Styrenix Perfor.

Styrenix Performance Materials reported a strong Q1 FY26. Standalone sales volume reached a record 51.8 KT, marking an 8.1% increase quarter-on-quarter. Standalone revenue grew by 2.85% QoQ to INR721 crores, also up 3.1% year-on-year from INR700 crores in Q1 FY25. Consolidated sales volume increased by 5% QoQ to 67.2 KT, contributing to a consolidated revenue of INR943.5 crores. Standalone PAT stood at INR54.9 crores (7.6% margin), while consolidated PAT was INR51.9 crores (5.5% margin).

The integration of the Thailand acquisition, completed in January 2025, is a key focus. Current capacity utilization in Thailand is 50-55%, with management aiming for significant ramp-up to increase profitability. Challenges include revalidating the Styrenix brand and products with customers across multiple Asian geographies, which is acknowledged to take time. Management believes there is potential to increase revenue by 70-80% additionally at peak utilization, leveraging the unique product profile acquired.

The company is on track with its India capacity expansion plans, expecting 50% of its planned ABS capacity expansion to come online in the next financial year (FY27). The full 50,000 tons additional ABS capacity is targeted for FY28, with HIPS expansion also planned around the same time. The overall augmentation in India's capacity is projected to take 12-15 months. For FY26, the total capacity for all products in India is guided to be approximately 210,000-215,000 tons. A Phase 1 capex of INR325-350 crores is planned by March 2027, excluding polystyrene capex.

Styrenix is implementing initiatives to reduce costs and improve operational efficiency. In India, a hybrid power SPV is expected to become active by year-end, which will reduce power costs. While no specific 'low-hanging fruit' for cost reduction was identified in India, continuous efforts for efficiency are ongoing across departments. In Thailand, reducing conversion costs, which are currently higher than in India, is a focus through process improvements and increased capacity utilization, rather than significant capital injection.

The company is strategically focusing on higher-value-added products, particularly from its Thailand portfolio, including bimodal rubber (MAC 50), refrigerant ABS, food-grade SAN, and high-heat ABS for the automotive industry. The Indian market for PC ABS (used in automotive and electronics) is expected to grow robustly, exceeding GDP growth, driven by premiumization trends. Styrenix is also exploring medium to long-term export opportunities to the EU, despite India currently being sold out, with efforts underway for qualification.

Despite some muted demand in Q1 FY26 for household appliances and larger appliances due to an early monsoon, management expects a correction over the year and remains confident in meeting annualized targets, including 12-13% overall volume growth. While a competitor is adding 70,000 MT of ABS capacity, management believes sufficient market opportunity exists, with domestic players able to capture market share from imports without significant long-term pricing pressure, though short-term pressures are possible.