NGL Fine-Chem Limited — Q2 FY26 earnings call

Call held 18 Nov 2025

Management summary

NGL Fine Chem reported strong Q2 and H1 FY26 results driven by broad-based demand recovery in India and Asia, with significant growth in revenue and EBITDA. The company is making strategic progress in regulated markets, having filed its first API registration with the US FDA and expanding its European portfolio. While profitability was slightly impacted by increased costs and lower realizations, management is optimistic about future margin improvement as new capacities come online and regulated market sales commence, despite acknowledging ongoing pricing pressures and a cautious outlook on sustained demand recovery.

Highlights

  • Q2 FY26 Revenue from operations grew 28.64% YoY to INR120.26 crores, reflecting improved market conditions.

  • Q2 FY26 EBITDA increased 48.43% YoY to INR17.16 crores, with EBITDA margin expanding 373 bps to 14.27%.

  • First API registration to U.S. FDA submitted in September 2025, with regulatory audits anticipated in Q2 FY27 and commercial production in H2 FY27.

  • 3 CEPs and 5 ASMFs already granted in Europe, with 3 more CEPs applied for and 3 more ASMFs in process.

  • Fluralaner, a star product, saw successful commercial launch in May 2025 post-patent expiry and is driving good growth.

Concerns

  • Q2 FY26 Profit after tax (PAT) of INR9.63 crores was slightly below Q2 FY25 PAT of INR9.81 crores.

  • H1 FY26 PAT of INR18.87 crores was marginally lower than H1 FY25 PAT of INR19.03 crores.

  • Outsourcing costs increased by approximately 30% and salary costs by about 15% in H1 FY26, contributing to overall cost increases.

  • EBITDA breakeven for the new plant is not expected until FY28, with FY27 focused on registrations rather than significant utilization.

  • Pricing pressure continues due to supply-demand imbalance, with management noting only one quarter of demand recovery so far.

Key financials

2 periods

Q2 FY26

  • Revenue
    ₹120.26 Cr
    YoY +28.6%
  • EBITDA
    ₹17.16 Cr
    YoY +48.4%
  • EBITDA Margin
    14.3%
  • PAT
    ₹9.63 Cr
    YoY -1.8%

H1 FY26

  • Revenue
    ₹224.44 Cr
    YoY +21.8%
  • EBITDA
    ₹28.13 Cr
    YoY +34.5%
  • PAT
    ₹18.87 Cr
    YoY -0.84%

What they filed

Q1 FY27: revenue up 33.7%, net profit up 100.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue93 89 95 104 120 +29%128 +44%149 +57%139 +34%
EBITDA12 5 6 11 17 +42%22 +340%21 +250%23 +109%
Net profit10 1 1 9 10 +0%16 +1500%13 +1200%18 +100%
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

high confidence
  • Capex Capex disclosed
    Our ongoing capital projects remain on track for completion by Q4 FY '26 with commissioning scheduled for Q1 FY '27.
  • Debt Gross ₹95 Cr
    So we have got a sanction for INR95 crores debt. We hope to not utilize this debt completely. ... Worst-case scenario is a max at INR95 crores, best scenario probably at around INR75 crores.

Guidance & targets

Revenue

  • EU Revenue Revenue · FY26 · High confidence INR30 crores
    We have already started selling in the EU. And in fact, we have given a guidance that we are hoping for up to INR30 crores revenue to come from the EU in the current fiscal year.

    — Rahul Nachane

Operating Expenses

  • New Plant Opex Operating Expenses · FY27 · Medium confidence INR1.2-1.5 crores per month
    With regard to the new plant, which we will commission next year, we expect opex to be in the range of about INR1.2 crores per month to INR1.5 crores.

    — Rahul Nachane

Depreciation

  • New Plant Depreciation Depreciation · FY27 · Medium confidence INR6-8 crores
    I would say between INR6 crores and INR8 crores would be the full year depreciation - additional depreciation next year, which will come from the expansion.

    — Rahul Nachane

Profitability

  • New Plant EBITDA Breakeven Profitability · FY28 · High confidence FY28
    EBITDA breakeven, we expect from the new plant in FY '28, not in FY '27 because -- FY '27 is going to be basically getting all registrations done for us.

