MCON Rasayan India Ltd — Q2 FY26 earnings call

Call held 19 Nov 2025

Management summary

MCON Rasayan India Limited reported a strong H1FY26 with 32% YoY revenue growth to ₹284 million and a 39% sequential EBITDA improvement to ₹33 million. Despite year-on-year margin pressure from increased expenditure, PAT remained stable at ₹12 million. The company is focused on strategic priorities including institutional sales, branding, and geographic expansion through its FOCO model, while actively managing working capital and aiming for a ₹70+ crore revenue run rate for FY26.

Highlights

  • Revenue grew 32% year-on-year to ₹284 million in H1FY26.

  • EBITDA improved 39% sequentially to ₹33 million, with a 354-basis point margin expansion.

  • Interest costs reduced by 25.8% year-on-year, strengthening financial position.

  • PAT stood at ₹12 million, broadly stable compared to last year, demonstrating business resilience.

  • Widening distribution footprint now includes 122+ distributors, 7 FOCO Modal partnerships, and presence across 42+ cities in eight states.

Concerns

  • EBITDA margins were lower year-on-year, despite sequential improvement.

  • Total expenditure increased due to raw material and logistics pressure.

  • Working capital remains stretched and is expected to continue for the next six to eight months.

Key financials

  1. Revenue 284 Mn +32%YoY
  2. EBITDA 33 Mn +39%QoQ
  3. EBITDA Margin 11.7%
  4. PAT 12 Mn

What they filed

Q4 FY26: revenue up 48.2%, net profit up 55.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY23Q4 FY23Q2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue13 18 17 25 22 +65%29 +62%28 +65%37 +48%
EBITDA1 1 2 3 3 +149%2 +84%3 +65%4 +32%
Net profit1 0 1 1 1 +88%1 +117%1 +15%2 +55%
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.

Capital allocation

medium confidence
  • Debt Debt disclosed Cost 8.5%
    Mahesh Bhanushali: It's 8.5% currently. 8.5% to 8.7%.

Guidance & targets

Revenue

  • Revenue Run Rate Revenue · FY26 · High confidence ₹70+ crore
    We remain fully committed to achieving our Rs 70 plus crore revenue run rate for FY26 and the momentum in H1 reinforces our confidence in meeting the objective.

    — Mahesh Bhanushali

  • Annual Revenue Growth Revenue · year-on-year · Medium confidence more than 50%
    So, see here on we are always expecting more than 50% growth year-on-year

    — Nandan Pradhan

  • Crossing ₹100 Crore Mark Revenue · Next Year · High confidence ₹100 crore
    And when do you expect to cross 100 crore mark? Next Year.

    — Nandan Pradhan

  • Sales Guidance Revenue · for the year · High confidence ₹70 crores
    And in terms of sales guidance, we maintain, right? 70 crores for the year? Yes, we do maintain that.

    — Nandan Pradhan

  • Government Project Contribution Revenue · next two quarters · High confidence more than 20%
    As far as the contribution is concerned, we are expecting more than 20% contribution from the government project in the next two quarters.

    — Nandan Pradhan

Margin

  • EBITDA Margin Margin · next year itself or latest plan next to next year · Medium confidence 15%
    Sir, we are not now committing to that 15% EBITDA margin guidance for FY26, right? So, sir when should we see, I mean, over the next, let's say, next two, three years, should we see that 15% margin? Yes. Hopefully next year itself or latest plan next to next year.

    — Nandan Pradhan

Market context

  • PAT Margin Profitability · going forward · Medium confidence double-digit
    the margins we will have a nominal growth in the initial one or two years but then going forward it will be we are focusing on a double-digit PAT.

    — Nandan Pradhan

What to watch in Q3 FY26

Working Capital Stretch Reduction

Within 6-8 months
Current Stretched
Target Reduced stretch, positive cash flow

Why it matters

Working capital management is a key concern, and its improvement is crucial for liquidity and financial health, as committed by management.

Nandan Pradhan: See, working capital stretch will happen for next six to eight months further. OK, because with the rapid expansion that we are planning and plus the government projects, we are very upbeat about it. And, there, we are expecting huge volumes. So automatically, once you have to move from a 5 crore per month to 10 crore per month, then the stretch is going to come on the working capital for sure. So that is going to happen. But after six to eight months, we will see a positive cash flow happening and then the stretch on working capital will be reduced.

Risks & concerns

  • Working capital stretch due to rapid expansion

    high

    Management stated that working capital stretch is expected to continue for the next six to eight months due to rapid expansion and government projects, impacting cash flow.

    Management acknowledged

  • Concentrated revenue from Maharashtra

    medium

    Maharashtra contributes 50% of revenue, which an analyst flagged as a concentrated risk. Management acknowledged it but stated no conscious effort to reduce it, citing Mumbai as a major market and parallel growth in other states.

    Analyst downplayed

  • Margin pressure from high fixed costs relative to H1 sales

    medium

    H1 FY26 margins were impacted because expenses (including sales team) were based on a ₹70 crore turnover target, while actual sales were only 30-35% of that, leading to a reduced balance.

    Management acknowledged

  • Increasing competition from large players

    medium

    Management noted that large manufacturers (cement, paint) are entering the construction chemical segment, increasing competition and requiring efforts to retain market share and gain new business.

    Management acknowledged

Q&A highlights

7 direct
Concentrated risk from Maharashtra revenue contribution Partial
So as such, there are no conscious efforts that we want to reduce the contribution of Maharashtra. But yes, we are also focusing on other states so that the risks are well distributed.

