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    Rossari Biotech

    ROSSARIMixed
    Chemicals·17 Oct 2025
    Management Summary

    Rossari Biotech reported strong Q2 FY26 results with an 18% YoY revenue growth, primarily driven by healthy volume expansion across all core businesses and robust export performance. While the operating environment remained dynamic with subdued pricing and tariff pressures, the company successfully commissioned new capacities and continued investments in R&D. Profitability saw a slight dip in overall EBITDA margin to 12.3% due to investments and one-time expenses, but core B2B margins remained stable.

    Highlights

    8
    • Revenue for Q2 FY26 grew by 18% YoY to ₹586.1 crore.

    • EBITDA stood at ₹71.9 crore with a margin of 12.3% in Q2 FY26.

    • Core EBITDA margin (excluding institutional and B2C verticals) remained steady at around 15%.

    • HPPC, TSC, and AHN divisions grew 16%, 21%, and 29% YoY respectively.

    • Exports delivered robust growth of 36% YoY in Q2 and 27% in H1, contributing nearly 28% of overall revenues.

    • Additional 20,000 MTPA capacity at Dahej and 15,000 MTPA ethoxylation capacity at Unitop were successfully commissioned.

    • Net working capital increased to 102 days in Q2 FY26, up from 95 days in March.

    • H1 FY26 capex outflow was approximately ₹142 crore.

    Concerns

    2
    • Tariffs on textile exports to US

    • Global uncertainty (tariffs, Europe situation)

    Key financials

    Single quarter

    07 metrics
    1. 01Revenue₹586.1 Cr+18%YoY
    2. 02EBITDA₹71.9 Cr
    3. 03EBITDA Margin12.3%
    4. 04Core EBITDA Margin15%
    5. 05Net Working Capital Days102 days

    Segment breakdown

    Home, Personal Care and Performance Chemicals (HPPC)
    16% YoY Growth
    Textile Speciality Chemicals (TSC)
    21% YoY Growth
    Animal Health and Nutrition (AHN)
    29.0% YoY Growth
    Institutional and B2C Business
    1% YoY Growth7.0% QoQ Growth
    Exports
    36% Q2 YoY Growth27% H1 YoY Growth28% Revenue Contribution
    List

    Guidance & targets

    11
    CategoryTargetPriority
    Capacity Utilization
    Dahej Capex Peak Utilization
    FY28
    High
    Margin
    Core B2B EBITDA Margin
    14-16%
    High
    Margin
    Overall Margin Improvement
    some improvement
    Medium
    Margin
    FY26 Overall Margins
    similar range
    Medium
    Expenses
    Expense Levels
    H1 levels
    High
    Working Capital
    Working Capital Trend
    positive
    Medium
    Asset Turn
    Asset Turn at Peak Utilization
    4x
    High
    Revenue Potential
    Revenue Potential from Additional Capacity
    ₹3,500 crore
    High
    Capex
    Additional Capex H2 FY26
    ₹20-25 crore
    High
    Capex
    Previously Announced Capex
    ₹192 crore
    High
    Capacity
    Total Capacity
    385,000 tons
    High

    Risks & concerns

    6
    RiskSeverity

    Subdued pricing environment

    Impacted realizations, causing pressure on overall growth despite volume expansion.Management acknowledged

    medium

    Tariffs on textile exports to US

    Causing headwinds for textile chemicals business, impacting sales and margins, with uncertainty on future developments.Management acknowledged

    high

    Global uncertainty (tariffs, Europe situation)

    Creating an unpredictable operating environment, making future predictions difficult.Management acknowledged

    high

    Working capital stretch

    Net working capital increased to 102 days due to stretched receivables and a major institutional sale, impacting cash flow.Management acknowledged

    medium

    Raw material price volatility due to geopolitical events (US sanctions on Iran)

    Methanol prices saw a spurt, but consumption is small; acetic acid imports from Iran are negligible for the company.Analyst downplayed

    low

    Areas of Evasion(1)

    • exact indirect export exposure figures

    Q&A highlights

    3

    “This plant has got capitalized in this quarter. The scale-up is going to happen over the next 2-3 years and our assessment is that by FY28, we should be reaching the peak utilization of this capex.”

    Clarifies the timeline for new capacity ramp-up and its expected contribution to revenue, providing a long-term outlook.

    asked by Rehan Saiyyed

    3 min read7 chapters

    Detailed Narrative

    01

    Q2 FY26 Performance Overview

    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%.

    02

    Capacity Expansion and Utilization

    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.

    03

    Product Innovation and R&D Pipeline

    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.

    04

    Export Growth and Geographic Diversification

    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.

    05

    Profitability and Margin Outlook

    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.

    06

    Working Capital and Capex Funding

    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.

    07

    Textile Chemicals and Tariff Headwinds

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.