NGL Fine Chem

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.

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.

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.

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, 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.

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.

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.