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.