PCBL Chemical Limited — Q2 FY26 earnings call

Call held 17 Oct 2025

Management summary

PCBL Chemical Limited reported healthy volume growth and record power generation in Q2 FY26, but profitability was impacted by pricing pressure, US tariffs, and a softer market. Despite these headwinds, the company maintained high capacity utilization and reduced debt. Aquapharm showed mixed performance, with strong India growth offsetting US weakness. PCBL remains optimistic about future growth, driven by strategic capacity expansions and new product development in advanced materials.

Highlights

  • Consolidated sales volume in carbon black business increased by 5% QoQ to 1,61,728 metric tons, with capacity utilization over 99%.

  • Achieved highest ever power generation (223 MUs, up 7% YoY) and external sales volume (138 MUs, up 10% YoY).

  • Working capital cycle improved by 12 days in H1 FY26, releasing around Rs. 240 crores of cash, and gross debt reduced by over Rs. 300 crores since March 2025.

  • Aquapharm's specialty and solution segment witnessed a gross margin improvement of 10% on the back of a better product mix.

  • Strong pipeline of strategic projects, including new specialty black lines and brownfield expansion, are on track for commissioning over the next 18 months.

Concerns

  • Margins impacted by continued pricing pressure in a relatively softer market environment.

  • US tariffs (50% tariff) on carbon black exports (5% of total volume) constrained business, leading to a Rs. 70 crores annual impact on EBITDA.

  • Temporary deferment of purchases following the GST rate cut contributed to pricing pressure in the domestic market.

  • Aquapharm's US Oil & Gas segment volumes were down by 40% due to low crude oil prices ($62-65 vs. sweet spot of $75-80).

Key financials

  1. Consolidated Revenue ₹2,164 Cr
  2. Consolidated EBITDA ₹278 Cr
  3. PAT ₹62 Cr
  4. Carbon Black Sales Volume 1,61,728 metric tons +5%QoQ
  5. Power Generation 223 MUs +7%YoY
  6. External Power Sales Volume 138 MUs +10%YoY

What they filed

Q1 FY27: revenue up 13.8%, net profit up 15.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,536 1,430 1,448 1,453 1,478 −4%1,274 −11%1,371 −5%1,653 +14%
EBITDA273 244 215 226 180 −34%151 −38%157 −27%238 +5%
Net profit129 111 95 93 60 −53%36 −68%47 −51%107 +15%
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.

Segment breakdown

  • Carbon Black Business (Q2 FY26)
    1,61,728 tons Total Sales Volume99,549 tons Domestic Sales Volume62,179 tons International Sales Volume
  • Carbon Black Product Mix (Q2 FY26)
    93,892 tons Tyres Sales Volume50,331 tons Performance Chemical Sales Volume17,505 tons Specialty Sales Volume
  • Aquapharm Chemical (Q2 FY26)
    ₹395 Cr Revenue₹48 Cr EBITDA
  • Aquapharm Chemical (H1 FY26)
    ₹4,278 Cr Revenue₹603 Cr EBITDA

Capital allocation

high confidence
  • Capex Capex disclosed
    • Specialty Black Line (super conductive grades) in Palej, Gujarat
    • Brownfield expansion of rubber line in Tamil Nadu
    • Specialty Black Line in Mundra
    • Nanovace pilot plant for battery chemicals (nano-silicon)
    • Acetylene Black plant
    • PBTC plant commissioning for Aquapharm
    • De-bottlenecking for acetyl chloride (Aquapharm)
    • Granulation lines for new granulated products (Aquapharm)
    Kaushik Roy: "In line with this PCBL Chemical is poised for exciting period ahead with several strategic projects scheduled to come on-screen in phases over the next 18 months..." (page 3), "Brownfield expansion of 90,000 MTPA rubber line in Tamil Nadu is under commissioning stage and likely to be operational in the current quarter itself." (page 3), "On the battery chemical side, Nanovace's pilot plant project is on track." (page 5), "Acetylene Black plant of 4,000 MTPA is expected to be commissioned over next 18 months." (page 5), Suresh Kalra: "We also have commissioned a new plant of PBTC..." (page 8), "We are also undertaking a de-bottlenecking initiative, which is also complete, for acetyl chloride." (page 8)
  • Debt Debt disclosed
    Kaushik Roy: "...reduction in gross debt of over Rs. 300 crores since March 2025." (page 3)
  • Liquidity Liquidity disclosed Working capital cycle improved by 12 days in H1 FY26, releasing around Rs. 240 crores of cash, and overall cash generation remains healthy.
    Kaushik Roy: "Our working capital cycle improved by 12 days in H1 FY'26, releasing around Rs. 240 crores of cash and overall cash generation remain healthy..." (page 3)

Guidance & targets

Volume

  • Domestic Tyre Demand Growth Volume · FY26 · High confidence 6-8%
    Domestic tyre demand is projected to grow at 6-8% in FY'26, led by stronger replacement demand in the second half.

