Detailed Narrative
HPP Segment: Strategic R32 Expansion
The High Performance Products (HPP) business achieved robust growth with revenue crossing ₹400 crores, a 38% YoY increase. Management announced a strategic capex of ₹236.5 crores to add 15,000 MTPA of R32 capacity, utilizing their available entitlement under the Kigali Montreal Protocol. This asset is expected to generate peak annual revenue between ₹600 crores and ₹825 crores upon completion in Q3 FY27. The expansion is timed to meet tightening global supply and increasing domestic demand for RAC (Room Air Conditioning) applications.
Specialty Chemicals: Sweating Assets through Debottlenecking
Specialty business revenue grew 39% YoY to ₹220 crores, aided by the new fluoro specialty plant operating at optimum capacity. To further capitalize on demand from global innovators, the Board approved a ₹75 crore capex for debottlenecking MPP capacity at Dahej. This project targets a commissioning date of Q3 FY27 and is expected to contribute ₹140-160 crores in peak annual revenue. Management highlighted a firm order for a novel agrochemical intermediate for calendar year 2026 as a key driver for this segment.
CDMO: Record Growth and Pipeline Visibility
The CDMO vertical reported a massive 98% YoY revenue growth to ₹134 crores in Q2 FY26. Management indicated that the 'lumpiness' historically associated with this segment is diminishing, with consecutive strong quarters. Supplies from the new cGMP4 plant are scheduled to commence in January 2026. The company is also seeing strong interest from 'Large Pharma' innovators, with three major audits conducted during the period, supporting their long-term $100 million revenue aspiration.
Financial Performance: Operating Leverage in Action
Q2 FY26 was a landmark quarter for profitability, with Operating EBITDA margins reaching 32.5%, a significant jump from 20.7% YoY. CFO Anish Ganatra clarified that approximately 75% of this EBITDA growth was driven by volume expansion and operating leverage rather than just pricing. Consequently, the company has revised its full-year EBITDA margin guidance upward to 28-30%. The balance sheet remains healthy with a net debt-to-equity ratio of 0.9x and working capital days maintained at 87.
Future Outlook and AHF Project Update
The company's AHF (Anhydrous Hydrogen Fluoride) project is advancing steadily with mechanical trials underway and commissioning expected by Q3 FY26. This project is critical as it provides the 'license to drain' for higher value-added downstream products. Management expects capacity utilization for HF to reach 50% or more by FY26, eventually hitting optimal levels by 2029-2030 as electronic-grade HF and advanced material verticals scale up.