Sigachi Industries Limited — Q3 FY26 earnings call

Call held 14 Feb 2026

Management summary

Sigachi Industries faced a challenging Q3 FY26, reporting a total operating income of INR 117.2 crores but a significantly reduced EBITDA margin of 4.6% and a net loss of INR 0.02 crores. This was primarily due to operational disruptions and increased costs stemming from the Hyderabad fire accident. Despite the short-term headwinds, the company is progressing with major capacity expansions at Dahej, targeting commissioning by Q3 FY27, and anticipates a return to normalized operations and double-digit EBITDA margins by FY28.

Highlights

  • Total operating income of INR 117.2 crores in Q3 FY26.

  • Capacity expansion for 12,000 metric tons MCC and 1,800 tons CCS disintegrant facility at Dahej SEZ progressing well, targeting Q3 FY27 commissioning.

  • O&M segment consistently delivered 22% gross margin for 9M FY26.

  • API segment delivered 10% gross margin for 9M FY26.

  • MCC segment reported 40% gross margin for 9M FY26, with demand remaining strong.

Concerns

  • EBITDA for Q3 FY26 stood at INR 5.7 crores, resulting in a significantly compressed EBITDA margin of 4.6%.

  • The company reported a net loss of INR 0.02 crores, translating to a PAT margin of (0.01%) in Q3 FY26.

  • Production constraints and increased costs due to the Hyderabad fire accident impacted Q3 FY26 performance.

  • Delay in receiving the full insurance claim for the Hyderabad mishap, with documents still pending.

Key financials

  1. Total Operating Income ₹117.2 Cr
  2. EBITDA ₹5.7 Cr
  3. EBITDA Margin 4.6%
  4. Net Loss ₹0.02 Cr
  5. PAT Margin -1%

What they filed

Q1 FY27: revenue down 11.4%, net profit up 106.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue109 105 114 111 84 −23%92 −12%92 −19%98 −11%
EBITDA18 21 19 24 7 −63%7 −66%12 −35%13 −45%
Net profit22 10 7 -99 12 −46%3 −70%5 −30%7 +107%
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

  • MCC (Q3 FY26 Revenue)
    ₹61.72 Cr Revenue
  • O&M (Q3 FY26 Revenue)
    ₹13.35 Cr Revenue
  • API (Q3 FY26 Revenue)
    ₹14.13 Cr Revenue
  • O&M (9M FY26 Gross Margin)
    22% Gross Margin
  • API (9M FY26 Gross Margin)
    10% Gross Margin
  • MCC (9M FY26 Gross Margin)
    40% Gross Margin

Capital allocation

high confidence
  • Capex Capex disclosed either equity or debt, not yet decided
    • 12,000 metric tons MCC expansion at Dahej facility
    • 1,800 tons CCS disintegrant facility at Dahej SEZ
    Yes, Dahej and further capexes based upon when once the board takes a decision then we will come up with an announcement.
  • Debt Debt disclosed
    Actually as of now there is no long term debt outstanding in the books. And the total the debt whatever it is there that is only working capital is there.

Guidance & targets

Profitability

  • Operational Normalcy Profitability · Q4 FY26, Q1/Q2 FY27 · Medium confidence Better in Q4 FY26, gradually normal in Q1/Q2 FY27
    Normalcy, maybe after fourth quarter it would be better and then gradually maybe in first, second quarter of the next year it comes to we expect that it comes to normalcy. Even fourth quarter it would be better.

    — O.S. Reddy

Revenue

  • Revenues and Margins Revenue · FY27, FY28 · Medium confidence As it was earlier (pre-incident)
    FY27, 28, those it will go as it is as it was earlier because now the transition period is going on and then because of that the internal audits and safety terms redefining, those things are going on. Because of that, there is a production slowdown also is there in the existing units. Otherwise, that will be very steady and then like 27, 28 it will be as like before it was there. The same thing would continue.

    — O.S. Reddy

  • Revenue from Cystic Fibrosis API Revenue · After 12 months (post-commercialization) · Medium confidence INR 250 crores
    Yes, that is that is after 12 months. Yes, after 12 months there is because that is in R&D that product has been -- that is development took place and then that is post development then there is a possibility to get this revenue INR250 crores after 12 months. That will be commercialized and then there is a expectation.

    — O.S. Reddy

Capacity

  • Total MCC capacity Capacity · Q3 FY27 · High confidence 30,000 metric tons (12,000 MT additional at Dahej)

    From 18,000 metric tons today

    At present we have 18,000 -- 18,000 metric tons is the capacity. At Dahej around 9,882 metric tons and Jhagadia it is 8,118 total 18,000 metric tons capacity is there. And going forward that another 12,000 metric tons will be added. Total 30,000 would be there.