    — Kaushik Roy

  • Specialty Sales Volume Volume · this year · Medium confidence 72,000-73,000 tons
    This year, based on our capacity, we can reach maybe about 72,000-73,000 tons and we are on track to achieve that volume.

    — Raj Gupta

Capacity

  • Total Carbon Black Capacity Capacity · next couple of years · High confidence over 1 million tons
    We are on track to achieve our targeted capacity of over 1 million tons of carbon black capacity in next couple of years.

    — Kaushik Roy

  • Palej Specialty Black Line Commissioning Capacity · this month end · High confidence commissioned
    Specialty Black Line dedicated for super conductive grades of 1,000 MTPA capacity will be commissioned in Palej, Gujarat by this month end...

    — Kaushik Roy

  • Palej Specialty Black Line Commercial Production Capacity · November 2025 · High confidence begin
    ...and commercial production will begin from 2025 November, which is next month.

    — Kaushik Roy

  • Tamil Nadu Rubber Line Operationalization Capacity · current quarter · High confidence operational
    Brownfield expansion of 90,000 MTPA rubber line in Tamil Nadu is under commissioning stage and likely to be operational in the current quarter itself.

    — Kaushik Roy

  • Mundra Specialty Black Line Commissioning Capacity · March '26 · High confidence preponed to March '26
    Number 3, commissioning of Specialty Black Line, 20,000 MTPA in Mundra is likely to be preponed to March '26.

    — Kaushik Roy

  • Acetylene Black Plant Commissioning Capacity · next 18 months · High confidence commissioned
    Acetylene Black plant of 4,000 MTPA is expected to be commissioned over next 18 months.

    — Kaushik Roy

Profitability

  • Aquapharm EBITDA Exit Rate Profitability · end of FY26 · High confidence Rs. 75 crores
    We look forward to end this financial year with the Rs. 75 crores of EBITDA overall, the global business for nine-months' basis. So, that is an exit we are looking at today.

    — Suresh Kalra

  • Carbon Black EBITDA per ton recovery Profitability · in couple of years' time · Medium confidence Rs. 20,000

    Previously Rs. 16,000 → Rs. 20,000

    So, our EBITDA which used to be around say Rs. 20,000, has come down to about Rs. 16,000. So, that is a margin of Rs. 4,000, we are fairly confident of recovering once the market stabilizes.

    — Raj Gupta

  • Carbon Black EBITDA per ton Profitability · Q3 FY26 · High confidence better than this quarter
    Basis that we have confidence that Quarter 3 EBITDA per ton should be better than this quarter.

    — Raj Gupta

  • Long-term Carbon Black EBITDA per ton Profitability · High confidence Rs. 24,000-25,000
    And with all the changes that those are happening at the product mix level, operating leverage and then yield improvement, operational efficiency and all, we expect us to be on track for that Rs. 24,000-25,000 EBITDA per ton.

    — Raj Gupta

New Product Development

  • Nano-silicon Pilot Plant Readiness New Product Development · FY26, 2-3 months · High confidence ready
    once the pilot is ready, which should be by FY'26, another 2-3 months' time

    — Kaushik Roy

  • Nano-silicon Product Approval New Product Development · 6 to 9 months post sample submission · Medium confidence product approval
    we hope that in the next 6 to 9 months post sending of the approval grade material, we will be able to get product approval.

    — Pankaj Kedia

What to watch in Q3 FY26

Tamil Nadu Rubber Line Operationalization

Current quarter (Q3 FY26)
Current Under commissioning stage
Target Operational

Why it matters

Adds 90,000 MTPA capacity, contributing significantly to volume growth and revenue.

Brownfield expansion of 90,000 MTPA rubber line in Tamil Nadu is under commissioning stage and likely to be operational in the current quarter itself.

Risks & concerns

  • US Tariffs on Carbon Black Exports

    high

    50% tariff on carbon black exports to US, impacting 5% of total volume and causing an annual EBITDA impact of Rs. 70 crores.

    Management acknowledged

  • Continued Pricing Pressure in Soft Market

    medium

    Margins impacted by a softer market environment, exacerbated by Russian imports (8,000-10,000 tons/month) and spot market sales.

    Management acknowledged

  • Global Economic Uncertainties

    medium

    Broader economic uncertainties and tighter inventory positions across society, leading to cautious purchasing patterns from customers.

    Management acknowledged

  • Low Crude Oil Prices Impacting Aquapharm US Business

    medium

    Crude oil prices at $62-65 are below the 'sweet spot' of $75-80, negatively affecting Aquapharm's US Oil & Gas segment volumes (down 40%).

    Management acknowledged

  • Geopolitical Tensions and Tariffs on Indian Exports

    medium

    Recent application of tariffs by the US on biocides and select polymers exported from India has impacted a portion of Aquapharm's business, creating temporary headwinds.

