PCBL Chemical Limited — Q4 FY26 earnings call

Call held 30 Apr 2026

Management summary

PCBL Chemical navigated a challenging Q4 FY26 marked by geopolitical disruptions and cost pressures, yet showed signs of recovery with strong domestic volume growth and significant progress on strategic initiatives like capacity expansion and cost reduction. The company remains optimistic about FY27, targeting double-digit EBITDA growth and substantial improvements in Aquapharm's performance, while strengthening its balance sheet.

Highlights

  • Consolidated sales volume increased 8% YoY to 161,865 MT in Q4 FY26, driven by 21% YoY domestic sales growth.

  • Specialty sales volumes grew significantly by 26% YoY to 19,386 tons in Q4 FY26, indicating strong demand for high-value products.

  • Net borrowings reduced by INR 454 crores to INR 4,536 crores in FY26, despite funding INR 750 crores in capex, strengthening the balance sheet.

  • Cost reduction initiatives are on track to unlock INR 200-250 crores of savings over the next 4-6 quarters, enhancing future profitability.

  • Nanovace pilot plant is ready for commissioning, with commercial volumes expected by FY28, marking progress in a strategic new segment.

Concerns

  • West Asia conflict caused significant disruptions, leading to massive increases in logistics costs and feedstock prices, impacting margins.

  • International sales volume decreased 10% in Q4 FY26 to 56,800 tons, reflecting global trade challenges.

  • Aquapharm's Q4 FY26 EBITDA was only INR 29 crores, impacted by slower infrastructure activity and LPG supply disruptions.

  • Commissioning of the 1,000 MTPA Palej superconductive specialty black line was delayed due to gas shortage.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹2,066 Cr
  • Consolidated EBITDA
    ₹248 Cr
  • Carbon Black Sales Volume
    1,61,865 MT
    YoY +8%
  • Domestic Sales Volume
    1,05,055 tons
    YoY +21%
  • International Sales Volume
    56,800 tons
    YoY -10%
  • Specialty Sales Volume
    19,386 tons
    YoY +26%
  • Power Generation
    196 MUs
    YoY +12%

FY26

  • Consolidated Revenue
    ₹8,189 Cr
    YoY -2.6%
  • Consolidated EBITDA
    ₹1,081 Cr
    YoY -21.9%
  • Carbon Black Sales Volume
    6,18,956 MT
    YoY +3.8%

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

SegmentRevenueEBITDA
Aquapharm (Q4 FY26)₹339 Cr₹29 Cr
Aquapharm (FY26)₹1,443 Cr₹162 Cr
Carbon Black (Q4 FY26)——

Capital allocation

high confidence
  • Capex ₹750 Cr
    • 90,000 tons Brownfield expansion of rubber carbon black at Tamil Nadu
    • Superconductive specialty black line of 1,000 MTPA at Palej
    • Specialty black line of 20,000 tons in Mudra
    Importantly, we have used this period to strengthen the balance sheet. Net borrowings reduced by INR454 crores to INR4,536 crores during FY26, even while we funded INR750 crores of capex.
  • Debt Net ₹4,536 Cr
    Net borrowings reduced by INR454 crores to INR4,536 crores during FY26, even while we funded INR750 crores of capex.
  • Liquidity Liquidity disclosed Our working capital cycle has tightened further.
    Our working capital cycle has tightened further.

Guidance & targets

Cost Savings

  • Cost Savings Cost Savings · next 4-6 quarters · High confidence INR 200-250 crores
    Cost initiatives across yield improvement, throughput enhancement and feedstock diversification are on track to unlock over INR200-250 crores of savings over the next 4-6 quarters.

    — Nilesh Koul

Aquapharm Top-line Growth

  • Aquapharm Top-line Growth Aquapharm Top-line Growth · FY27 · High confidence 20-25%
    Aquapharm should see a very strong growth in top line in FY27. I think in the region of 20-25% is something which we believe should be able to achieve.

    — Pankaj Kedia

Aquapharm Profitability

  • Aquapharm EBITDA Run Rate Aquapharm Profitability · next 2-3 quarters · High confidence INR 75 crores per quarter
    But over the next 2-3 quarters, we believe that that goal remains intact for us to reach 75 crores run rate on a quarterly basis.

    — Pankaj Kedia

Carbon Black Volume

  • Carbon Black Volume Growth Carbon Black Volume · next year · High confidence high single-digit
    I think in the carbon black business now with our additional capacity coming in, we expect to see a high single-digit volume growth.

    — Nilesh Koul

Carbon Black Profitability

  • Carbon Black EBITDA Growth Carbon Black Profitability · next year · High confidence more than double-digit
    We should see more than double-digit growth in EBITDA as well for next year.

    — Nilesh Koul

New Business Commercialization

  • Nanovace Commercial Volumes New Business Commercialization · FY28 · High confidence commercial volumes going up
    I would expect that FY28 is when we will start seeing commercial volumes going up.