    — O.S. Reddy

Market context

  • EBITDA Margin Profitability · FY28 onwards (partially in FY27) · Medium confidence Double digit
    Margin guidance FY28 onwards that would be good. 27 partially that will be a momentum.

    — O.S. Reddy

  • EBITDA Margin Profitability · FY28 onwards (partially in FY27) · Medium confidence Double digit
    Yes, double digit we are expecting double digit, yes.

    — O.S. Reddy

What to watch in Q4 FY26

Return to operational normalcy and improved EBITDA margin

Q4 FY26
Current EBITDA margin at 4.6% in Q3 FY26
Target Better performance, moving towards double-digit EBITDA

Why it matters

Crucial for financial recovery and investor confidence after a challenging quarter, indicating the effectiveness of mitigation efforts.

Normalcy, maybe after fourth quarter it would be better and then gradually maybe in first, second quarter of the next year it comes to we expect that it comes to normalcy. Even fourth quarter it would be better.

Risks & concerns

  • Operational disruption and increased costs due to Hyderabad fire accident.

    high

    Fire accident led to spreading overheads, increased material transportation/landing costs, custom duties, and production slowdown, resulting in lower EBITDA and net loss in Q3 FY26.

    Management acknowledged

  • Production constraints affecting MCC revenue share.

    medium

    MCC revenue share decreased from 83% to 70% due to production constraints, not a lack of demand, impacting overall revenue contribution.

    Management acknowledged

  • Delay in receiving full insurance claim for Hyderabad plant mishap.

    medium

    Documents like inspector of factories report and fire brigade attendance are pending, causing delays in receiving the full insurance claim, though an ad hoc amount is expected by March 31st.

    Analyst acknowledged

  • Legal proceedings related to MD and CEO.

    low

    Management stated the matter is sub judice and could not comment further on potential additional proceedings, though they indicated no further arrest is expected.

    Analyst deflected

Q&A highlights

7 direct
Impact of Hyderabad fire accident on Q3 FY26 EBITDA margins and costs. Direct
Yes. Exactly this is consequent to the fire accident that carrying in third quarter also because all Hyderabad unit overheads were spread across the other units. That is one thing. And also the material transportation cost from Hyderabad unit, there is a lot of raw material was available and this has been moved to the Dahej and Jhagadia units. There is an involvement of the transportation cost and the landing cost of the material increased, thereby the raw material consumption also it is increased. And also the custom duty, normally when we import the wood pulp, we import the material against advance licensing. Here because the facility is not there, we had to take the goods by paying custom duty. That is also impacted. That finally that is moved to the other units. Because of that, there is lower EBITDA is there in the third quarter and these are the main reasons. The overheads one thing.

Provides a comprehensive explanation for the significant decline in EBITDA margin, directly linking it to the fire incident's operational and financial repercussions.

Asked by Piyush

Timeline for return to normalcy in operations and margin recovery. Direct
Normalcy, maybe after fourth quarter it would be better and then gradually maybe in first, second quarter of the next year it comes to we expect that it comes to normalcy. Even fourth quarter it would be better.

Offers a clear, albeit gradual, timeline for investors to anticipate a recovery in the company's operational performance and profitability.

Asked by Piyush

Revision of FY27 and FY28 revenue and margin guidance following the incident. Direct
FY27, 28, those it will go as it is as it was earlier because now the transition period is going on and then because of that the internal audits and safety terms redefining, those things are going on. Because of that, there is a production slowdown also is there in the existing units. Otherwise, that will be very steady and then like 27, 28 it will be as like before it was there. The same thing would continue.

Reassures the market that the long-term financial outlook remains consistent with prior expectations, indicating management's confidence in overcoming short-term challenges through new capacities and operational improvements.

Asked by Deepesh Sancheti

Future plans and status of the Hyderabad plant, including raw material sourcing. Direct
That is a small facility area, only two acres. That we have not taken any decision on that. But it takes little time. Because that is not a big land. Moreover it is it has come into the city limits. Now the government has given a notification that the land in that area can convert into even residential or commercial space. And moreover if we even construct now also how long the CFO would be in live, consent for operation. But that's why we have not yet taken any decision. ... Our focus is not really to ramp up the Hyderabad facility because there are legal angles to it. Our focus is to look at the Dahej SEZ facility as to how fast the capex cycles turn around and we are able to commission the whole plant and then ramp it up to full capacities.