    Management acknowledged

Q&A highlights

8 direct
Impact of US Tariff and GST on Volumes and Pricing Direct
Yes, just for specifically US, we have cut down our volumes by roughly about 2000 tons in this quarter. And so far, as GST impact is concerned, we have not lost volume, in fact our domestic volumes have gone up but due to more sales in spot market, we did face pricing pressure. So, the impact of this deferment of auto purchases was felt not directly on the volume but on the pricing more, specific to us.

Clarifies the direct impact of external factors on volume and pricing for the quarter, highlighting the shift to spot market sales.

Asked by Aditya Khetan

Market Softness, Russian Imports, and Pricing Pressure Direct
We do not see a structural change in the demand supply scenario but last 5-6 months, the markets and the industry have been facing a lot of headwinds. Everything came together, like this US tariff which was initially introduced at a lower level, then increased, then GST rate cut announcement, which also kind of resulted in some deferment of auto purchases. Russian imports have been happening since last 1 year. So, overall levels have not gone up. So, India still is importing almost about 8,000-10,000 tons a month, which is not much honestly, but of course, these imports are happening at a lower price. So which is kind of creating pressure on the spot prices.

Addresses the underlying causes of pricing pressure, including Russian imports and broader market headwinds, while reassuring that the structural demand-supply scenario is unchanged.

Asked by Aditya Khetan

Specialty Products Contribution to EBITDA Direct
Our specialty volumes are going up. Even this quarter, if you look at our volume, they have gone up. Quarter-on-quarter, we have a 9% increase. Even year-on-year also we have increase. And on a full half year basis, you will see that there is an increase. This year, based on our capacity, we can reach maybe about 72,000-73,000 tons and we are on track to achieve that volume.

Confirms the growth in higher-margin specialty products and its positive impact on the overall product mix, aligning with the company's strategy.

Asked by Aditya Khetan

Aquapharm EBITDA Improvement and Crude Oil Prices Direct
So, our India business alone EBITDA grew at Rs. 28 crores in Q1 and in Rs. 33 crores in Q2. So, a very clear visible improvement in the Indian business. When we are saying that overall improvement will be visible in the coming quarters, because we know oil is a cyclical business and it has to change in the coming quarters.

Explains the segment-wise performance drivers for Aquapharm, linking the US business's performance to crude oil prices and projecting overall improvement.

Asked by Aditya Khetan

Overall Market Outlook and Expansion Plans Direct
Well, at this point of time, there are a lot of uncertainties in the market. As you know, one is of course US tariff and specific to India, it is also about GST. And beyond that, even the global economies... But having said that, we feel that we have kind of reached a level from where it will start improving. How fast the recovery can happen, that is something possibly time will tell. But a lot of actions have been taken internally to manage or sail through this difficult headwind or the strong headwind what we are facing at this point in time with more focus on operational excellence. So, that is one initiative. So, that should take care of the challenges what we are facing. But this thing do take time, I am sure all of you will appreciate it. But on the other side, since our feeling and we are quite clear about it, that going forward things will improve. And therefore, our expansion plans are all in place.

Provides management's comprehensive view on current market challenges and their strategic response, emphasizing internal actions and continued expansion plans despite uncertainties.

Asked by Sanjay Jain

Aquapharm US Market, China Tariffs, and EBITDA Targets Direct
As of now, the duty structure on China on these products has become 100% effective last week, okay. If that continues, we are going to see a significant benefit. Now, how much to quantify it is that we are looking at all the pluses and minuses... we are at an average of Rs. 50 crore EBITDA. We look forward to end this financial year with the Rs. 75 crores of EBITDA overall, the global business for nine-months' basis. So, that is an exit we are looking at today.

Quantifies the potential benefit from China tariffs for Aquapharm and provides a clear EBITDA target for the end of the financial year, indicating confidence in recovery.

Asked by Radha

Nano Silicon Customer Approvals and Timelines Direct
Sir, we are waiting for the pilot plant of ours to get commissioned and once the pilot plant is commissioned, we will be sending the approval grade material to a lot of customers and then we hope that in the next 6 to 9 months post sending of the approval grade material, we will be able to get product approval. The interest level in this product remains high and so sometime by the second half of next year, we look forward to a lot of positive news around this.

Outlines the critical path and timeline for commercializing the Nano silicon product, a key strategic initiative for future growth.

Asked by Radha

Carbon Black EBITDA per ton Outlook Direct
Though it is early in this quarter and the major issues like US tariffs and all, those are still unresolved, but what we are seeing is that crude has stabilized kind of around $60-62. And the disadvantage that we faced last quarter because of steep decline in crude price, is not likely to be there this quarter. Basis that we have confidence that Quarter 3 EBITDA per ton should be better than this quarter.

Provides a near-term outlook on the core carbon black business profitability, indicating expected improvement in Q3 FY26 due to stabilizing crude prices.

Asked by Shashank Kanodia

3 min read 6 chapters

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.

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