    — Rahul Nachane

  • EBITDA Margin Target Profitability · Long-term · Medium confidence 15-18%
    we hope that we should be back to our EBITDA targeted EBITDA rate of between 15% and 18%.

    — Rahul Nachane

  • Gross Margin for US/Europe Business Profitability · Future · High confidence 55-60%
    We expect that to be in the range of around 55% to 60%.

    — Rahul Nachane

Regulatory

  • US FDA Audit Trigger Regulatory · H2 CY26 · High confidence H2 calendar year '26
    We expect the audit to get triggered sometime in the second half of calendar year '26.

    — Rahul Nachane

Market Entry

  • US/EU Marketing Tie-ups Market Entry · 2027 onwards · High confidence 2027 onwards
    So we expect actual marketing tie-ups to commence probably in 2027 onwards.

    — Rahul Nachane

Product Development

  • Product Validations Completed Product Development · by December next year (2026) · High confidence 15 validations
    By December next year, we hope to complete 15 validations.

    — Rahul Nachane

Working Capital

  • Working Capital Working Capital · Future · Medium confidence INR60 crores

    From INR45 crores today

    Currently, our working capital is around INR45 crores. We expect it to grow to about INR60 crores.

    — Rahul Nachane

What to watch in Q3 FY26

US FDA Audit Trigger

H2 calendar year '26
Current First API registration submitted in Sep 2025
Target Audit triggered by US FDA

Why it matters

Confirmation of the audit trigger is a key milestone for market entry into the high-margin US regulated market.

We expect the audit to get triggered sometime in the second half of calendar year '26.

Risks & concerns

  • Sustained Demand Recovery

    medium

    Management is cautiously optimistic about demand recovery after 10 flat quarters and needs to see if it's long-term, not just a short-term recovery.

    Management acknowledged

  • Pricing Pressure

    medium

    Pricing pressure persists due to supply-demand imbalance, with subdued demand post-COVID and strong supply in the market.

    Management acknowledged

  • Regulatory Timelines for US Market Entry

    medium

    US FDA audit and approval processes can take 12-15 months (best case) or longer, impacting the timeline for commercial production and sales in the US.

    Management acknowledged

  • Competition in the Market

    low

    The market has seen increased competition with 20 players in India and double that in China, although management believes NGL's integrated supply chain provides an edge.

    Management acknowledged

Q&A highlights

6 direct
Growth Drivers and Market Share Partial
We have seen an improvement in demand occurring across markets and more so specifically in India and Asia... it's too early for me to say whether the market share is taken or its demand growth. But there is definitely a growth in demand in the market.

Analyst sought clarity on specific growth drivers and competitive positioning; management confirmed broad demand recovery but was cautious on attributing it to market share gains.

Asked by Rahul Jain

US Regulatory Filing and Audit Timeline Direct
this is the first filing we have done... best case scenario takes a U.S. filing to actual audit in about 12 to 15 months... expect this to be triggered in the second half of next year.

Clarified the critical timeline for US market entry, including the first filing and expected audit period, which is key for future revenue streams.

Asked by Rohit

New Plant Costs and Breakeven Direct
I would say between INR6 crores and INR8 crores would be the full year depreciation - additional depreciation next year... EBITDA breakeven, we expect from the new plant in FY '28, not in FY '27 because -- FY '27 is going to be basically getting all registrations done for us.

Provided specific financial estimates for the new plant's impact on P&L (depreciation) and a clear timeline for when it is expected to become profitable.

Asked by Ankit Gupta

Fluralaner Commercialization Status Direct
commercial launch has taken place in May this year after the expiry of the patent in March 2025. Customers have already launched the product... it's definitely one of our star products with a good growth rate in the current year.

Confirmed the successful commercialization of a key product post-patent expiry, indicating its contribution to current growth.

Asked by Dhwanil Desai

Capacity Utilization and Outsourcing Strategy Direct
the plant is put up mainly for catering to the U.S. and EU market... we would not like to use this plant for the rest of the world markets, which are lower margin ones. So there, if possible, we'll continue to outsource if we are falling short of capacity.

