Rossari Biotech

Rossari Biotech delivered a robust Q2 FY26, with revenues growing 18% YoY to ₹586.1 crore, primarily driven by strong volume expansion across all three core businesses. The HPPC, TSC, and AHN divisions registered healthy YoY growth of 16%, 21%, and 29% respectively. Despite a dynamic operating environment and subdued pricing, the company's broad product mix helped cushion the overall impact on growth. Overall EBITDA stood at ₹71.9 crore, with a margin of 12.3%, while core EBITDA (excluding institutional and B2C) remained stable at around 15%.

The company successfully commissioned an additional 20,000 metric tons per annum (MTPA) capacity at its Dahej facility and 15,000 MTPA of ethoxylation capacity at Unitop, marking the first phase of a planned 30,000 MTPA expansion. Management expects the Dahej capex to reach peak utilization by FY28, delivering an asset turn of about 4x. Total capacity is projected to reach approximately 385,000 tons by the end of FY26. The new facilities are designed for improved efficiency and higher throughput, supporting future growth.

Innovation and R&D are central to Rossari's strategy, with new products developed in both Ethylene Oxide-based and non-EO-based chemistries. The pipeline includes biosurfactants (sophorolipids, rhamnolipids), coco-aminopropyl butane (CAPB), CDEA, silicon block polymers, and silicon surfactants for agro and textile applications. Additionally, improved formulations for vitamin and mineral premixes are ready for production, and cold powder producing technology for polyethylene glycols is under commissioning, indicating a strong focus on value-added offerings.

Rossari's international business demonstrated robust growth, with exports rising 36% YoY in Q2 and 27% in H1, now contributing nearly 28% of overall revenues. The company is actively targeting new geographies beyond Americas and Europe, including Far East, Southeast, and MENA regions, where significant growth has been observed. An investment of up to USD 8 million in Rossari International Limited Company, a Saudi Arabia subsidiary, has been approved to explore expansion plans and strengthen global presence.

While Q2 FY26 EBITDA margin was 12.3%, management expects core B2B EBITDA margins (excluding institutional and B2C) to remain in the 14-16% range. They anticipate overall expense levels to stabilize at H1 levels for the rest of FY26. Margin improvement is expected from FY27 as new capacities come to full stream and EO availability improves. However, management expressed caution regarding the ability to predict the full year's performance due to global uncertainties, aiming to maintain current margin levels.

Net working capital increased to 102 days in Q2 FY26 from 95 days in March, attributed to stretched receivables and a major institutional sale with a long payment cycle. Management expects working capital to ease in the coming two quarters and return to positive by year-end. The total planned capital outlay is ₹192 crore, with approximately ₹142 crore already spent in H1 FY26. An additional ₹20-25 crore capex is expected in H2 FY26, with further projects worth ₹192 crore coming on stream in FY27.

The textile chemicals business, despite a 10% QoQ growth in Q2, faces significant headwinds due to tariffs on textile exports to the US. This impacts not only direct exports but also local suppliers to exporters. Management noted that customers are seeking price reductions, and there is considerable uncertainty regarding future tariff developments. This situation is expected to put pressure on both sales and margins in the coming quarters, although the company has diversified exports to new geographies to mitigate some impact.