    — Nilesh Koul

Long-term Profitability

  • EBITDA Long-term Profitability · by 2030 · High confidence INR 40 billion
    See the long-term fundamentals of the industry remain intact. These are short-term headwinds that we are facing currently. So, from 2030 perspective, we are very confident, we remain on track and with all the initiatives that we are taking, we believe that we should be able to deliver those numbers.

    — Raj Gupta

EBITDA per ton

  • EBITDA per ton increase EBITDA per ton · FY27 · High confidence 14-15%
    So, if I understand, you said you are expecting double-digit growth on EBITDA. So, should I assume that the 14,900 odd per ton, we should see at least about a 14-15% increase on this number? Is that what this leads to? We should easily see that, yes.

    — Nilesh Koul

Market context

  • EBITDA Growth Profitability · next year · High confidence double-digit
    As the environment normalizes and volumes recover, we are confident of delivering double-digit EBITDA growth fueled by volume momentum, leaner cost structure and better pricing realization.

    — Nilesh Koul

What to watch in Q1 FY27

Full impact of cost pass-through

Q2 FY27
Current Spot market pass-through initiated, formula-based contracts have lag.
Target Full impact reflected in numbers, margins normalize.

Why it matters

Will normalize margins and reflect the company's ability to manage raw material price volatility.

Given that price contracts carry an inherent quarterly lag effect, the full impact of cost pass-through will reflect in our numbers by Q2 FY27, at which point our margins profile should normalize.

Risks & concerns

  • West Asia Conflict and Supply Chain Disruptions

    high

    Escalation of conflict led to massive increases in logistics costs, feedstock prices, and issues with ship availability, impacting 40% of export business.

    Management acknowledged

  • Crude Price Volatility

    medium

    Crude prices rose sharply from $60 to $100 per barrel, currently around $120, directly impacting raw material costs, though formula-based contracts have a lag effect.

    Management acknowledged

  • Gas Shortage delaying Palej Specialty Black Line Commissioning

    medium

    The 1,000 MTPA superconductive specialty black line at Palej is mechanically ready but commissioning is delayed due to gas shortage.

    Management acknowledged

  • Aquapharm Segment Challenges

    medium

    Aquapharm faced slower infrastructure activity, LPG supply disruption, and significant increases in raw material and packing material costs (25-30% for key raw materials, up to 1.5x for packing materials).

    Management acknowledged

Q&A highlights

7 direct
Reason for jump in profitability in Q4 FY26 and FY27 outlook Partial
Sanjesh, if you're comparing it with last quarter, it was not a usual quarter. And our profitability dipped significantly. So, while quarter-on-quarters, when you're looking, it is appearing as a significant jump, but this is not where we should be with the kind of volumes that we have done. And, of course, this quarter the volumes have gone up by 20,000 tons and the volumes have contributed. EBITDA margins remain the same. There's not much improvement at EBITDA per ton level. So, the real impact of all the initiatives which Nilesh just spoke about is yet to come. It is still not reflected in the performance.

Clarifies that Q4 profitability was more of a rebound from a low base rather than a significant structural improvement, setting expectations for future quarters.

Asked by Sanjesh Jain

Strategy for feedstock diversification towards coal tar distillation Direct
I'll get into more detail on this in the next call, because the project feasibility is being finalized right now. But at the core of it is that we need to diversify our feedstock base. Second, it's not that we will use coal-tar for all applications. This will be specific application based. So, there are applications where coal tar-based feedstock is slightly better. We have also upgraded our facilities, to be able to use combination of feedstocks.

Signals a strategic shift in raw material sourcing to reduce dependency on crude-linked feedstocks and enhance resilience.

Asked by Sanjesh Jain

Aquapharm's path to profitability and FY27 outlook Direct
From a profitability perspective what has happened is significantly lower capacity utilization in the last couple of quarters. That has led to some kind of a negative operating leverage playing to our numbers. As we see Q1 and Q2 onwards, oil and gas business moving up sharply, the same thing will turn into positive to our advantage. So, you will see profitability moving up as our overall capacity utilization moves up from Q1 FY27 onwards.

Provides clarity on the challenges faced by Aquapharm and the expected timeline for its return to profitability, linked to capacity utilization and oil & gas segment recovery.

Asked by Sanjesh Jain

Management of balance sheet, working capital, and net debt amidst rising feedstock prices Direct
Our overall borrowings have come down by roughly INR450 odd crores this year, as you must have seen from the balance sheet. You must have also noticed that our investment in working capital has also gone down significantly. So, we are managing our receivables and inventory very tightly... Even if crude remains at $90 level, I think considering the volume growth, the revenue growth, we will require another INR100 crores worth of incremental working capital. That's how we are estimating it as of now. And the cash generation with higher volumes and better margins will be far more than what we require to invest in our growth, pay out to shareholders and invest in working capital for this incremental requirement.

Addresses concerns about financial leverage and working capital needs, reassuring investors about the company's ability to fund growth and reduce debt.

