Yasho Industries Limited — Q3 FY26 earnings call

Call held 13 Feb 2026

Management summary

Yasho Industries delivered robust revenue growth in Q3 FY26 and 9M FY26, supported by improved demand and volume traction. Profitability remained healthy despite gross margin compression due to product mix shifts. Strategic capex projects are on track, and the company is actively diversifying markets to mitigate tariff impacts and drive future growth, while focusing on improving Pakhajan utilization and financial leverage.

Highlights

  • Revenue for Q3 FY26 grew by 35% year-on-year to ₹201.83 crores, indicating strong demand conditions and volume traction.

  • For the 9-month period, revenue stood at ₹583.76 crores, reflecting a 19% year-on-year growth.

  • EBITDA margin for Q3 FY26 was 16.65%, with 9-month EBITDA margin at 17.06%, driven by sourcing efficiencies and cost control.

  • A strategic manufacturing project with a large MNC, estimated at ₹85-90 crores, is progressing as planned and is fully customer-funded, with an advance of ₹19.9 crores received.

  • ₹25.9 crores has been deployed for two new manufacturing lines, with commercial production planned for Q1 FY27, enhancing capacity in high-visibility product categories.

Concerns

  • Gross margin compression in Q3 FY26 was observed, attributed purely to a change in product mix and geographical diversification.

  • The Pakhajan facility continued to operate below optimal utilization, dropping below 50% since Q2, though management states the impact on margin was contained.

  • The company acknowledges competition in the lube additive market, particularly from Chinese players, which could pose challenges.

Key financials

2 periods

Q3 FY26

  • Revenue
    ₹201.83 Cr
    YoY +35%
  • EBITDA Margin
    16.6%

9M FY26

  • Revenue
    ₹583.76 Cr
    YoY +19%
  • EBITDA Margin
    17.1%

What they filed

Q1 FY27: revenue up 54.8%, net profit up 800.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue167 149 185 199 183 +10%202 +36%246 +33%308 +55%
EBITDA31 27 36 33 33 +6%33 +22%44 +22%73 +121%
Net profit4 -1 5 4 5 +25%4 +500%12 +140%36 +800%
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.

Capital allocation

high confidence
  • Capex Capex disclosed MNC project fully funded by customer
    • Strategic manufacturing project with large MNC ₹85 Cr
    • Capacity enhancement (two manufacturing lines) ₹25.9 Cr
    • R&D ₹25 Cr
    On the growth investment front, our strategic manufacturing project with a large MNC is progressing as planned. The estimated cost of the project is approximately INR85 crores to INR90 crores, which will be fully funded by customer. And we have already received an advance of INR19.9 crores. Equipment deliveries are expected to begin in Q2 FY '27 with commercialization targeted for Q1 FY '28. In parallel, as part of our capacity enhancement initiative, we have deployed INR25.9 crores towards two manufacturing lines focused on high visibility product categories with sustained demand. Trial runs for these lines are expected to begin in March '26 and commercial production is planned for Q1 FY '27. ... Well, this year, we have done a capex of about INR60 crores, INR25 crores in two lines where we saw the demand coming and another INR25 crores we spent in R&D. So that's about INR55 crores, INR60 crores.
  • Debt Gross ₹560 Cr
    On the balance sheet front, our gross debt levels are expected to stabilize in the coming quarter. Reducing leverage continues to be the central financial priority, and we remain focused on lowering our debt-to-EBITDA multiple through improved profitability, controlled capex deployment, and strong cash generation from operations. ... I think amount INR560 crores something. ... With promoter loan. ... Outside there is bank loan? Bank loans are about INR500 crores, and balance INR50 crores come from the promoters.

Guidance & targets

Revenue

  • Revenue Potential (FY28) Revenue · FY28 · Medium confidence ₹1,500 crores
    With the commissioning of our two new lines and execution of the LTSA project, we expect to scale of our revenue in FY '28 to approximately INR1,500 crores at around 40% utilization of available space at the Pakhajan facility.

    — Parag Jhaveri

  • Pakhajan Revenue at Optimal Utilization Revenue · FY28 · High confidence ₹750-850 crores
    We are expecting optimal level utilization of 80%, 85% by FY '28. And the revenue should be in the range of about INR750 crores to INR850 crores depending on the market condition.

    — Parag Jhaveri

  • FY26 Revenue Revenue · FY26 · Medium confidence ₹800 crores
    We will do somewhere we should close somewhere about INR800 crores.

