Detailed Narrative
Q2 FY26 Performance and Market Headwinds
PCBL Chemical Limited reported a healthy 5% QoQ increase in carbon black sales volume to 1,61,728 metric tons, achieving over 99% capacity utilization. The company also recorded its highest ever power generation of 223 MUs, up 7% YoY, with external sales volume growing 10% YoY to 138 MUs. However, consolidated revenue from operations stood at Rs. 2,164 crores, with EBITDA at Rs. 278 crores and PAT at Rs. 62 crores, reflecting margin pressure from a softer market and continued pricing challenges.
Impact of US Tariffs and Global Economic Uncertainties
The carbon black business was significantly impacted by a 50% US tariff on exports, which account for 5% of total volume, translating to an annual EBITDA impact of approximately Rs. 70 crores. Management noted broader economic uncertainties and tighter inventory positions, leading to cautious purchasing patterns. Additionally, Russian imports of 8,000-10,000 tons per month at lower prices contributed to pricing pressure in the spot market, despite domestic volumes increasing.
Aquapharm Chemical's Mixed Performance and Outlook
Aquapharm Chemical reported Rs. 395 crores in revenue (up 9% YoY) and Rs. 48 crores in EBITDA for Q2 FY26. The India business demonstrated strong growth, with EBITDA increasing from Rs. 28 crores in Q1 to Rs. 33 crores in Q2. However, the US Oil & Gas segment experienced a 40% volume decline due to low crude oil prices ($62-65 vs. a 'sweet spot' of $75-80). Management anticipates visible EBITDA improvement from Q3 onwards, targeting an exit rate of Rs. 75 crores by the end of FY26, partly driven by new tariffs on Chinese imports benefiting Aquapharm's products.
Aggressive Capacity Expansion and New Product Development
PCBL is on track with several strategic projects, including the commissioning of a 1,000 MTPA specialty black line in Palej by month-end (commercial production in Nov 2025) and a 90,000 MTPA rubber line brownfield expansion in Tamil Nadu (operational this quarter). The 20,000 MTPA specialty black line in Mundra has been preponed to March 2026. The Nanovace pilot plant for nano-silicon is on track, with process patents secured in the US and pending elsewhere, positioning PCBL in advanced battery chemicals.
Capital Management and Sustainability Achievements
The company demonstrated prudent capital management by improving its working capital cycle by 12 days in H1 FY26, which released approximately Rs. 240 crores of cash. Gross debt was reduced by over Rs. 300 crores since March 2025, maintaining healthy cash generation. PCBL also achieved significant sustainability milestones, including registration under the International Renewable Energy Certificate (IREC) platform and receiving the Gold Medal in the EcoVadis Sustainability Rating for FY23-24, placing it among the top 5% of global companies.
Employee Expenses and Operational Efficiency Focus
Employee expenses saw a 25% YoY increase in Q2 FY26, primarily due to the annual appraisal cycle (July-June) and strategic fresh hiring to build capabilities for organic and inorganic growth, as well as investments in technology. Management indicated that this reflects a new run rate for employee costs. Despite market challenges🌐, the company is focusing on operational excellence to optimize processes, manage costs, and strengthen overall competitiveness.