Clarifies that the Hyderabad plant's future is uncertain and not a strategic priority, with focus shifted to new, larger capacities at Dahej, and raw material sourcing adjusted accordingly.

Asked by Shaik Mujeeb Ahmed

Update on the insurance claim process for the Hyderabad mishap. Partial
Yes. Insurance there are few documents to be submitted. One is from the inspector of factories, the other one is fire brigade attendance. These things are pending. The next week we are submitting those documents and before 31st March we are expecting some ad hoc amount and post 31st March the final claim may be received.

Provides a timeline for the expected receipt of insurance funds, which are crucial for mitigating the financial impact of the incident, though it highlights pending documentation.

Asked by Deepesh Sancheti

Promoter's intention to increase shareholding after recent pledge invocation. Direct
Even yes, there is this promoters intended to increase their shareholding. Always that is there.

Addresses concerns regarding promoter commitment and signals a positive outlook from the promoters themselves, potentially boosting investor confidence.

Asked by Deepesh Sancheti

Confidence in securing a formulator or commercial partner for the Cystic Fibrosis API. Direct
Yes. Company is very pretty confident and expecting that the margins and the based upon the R&D findings then we are hoping that will come into operations and then we will secure that revenue and margins also.

Highlights management's strong belief in the commercial viability and revenue potential (INR 250 crores) of a key new API product, which is a significant future growth driver.

Asked by Deepesh Sancheti

Current net debt amount and future trajectory, including funding for capex. Direct
Actually as of now there is no long term debt outstanding in the books. And the total the debt whatever it is there that is only working capital is there. And going forward for the completion of the capex and all if it is required either we raise equity or debt, but based upon the situation and then requirement. As of now there is no long term debt in the books except working capital.

Clarifies the company's healthy balance sheet with no long-term debt and outlines a flexible approach to funding future capex, which is important for growth.

Asked by Rushikeshk

2 min read 5 chapters

Detailed narrative

Q3 FY26 Performance Impacted by Hyderabad Incident

Sigachi Industries reported a challenging Q3 FY26 with total operating income of INR 117.2 crores. The quarter saw a significant decline in profitability, with EBITDA at INR 5.7 crores (4.6% margin) and a net loss of INR 0.02 crores (0.01% PAT margin). This underperformance was directly attributed to the Hyderabad fire accident, which led to increased operational costs, material transportation expenses, custom duties on imported wood pulp, and the spreading of Hyderabad unit overheads across other operational units.

Segmental Contributions and Margins

In Q3 FY26, the MCC segment contributed INR 61.72 crores to revenue, while O&M and API segments recorded revenues of INR 13.35 crores and INR 14.13 crores, respectively. For the nine months FY26, the O&M segment maintained a gross margin of 22%, and the API segment achieved a 10% gross margin. The MCC segment, despite current production constraints, reported a 40% gross margin, with management expecting its EBITDA margin to recover above 20% once operations normalize.

Capacity Expansion and Future Growth Outlook

The company is actively pursuing its capacity expansion plans, with a 12,000 metric tons per annum MCC facility and an 1,800 tons CCS disintegrant facility both under development at Dahej SEZ. These projects are on track for commissioning by Q3 FY27, which will increase the total MCC capacity to 30,000 metric tons. Management expressed confidence that these new capacities will absorb overheads and contribute to normalized operations and double-digit EBITDA margins from FY28 onwards, with partial momentum expected in FY27.

Uncertainty Regarding Hyderabad Plant and Insurance Claim Status

The future of the Hyderabad plant, which previously housed 6,000 metric tons of MCC capacity, remains undecided due to legal angles and its location within city limits. Raw materials from Hyderabad have been shifted to Dahej and Jhagadia units. The company is also awaiting the insurance claim for the Hyderabad mishap, with some documents still pending. An ad hoc amount is expected by March 31, 2026, with the final claim to follow. The total insurance claim is estimated at INR 70 crores, including INR 48 crores for fixed assets, INR 4 crores for inventory, and INR 25 crores for business interruption loss over 12 months.

Strategic Focus on API and R&D Initiatives

Sigachi continues to strengthen its regulated market readiness for API through R&D and compliance-led initiatives. The company has one CEP approval for Metformin and is working on others. Management is confident in the commercialization of its Cystic Fibrosis API, projecting INR 250 crores in revenue from this product after 12 months post-development and commercialization, and is actively seeking formulators or commercial partners to support this new revenue stream.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Healthcare earnings calls