    — Parag Jhaveri

EBITDA Margin

  • Long-term EBITDA Margin EBITDA Margin · Long-term · High confidence 17-19%
    See, my guidance will be still going to be between 17% to 19%.

    — Parag Jhaveri

Annual Growth

  • Annual Growth Rate Annual Growth · Long-term · Medium confidence 15-25%
    The facility's infrastructure is already equipped to support 15% to 25% annual growth over the long term, and we expect a 4:1 revenue to capex ratio for incremental investments.

    — Parag Jhaveri

Revenue to Capex Ratio

  • Incremental Revenue to Capex Ratio Revenue to Capex Ratio · Long-term · High confidence 4:1
    The facility's infrastructure is already equipped to support 15% to 25% annual growth over the long term, and we expect a 4:1 revenue to capex ratio for incremental investments.

    — Parag Jhaveri

Commercialization

  • MNC Project Commercialization Commercialization · Q1 FY28 · High confidence Q1 FY28
    Equipment deliveries are expected to begin in Q2 FY '27 with commercialization targeted for Q1 FY '28.

    — Parag Jhaveri

Commercial Production

  • New Manufacturing Lines Commercial Production Commercial Production · Q1 FY27 · High confidence Q1 FY27
    Trial runs for these lines are expected to begin in March '26 and commercial production is planned for Q1 FY '27.

    — Parag Jhaveri

Capacity Utilization

  • Pakhajan Optimal Utilization Capacity Utilization · FY28 · High confidence 80-85%
    We are expecting optimal level utilization of 80%, 85% by FY '28. And the revenue should be in the range of about INR750 crores to INR850 crores depending on the market condition.

    — Parag Jhaveri

Industrial Segment Contribution

  • Industrial Segment Share of Sales Industrial Segment Contribution · Next 2 years · High confidence 90-95%

    From 85-90% today

    Right now, we are about 85% to 90% industrial, will eventually go to 90% to 95% in the next 2 years' time.

    — Parag Jhaveri

Sales Mix

  • Long-term Contract vs. Spot Sales Mix Sales Mix · Full utilization · High confidence 60-70% long-term, 30% spot
    It will be 60% to 70% long-term contract, 30% will be spot.

    — Parag Jhaveri

What to watch in Q4 FY26

Pakhajan Facility Utilization

Next quarter
Current 40-45%, dropped below 50% since Q2
Target Improvement towards optimal utilization

Why it matters

Directly impacts operational efficiency and margin improvement, as the facility is currently underutilized.

Operationally, while our Pakhajan facility continued to operate below optimal utilization, the impact on margin was effectively contained. ... Yes, because of the -- since Q2, Pakhajan has dropped below 50%.

Risks & concerns

  • Gross Margin Compression

    medium

    Gross margin compression in Q3 FY26 due to product mix change and geographical diversification.

    Management acknowledged

  • US Tariff Volatility

    medium

    Tariffs have impacted sales, but management is diversifying markets and product mix to mitigate.

    Management acknowledged

  • Pakhajan Underutilization

    medium

    Pakhajan facility operating below 50% utilization since Q2, impacting operational efficiency.

    Management acknowledged

  • Competition in Lube Additive Market

    medium

    Increased competition, particularly from Chinese players, in the lube additive market.

    Analyst acknowledged

Q&A highlights

5 direct, 1 evasive
Gross Margin Compression Direct
This is purely due to the change in the product mix. Also, we went into the diversified market geographically. So that has changed for last quarter a little bit in the profit margin.

Clarifies the primary drivers behind the observed gross margin compression in the quarter.

Asked by Parth Agrawal

US Tariff Impact and Inquiries Partial
Well, we started seeing a discussion, but it will take a while to convert into the reality because yet it has not been notified. Only the 25% has been notified, but the balance 25% is not yet back to 18% so far. People may like to wait and watch.

Provides an update on the status of US tariffs and the cautious outlook on immediate business conversion despite reduced tariffs.

Asked by Parth Agrawal

Details of MNC Contract Evasive
No, I don't think so because as per our NDA, we are not supposed to disclose much more information on the matter unless until we start the commercial production. So I'm sorry for that. I cannot give you more insight.

Highlights the confidential nature of the strategic MNC contract, limiting detailed disclosure until commercial production.

Asked by Parth Agrawal

Aggressiveness of FY28 Revenue Guidance (₹1,500 Cr) Direct
I know it is a challenge, but there are two factors, Manish bhai. Number one, company will have a grow with its existing capacity, which we could not achieve the full utilization in FY '26, what we anticipated. We expect that to happen in FY '27, plus in FY '28, we will have this long-term supply agreement revenue kicking in.

