Clean Science and Technology Limited Q3 FY26 Earnings Call Summary

Summary

Clean Science and Technology Limited - Q3 FY26 Earnings Call Summary Saturday, January 31, 2026, 4:00 PM IST

Event Participants

Executives 3 Pratik Bora (President, Commercial), Sanjay Parnerkar (CFO), Siddharth Sikchi (Executive Director and Promoter)

Analysts 5 Abhijit Akella (Kotak Securities), Ankur Periwal (Axis Capital), Archit Joshi (Nuvama), Jason Soans (IDBI Capital), Sanjesh Jain (ICICI Securities)

Financials & KPIs

Geographic & Segment Commentary

• Performance Chemicals: Representing 72% of revenue, the segment saw volume-led declines in MEHQ and BHA. Pricing for MEHQ was reduced to stay competitive against Chinese hydroquinone-derived imports, which are at “all-time low” levels.
• Pharma & Agro: Contributed 21% of revenue; witnessed lower offtake in the Agchem segment, though management views this as a postponed demand cycle rather than a permanent loss.
• FMCG: Contributed 5% of revenue; significantly impacted by the permanent loss of a key Chinese customer for 4-MAP due to backward integration and high U.S. tariffs (55%) on end-products like avobenzone.
• HALS (Subsidiary): Achieved EBITDA breakeven at Clean Fino Chem Limited this quarter. Current geographic mix is 70% domestic and 30% international, with export approvals recently secured for the U.S. and Europe.

Company-Specific & Strategic Commentary

• Process Optimization: Management is reworking the production process for Pharma intermediate DHDT, with newer samples sent to customers for testing.
• Raw Material Integration: Commercialization of the hydroquinone and catechol plant in Dec 2025 has stopped external imports, which will provide immediate margin cushions for downstream products TBHQ and Veratrole.
• Market Protection: Promoter committed to no further equity dilution for at least the next few years, emphasizing a long-term (5-year) strategy over quarterly fluctuations.
• Chinese Competition: Chinese players have lowered hydroquinone prices dramatically, forcing Clean Science to lower MEHQ pricing to protect market share.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

MEHQ Pricing Dynamics

• Question: What is driving the MEHQ price drop and is there domestic competition? (Sanjesh Jain)
• Answer: There is no new domestic competition. Pricing is down because Chinese players lowered hydroquinone (raw material) prices to all-time lows, making conventional MEHQ cheaper; CSTL had to match these prices to retain volume. (Siddharth Sikchi)

HALS Performance

• Question: What are the realizations and volume targets for HALS? (Jason Soans)
• Answer: Blended realization was ₹425/kg this quarter. Volumes reached 810 tons (+6% QoQ) and the subsidiary achieved EBITDA breakeven. (Siddharth Sikchi/Pratik Bora)

Strategic Recovery

• Question: When will the 40% EBITDA margins or high growth return? (Manish/Individual Investor)
• Answer: Macro factors like 55% U.S. tariffs and Chinese overcapacity were unanticipated. The company is using its ₹450 crore cash to R&D new products and integrate raw materials (HQ/Catechol) to recover margins. (Siddharth Sikchi)

Promoter Intent

• Question: Will there be an OFS after the 3-year lock-in expires? (Abhijit Akella)
• Answer: The Boob family is unlikely to dilute further in the next couple of years, especially in current market conditions. (Siddharth Sikchi)

Key Takeaway

Clean Science and Technology reported a challenging Q3 FY26, with consolidated revenue declining 10% sequentially to ₹216 crores and EBITDA margins compressing to 33%. The performance was hindered by a “perfect storm” of record-low Chinese pricing in the hydroquinone/MEHQ chain and high U.S. tariffs impacting the FMCG segment (4-MAP). Strategically, the company reached a milestone with HALS EBITDA breakeven and the commercialization of its HQ/Catechol plant, which eliminates reliance on imports for TBHQ and Veratrole. While the Agchem and Pharma segments remain muted, the company is maintaining a strong liquidity position of ₹450 crores to fund its Performance Chemical 2 expansion (slated for Q1 FY27). Management remains focused on market share protection over immediate margin expansion, navigating a fluid global environment while awaiting the benefits of backward integration and new product approvals to materialize in FY27.