Outlined the strategic allocation of new capacity to higher-value regulated markets and the continued role of outsourcing for lower-margin segments.

Asked by Naysar Shah

Cost Increases Over Last 3 Years Partial
Current half year, we have seen our cost of outsourcing go up by close to something like 30%... Plant upkeep costs... has seen an increase... Salaries cost has gone up by about 15% because of onboarding of the team for the new plant.

Management detailed the primary drivers behind recent cost increases, providing insight into the factors affecting profitability.

Asked by Akash Jain

Debt Peak for Capex and Working Capital Direct
I said that the maximum debt -- long-term debt, which we hope to take for this project will be INR95 crores. ... Currently, our working capital is around INR45 crores. We expect it to grow to about INR60 crores.

Provided clarity on the expected peak debt levels for the ongoing capex and the anticipated increase in working capital requirements.

Asked by Keshav Garg

Gross Margin for Regulated Markets Direct
We expect that to be in the range of around 55% to 60%. ... Currently, right, yes. (in response to 5-10% higher than current)

Quantified the significantly higher gross margins expected from the US and European regulated markets, highlighting the profitability potential of the strategic shift.

Asked by Naysar Shah

3 min read 7 chapters

Detailed narrative

Strong Q2 and H1 FY26 Financial Performance

NGL Fine Chem reported robust financial results for Q2 and H1 FY26. Revenue from operations for Q2 FY26 reached INR120.26 crores, marking a 28.64% increase year-on-year. EBITDA for the quarter grew by 48.43% to INR17.16 crores, with the EBITDA margin expanding by 373 basis points to 14.27%. For the first half of FY26, revenue stood at INR224.44 crores (up 21.82% YoY) and EBITDA at INR28.13 crores (up 34.54% YoY), demonstrating a strong recovery in demand.

Strategic Entry into Regulated Markets

The company is actively pursuing opportunities in regulated markets. Its first API registration with the U.S. FDA was submitted in September 2025, with regulatory audits expected in Q2 FY27 and commercial production in H2 FY27. In Europe, NGL Fine Chem has already secured 3 CEPs and 5 ASMFs, with an additional 3 CEPs applied for and 3 ASMFs in the process of being filed by March next year. Sales from Europe are projected to reach INR30 crores in the current fiscal year.

Capital Expenditure and Capacity Expansion

NGL Fine Chem's capital expenditure program remains on track, with ongoing investments nearing completion by Q4 FY26 and commissioning scheduled for Q1 FY27. The first clean room under Phase 1 is already operational for manufacturing validation batches. The new plant is primarily designed to cater to the US and EU markets, as well as higher-value areas in Latin America, with lower-margin markets potentially continuing to be served through outsourcing.

Cost Dynamics and Margin Outlook

While gross margins improved, overall costs below gross margin increased in H1 FY26. This was attributed to a ~30% rise in outsourcing costs, increased plant upkeep for audit preparedness, and a ~15% increase in salaries for the new plant team. Management expects the new plant to incur INR1.2-1.5 crores per month in operating expenses and INR6-8 crores in depreciation for FY27, with EBITDA breakeven anticipated in FY28. The company aims to return to an EBITDA margin target of 15-18% as scale increases.

Fluralaner as a Key Growth Driver

Fluralaner, a significant product for NGL Fine Chem, saw its commercial launch in May 2025, following the expiry of its patent in March 2025. The company has successfully marketed this product in both domestic and export markets, identifying it as a 'star product' with a good growth rate in the current year. This product is expected to continue contributing positively to the company's performance.

Debt and Working Capital Management

The company has a sanctioned debt facility of INR95 crores. Management anticipates the peak debt to be around INR95 crores in a worst-case scenario, or potentially INR75 crores in a best-case scenario. Current working capital stands at INR45 crores and is expected to grow to approximately INR60 crores, supporting the increased scale of operations.

Competitive Landscape and Demand Recovery

The competitive landscape remains active, with approximately 20 players in India and double that in China. Management noted that demand recovery is broad-based across India and Asia, marking the first healthy growth quarter after about 10 quarters of flat movement. However, they remain cautiously optimistic, emphasizing the need for sustained demand growth over several quarters for pricing to recover from the current supply-demand imbalance.

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