Management justifies the ambitious FY28 revenue target by outlining the factors supporting its achievability, including capacity utilization and new contracts.

Asked by Manish Gupta

Derisking Business from Random Actions (e.g., Tariffs) Direct
So what we have done in the -- number of measures we have done. We are looking at a different geography where Yasho has never looked at it. South America, the Africa region, also in the Asian market, we were not so gung-ho, where we are which is very close to the -- another Asian giant.

Details the company's strategy of geographical diversification and product mix churning to mitigate external risks like tariffs.

Asked by Manish Gupta

Pakhajan Capacity Utilization Direct
Yes, because of the -- since Q2, Pakhajan has dropped below 50%.

Confirms the current underutilization of the Pakhajan facility, which is a key operational concern.

Asked by Pujan Shah

Customer Funding for Capex Partial
I don't know much on that, what is the customer mindset. But I can say this is a very unique molecule, has a unique process. So that's -- and we had a capability to manage that kind of thing. So that's why customer has chosen Yasho as the partner, long-term partner.

Explains the unique nature of the MNC contract where the customer funds capex, highlighting Yasho's specialized capabilities.

Asked by Aditya

Domestic Market Growth Drivers Direct
As I said, we are identifying a lot of new markets that is growing. Also in India, we are able to continue our growth, particularly in Q3, we could increase our reach out to the customer much more with our aggressive strategy on pricing. And demand in India, we've seen it's been improving day by day, not only in industrial, but also somewhat into the consumer segment, too.

Provides specific reasons for the strong domestic market growth, including new market identification, aggressive pricing, and broad-based demand improvement.

Asked by Aditya

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance and 9M Overview

Yasho Industries reported a robust Q3 FY26 with revenue reaching ₹201.83 crores, marking a significant 35% year-on-year growth. For the nine-month period, the company achieved a revenue of ₹583.76 crores, reflecting a 19% year-on-year increase despite ongoing pricing volatility in certain product categories. The company maintained healthy profitability, with an EBITDA margin of 16.65% for Q3 FY26 and 17.06% for the 9-month period, attributed to sourcing efficiencies and operational discipline.

Strategic Growth Initiatives and Capex Plans

The company's strategic manufacturing project with a large MNC is progressing as planned, with an estimated cost of ₹85-90 crores, fully funded by the customer, and an advance of ₹19.9 crores already received. Commercialization for this project is targeted for Q1 FY28. In parallel, Yasho Industries has deployed ₹25.9 crores for two new manufacturing lines, with trial runs expected in March '26 and commercial production planned for Q1 FY27. Total capex for the first nine months of FY26 was approximately ₹60 crores, with some planned capex deferred.

Market Diversification and Trade Environment

To mitigate risks from tariff volatility and macroeconomic challenges, Yasho Industries is actively diversifying its geographical footprint, expanding into South America, Africa, and other Asian markets. The evolving India-EU trade environment is expected to support improved engagement, with the company's European subsidiary benefiting from strong demand visibility for the coming year, positioning it for accelerated growth and deeper market penetration in this strategic region.

Operational Efficiency and Margins

While the Pakhajan facility continued to operate below optimal utilization, currently at 40-45% and having dropped below 50% since Q2, the impact on margins was effectively contained. This was achieved through a combination of product mix refinement, improved throughput efficiency, and disciplined cost control initiatives. Gross margin compression in Q3 was primarily attributed to a change in product mix and geographical diversification, rather than tariff impacts.

Financial Health and Capital Allocation

The company's gross debt levels are expected to stabilize in the coming quarter, with current borrowings (including promoter loan) at ₹560 crores, comprising ₹500 crores in bank loans and ₹50 crores from promoters. Reducing leverage and lowering the debt-to-EBITDA multiple remains a central financial priority. This is supported by a sharp focus on cash flow generation, working capital discipline, and anticipated further improvement in working capital days in Q4 FY26.

Future Outlook and Capacity Utilization

Yasho Industries aims for a revenue potential of approximately ₹1,500 crores by FY28, leveraging around 40% utilization of its Pakhajan facility. The optimal utilization for Pakhajan is projected to be 80-85% by FY28, which could generate revenues in the range of ₹750-850 crores. The company expects to maintain a long-term EBITDA margin of 17-19% and targets 15-25% annual growth, supported by a 4:1 revenue to capex ratio for incremental investments. The contribution of the industrial segment to total sales is expected to increase from the current 85-90% to 90-95% in the next two years.

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

More Chemicals earnings calls