Styrenix Performance Materials Limited

Styrenix Performance Materials reported a mixed performance for Q2 FY26. Standalone revenue for Q2 FY26 decreased by 5.8% YoY to ₹615 crores, with PBDIT at ₹81.8 crores, representing a 13.3% margin. For H1 FY26, standalone revenue was ₹1,336 crores, a 1.18% YoY decrease, and PBDIT stood at ₹167.9 crores, a 14.94% YoY decline. Consolidated results, which include the Thailand subsidiary, showed Q2 FY26 revenue at ₹799 crores and PBDIT at ₹88.4 crores (11.1% margin), reflecting a QoQ decline from Q1 FY26.

The standalone business saw Q2 FY26 sales volume of 45.2 KT, an 8.1% increase YoY, but a 12.7% QoQ decrease. H1 FY26 standalone sales volume grew by 7.6% YoY to 97 KT. Management indicated that most of this growth came from the ABS segment, with polystyrene (PS) sales remaining largely flat due to impacts on household appliances and air conditioning. The company anticipates approximately 10% overall volume growth for India in FY26, with the second half expected to be better than the first.

The consolidated figures, incorporating Styrenix Performance Materials Thailand Limited (acquired January '25), showed Q2 FY26 sales volume at 57.5 KT and H1 FY26 volume at 124.7 KT. Thailand's contribution to H1 FY26 volumes was 32 KT (17 KT in Q1, 15 KT in Q2). Management expects Thailand's growth to be flattish for FY26, with significant uncertainties, and no forward-looking EBITDA projections were provided for the region, emphasizing its medium-to-long term strategic value.

The company is proceeding with its Phase 1 ABS expansion capex in India, with a total planned spend of approximately ₹350 crores. In H1 FY26, ₹40 crores has been spent on this capex. Management expects the project to be completed sometime between the mid to end of the next financial year (FY27), with the entire capex spend occurring within two years. The funding for this capex will initially come from internal accruals, with borrowings expected in the near future.

Management noted that the ABS market in India remains underserved, providing opportunities for import substitution despite new capacities from competitors. They are running ABS capacities 'relatively full' and have not seen significant increases in competitive intensity or changes in margin profile. For PS, demand is expected to improve in the next two quarters, particularly in Q4, driven by sectors like air conditioning and refrigerators, which typically see higher sales of HIPS grades.

The company maintains minimal inventory, particularly for imported raw materials like styrene and acrylonitrile, to mitigate the impact of falling raw material prices. Most of the business operates on a formula-driven pricing model, allowing for the pass-through of raw material price fluctuations to customers. While some spot market opportunities exist, competitive intensity limits significant upside in margins.

Styrenix incorporated a wholly-owned subsidiary, Styrenix Performance Materials FZE, in Dubai in September 2024, to serve as a long-term base for sales to the Middle East, Europe, and the U.S. Initial benefits from this entity are expected to materialize more next year. In Thailand, the transition from the INEOS brand to the local Absolac brand has led to a 5-10% loss in overall volumes, which management is confident in recovering over time^⏳ through customer validation and sales efforts.