Analyst questioned the high concentration of revenue from Maharashtra (50%) as a risk. Management acknowledged the potential risk but stated no active plans to reduce it, focusing on parallel growth.

Asked by Rishi Kothari

Revenue potential of Pune-Solapur FOCO cluster and liquid line throughput Direct
So, if I talk of the franchise is from the FOCO model, then I think that within next one and a half years, they will reach our optimum potential.

Analyst sought specifics on growth drivers from new FOCO clusters. Management provided a timeline for new FOCO units to reach optimum potential, linking it to infrastructure projects.

Asked by Rishi Kothari

Client retention rate and impact on growth Direct
So currently we are hovering around 75% to 80% as far as the client retention rate is concerned. The majority going away of the clients is mainly on the competitive rate part.

Analyst inquired about customer stickiness. Management quantified retention and attributed losses to competitive pricing, indicating a trade-off between margins and market share.

Asked by Rishi Kothari

Product mix strategy, shift to higher margin products, and EBITDA uplift Direct
This year, we are planning to cross at least 20% contribution from the admixture division. So that is the kind of shift we are looking at.

Analyst probed the strategy for margin improvement. Management outlined specific targets for increasing contribution from higher-margin product categories like admixtures.

Asked by Deepesh Sancheti

Order book bifurcation and LOI book value Direct
Currently, we are sitting on around 18, 18 and a half crores.

Analyst sought quantification of future revenue visibility. Management clarified their distributor model doesn't yield a traditional order book but provided the value of Letters of Intent (LOIs).

Asked by Deepesh Sancheti

Receivables over 180 days and collection cycle Direct
Over 180 days, it is around 12% to 15% currently. That is also on a reducing basis. Like compared to 31st March, we are already down by more than a crore.

Analyst raised concerns about rising receivables. Management explained the reasons (new markets, infra projects) and provided a current percentage, noting a positive trend of reduction.

Asked by Deepesh Sancheti

FOCO expansion prioritization over sweating existing capacity Direct
So, due to that, they have gone nearer to the market. So the manufacturing of our mother plant, that is in Vapi, has reduced. But the plant there is manufacturing and they're delivering.

Analyst questioned the strategy of expanding FOCO units while existing plant utilization was falling. Management explained FOCO's role in reducing transport costs and improving margins by being closer to markets, with plans to utilize the Vapi plant for Maharashtra and government projects.

Asked by Shyam Garg

Working capital management and inventory build-up Direct
So, Prashant sir, the inventory was already built. We did not build in this particular quarter. So it's already there, number one. Number two, as we increase our FOCOs, so there is always a shift

Analyst questioned the inventory build-up during a lean quarter. Management clarified it was existing inventory and explained the shift due to FOCO expansion, along with efforts to improve inventory management.

Asked by Prashant Kale

2 min read 6 chapters

Detailed narrative

H1 FY26 Performance Highlights

MCON Rasayan India Limited reported a robust H1FY26 with a 32% year-on-year revenue growth, reaching net sales of ₹284 million. EBITDA for the period stood at ₹33 million, marking a 39% sequential improvement and a 354-basis point margin expansion to 11.7%. Despite year-on-year margin pressures, PAT remained broadly stable at ₹12 million, demonstrating the resilience of the business model. The company also benefited from a 25.8% year-on-year reduction in interest costs.

Strategic Focus and Distribution Expansion

The company's strategic priorities include strengthening institutional sales through engagement with large developers and government bodies, enhancing visibility via multi-channel branding, and accelerating geographic expansion using the FOCO (Franchise Owned Company Operated) model. MCON's distribution footprint has expanded to 122+ distributors and 7 FOCO partnerships across 42+ cities in eight states. Three new franchise units went live during the half year, contributing to network consolidation.

Product Mix and Margin Improvement Initiatives

MCON is actively optimizing its product mix to enhance margin quality, focusing on increasing high-value-added products. The company aims to increase the contribution from the admixture division to at least 20% this year, up from 13% last year. While high-margin products are more competitive, the strategy involves introducing new high-margin products and making current products more cost-effective or better-margined, with 16 high-margin products launched in the last 18 months contributing 8-10% to H1FY26 turnover.

Working Capital Management and Receivables

The company is experiencing stretched working capital, which is expected to persist for another six to eight months due to rapid expansion and government projects. Receivables have risen, primarily due to venturing into new markets and dealing with infra projects that have extended credit periods (90-180 days). Currently, 12-15% of receivables are over 180 days, but this percentage is on a reducing trend. MCON is implementing measures like channel financing, better inventory management, and offering discounts for upfront payments to improve cash flow.

Capacity Utilization and FOCO Plant Strategy

The Vapi mother plant's utilization has reduced to 50-55% as powder manufacturing has shifted to FOCO plants closer to markets (Pune, Kurukshetra, Karnataka, Rajasthan) to reduce transport costs and improve margins. The Sarigam plant currently has 0% utilization, with operations consolidated at Ambethi. Management plans to utilize the remaining Vapi capacity by focusing on Maharashtra and government projects, aiming for a balanced contribution from both mother plant and FOCO units.

Market Opportunity and Competitive Landscape

MCON operates in a total addressable market estimated at ₹50,000 crore, with current penetration less than 1%. The company aims to reach 1.5-2% penetration in the next three years. The market is becoming increasingly competitive, with large manufacturers from the cement and paint sectors entering the construction chemical segment. MCON is focused on retaining its existing market share while also gaining new business amidst this competitive environment.

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