FY25. The adjusted EBITDA was INR 14 crores. Key drivers for the decline included continuing pressure on ethyl acetate spreads, a product mix shift due to a decline in Specialties, and incremental costs from Lote and Dahej facilities. The results also included a one-time^📎 net gain of INR 36 crores from a litigation settlement, offset by labor and supply chain redesign costs.

The Specialties segment experienced a significant revenue decline of 30% in Q3 FY26, with EBITDA margins at 12-13%. This was attributed to 12% price moderation, a 5-6% impact from a one-time^📎 campaign product in FY25 that did not repeat, and a 10% impact from the phase-out of an agrochemical intermediate. Management expects sales from a new replacement product to manifest in Q4 FY26, with ramp-up continuing into FY27. The company remains focused on its diketene derivatives space, leveraging its largest global portfolio and cost position.

The Essentials business saw a 6% decline in revenue in Q3 FY26, though volumes remained stable. This was primarily due to the impact of acetic acid feedstock prices, which had dropped over 20% in 2024-2025. However, acetic acid prices have rebounded to $360-$380 levels in December, and management anticipates them to float between $340-$370 in the short to midterm. Ethyl acetate spreads are also improving, inching towards the $130 range from $90-$100. The company's focus remains on volume-driven profitable growth, with new capacities coming online in FY27.

The Dahej facility, a significant INR 710 crores capex, is progressing as planned. Phase 1 is already operational and supplying customers, while Phase 2, focusing on diketene and its downstream derivatives, is on track for mechanical completion by the end of Q4 FY26. FY27 will be the first year for qualification and ramp-up of Dahej Phase 2, with further fast-tracking in FY28. The Lote fluorination facility remains on track to achieve its target of INR 70-80 crores top line in its first year of operations (FY26), operating in compliance with all regulations.

Laxmi Organic continues to implement self-help measures to navigate the challenging chemical industry landscape. These include focusing on productivity, commercial excellence, execution excellence for projects within budget and scope, and stringent cost discipline. The company is also prioritizing new growth projects and product development, particularly in its specialty vertical. Management reaffirmed its commitment to transparency and active engagement with stakeholders, ensuring environmental compliance at its Lote facility.