NGL Fine Chem

NGL Fine Chem demonstrated a robust recovery in FY26, with revenue from operations growing 36% YoY to ₹500.95 crores, up from ₹368.26 crores in FY25. EBITDA more than doubled to ₹72.69 crores, against ₹33.87 crores in the previous year, resulting in an EBITDA margin of 14.51%, an improvement of 531 basis points. Profit after tax surged by 128% to ₹48.13 crores, indicating a strong return to growth trajectory after challenging years.

The company reported a strong Q4 FY26, with revenue from operations reaching ₹149.23 crores, a 57% increase year-on-year and 17% sequentially. EBITDA for the quarter was ₹21.41 crores, a significant rise from ₹6.32 crores in Q4 FY25, with the EBITDA margin expanding by 769 basis points YoY to 14.35%. Profit after tax for Q4 FY26 was ₹13.49 crores, substantially higher than ₹0.54 crores in the prior year's quarter.

Phase I of the expansion program is now contributing meaningfully to operations, comfortably absorbing higher volumes. However, Phase II at Tarapur faced delays due to shortages of gas and labor, pushing its commissioning from Q1 FY27 to early Q2 FY27. Commercial production from Phase II is still expected in H2 FY27 as previously guided. Of the total planned capex of ₹210 crores, ₹182.75 crores has been invested up to Q4 FY26.

Despite strong growth, Q4 FY26 margins were marginally lower sequentially due to increased freight and raw material costs, and mark-to-market forex provisions, which could not be immediately passed on due to fixed-price contracts. However, management has secured a partial price pass-through with customers in Q1 FY27 and anticipates EBITDA margins to stabilize in the 15-18% range, especially as China's raw material prices have also started to increase.

Animal API remains the core business, contributing 95% of revenues. The company has expanded its API portfolio to approximately 45 products, effectively doubling its pipeline in three years. Sales and marketing efforts have led to effective penetration in new geographies like Latin America, contributing to broad-based volume growth globally. The top 10 customers account for 29% of sales, and the top 10 products contribute 66% of sales, indicating good diversification.

NGL Fine Chem is actively pursuing regulated markets, with 5 VMS filings already completed and 6 more planned. While USFDA inspections are regulator-dependent and could occur this year or next, the company is advancing European registrations and expects business to commence in H2 FY27. The new Phase II capacity will be utilized for existing products and European markets until USFDA approvals are secured, with the aim of reaching significant revenue from regulated markets starting FY28.

The total capex for Phase II increased by ₹50 crores to ₹210 crores, primarily due to ₹20 crores for automation/digitization and ₹30 crores for higher metal costs, not for additional sales capacity. The company is funding its cost increases through internal accruals and is not taking on additional borrowing, with current debt outstanding around ₹100 crores. Management has not yet formulated a dividend strategy for the next three years, indicating a focus on reinvestment.