Asked by Sanjesh Jain

Timeline for commercial volumes from the new battery chemicals (Nanovace) business Direct
I would expect that FY28 is when we will start seeing commercial volumes going up.

Sets expectations for the commercialization of a high-margin, strategic new business segment.

Asked by Rohit Sinha

Confidence in carbon black spreads bottoming out and triggers for improvement Direct
For the Indian players, some of the positive things that we are seeing is because the US tariff issue is to some extent sorted out. So, the additional volume coming into the Indian market is now moving towards US as well. So, you see some improvement in volumes being exported out of India, which therefore reduces the pressure on pricing in India. That's number one. I think we are also continuing to see some inventory built up by our customers as well, which is a little bit of an additional demand coming through and again should allow us to start charging a little bit more premium. Third, of course, the value-added component of our business is going up and we expect to see that also helping us improve our spreads.

Explains the factors contributing to the expected recovery in carbon black spreads, including trade dynamics and customer behavior.

Asked by Aditya Khetan

Impact of India-EU FTA on carbon black business and supply mix in Europe Direct
Now, in terms of how this EU FTA is going to benefit us, there is no import duty on carbon black in Europe. So, there is no direct benefit. But when you look at indirect benefit, currently, tyre imports in EU from India attracts 4.5% duty. So once this FTA is signed, then the duty is likely to get to 0%. And Europe accounts for one third of India's tyre exports. So, I mean, that should boost up domestic production in India and from that perspective, it is going to be positive.

Clarifies the specific mechanism through which the FTA will benefit PCBL, primarily via increased domestic tyre production for export.

Asked by Sailesh Raja

Comparison of profitability between crude-based (CBFS) and coal-tar based carbon black at current crude prices Direct
The coal-type prices have also moved up. So, it is even keel as of now. So pre-war versus now, it's about the same levels of difference. So, when it is imported coal tar into India, it's still a little bit more expensive on a TCO basis, because there is a difference in yield which we get between CBFS and coal tar. So competitive, but CBFS is better for us right now.

Provides insight into the current cost economics of different feedstock options, relevant to the company's diversification strategy.

Asked by Shashank Kanodia

2 min read 5 chapters

Detailed narrative

Navigating Geopolitical Headwinds and Supply Chain Disruptions

PCBL Chemical faced significant challenges in Q4 FY26 due to the West Asia conflict, which escalated in February. This led to massive increases in logistics costs, feedstock prices, and issues with ship availability, impacting the 40% of business driven by exports. Raw material prices, particularly crude, rose sharply from $60 to $100 per barrel, currently hovering around $120 per barrel. Despite these pressures, the company proactively rerouted shipments to alternate geographies to ensure supply continuity, and customers were considerate in sharing increased costs.

Signs of Recovery and Strategic Initiatives in Carbon Black

Management noted clear signs of recovery, with spreads finding a floor and positive exit quarter momentum. The rationalization of U.S. tariffs has restored a meaningful cost advantage for Indian exports, and customer pipelines in the specialty business are firming up. PCBL added 90,000 tons of carbon black capacity, bringing total installed capacity to 880,000 tons per annum. The company expects both domestic and export growth in coming quarters, with domestic sales volume growing 21% YoY to 105,055 tons in Q4 FY26, contributing to an overall 8% YoY increase in consolidated sales volume to 161,865 MT.

Aquapharm Segment Performance and Outlook

The Aquapharm segment reported Q4 FY26 revenue of INR 339 crores and EBITDA of INR 29 crores, with full-year FY26 revenue at INR 1,443 crores and EBITDA at INR 162 crores. The segment faced headwinds from slower infrastructure activity and LPG supply disruptions, but home care sales volumes grew 11% YoY and application-specific solutions grew 18%. Management anticipates a strong top-line growth of 20-25% for Aquapharm in FY27, aiming for an EBITDA run rate of INR 75 crores per quarter within the next 2-3 quarters, driven by increased capacity utilization and recovery in the oil & gas business.

Advancements in Nanovace and Cost Optimization

The pilot plant for Nanovace, PCBL's battery chemicals platform, is fully equipped and ready for commissioning, with commercial volumes expected by FY28 after a validation period. This represents a significant diversification opportunity into a high-growth, high-margin segment. Furthermore, cost reduction initiatives, focusing on yield improvement, throughput enhancement, and feedstock diversification, are on track to deliver INR 200-250 crores in savings over the next 4-6 quarters, which will significantly enhance future profitability and operational efficiency.

Balance Sheet Strengthening and Capacity Expansion Progress

PCBL successfully reduced net borrowings by INR 454 crores to INR 4,536 crores during FY26, even while funding INR 750 crores of capex. The 90,000 tons Brownfield expansion for rubber carbon black in Tamil Nadu is complete, contributing to the increased capacity. However, the commissioning of the 1,000 MTPA superconductive specialty black line at Palej was delayed due to gas shortage, while the 20,000 tons specialty black line in Mudra is ready for commissioning in the coming weeks, indicating ongoing capacity additions.

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