Summary
Epigral Limited - Q3 FY26 Earnings Call Summary Friday, January 30, 2026 4:00 PM
Event Participants
Executives 4 Kaushal Soparkar (Director), Maulik Patel (Chairman and Managing Director), Milind Kotecha (Investor Relations), Rakesh Agrawal (Chief Financial Officer)
Analysts 7 Ashish (Leo Capital), Deepesh J. Sancheti (Maanya Finance), Hemkesh Khattar (Green Portfolio), Maneesh Bhadane (360 One Capital), Nipun Sharma (VLS Finance), Pujan Shah (Molecule Ventures), Rohit Sinha (Sunidhi Securities)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹603 crores | +2% QoQ, -7% YoY; Growth driven by improved product mix despite flat volumes. |
| EBITDA | ₹103 crores | -22% QoQ; Margins contracted to 17% due to low realizations, high raw material costs, and high-cost inventory. |
| PAT | ₹39 crores | -23.5% QoQ; Impacted by margin pressure and a one-time expense related to Labor Code changes. |
| ECU (Electrochemical Unit) | ₹29,000 - ₹30,000 | Marginally down by ₹500-₹1,000 QoQ; Subdued demand in Chlor-Alkali segment weighed on pricing. |
| Derivative & Specialty Mix | 52% | Increased from 50% QoQ; Aligns with the long-term strategic goal of reaching 70% revenue contribution. |
| Overall Plant Utilization | 78% | Flat QoQ, -300 bps YoY; Impacted by prolonged monsoon and maintenance in the first half of the quarter. |
| Net Debt | ₹557 crores | Increased from ₹531 crores YoY; Capex spend of ₹337 crores during the year. |
| Net Debt to EBITDA | 1.0x | Increased from 0.8x YoY; Management remains comfortable with current leverage levels. |
Geographic & Segment Commentary
- Derivatives & Specialty: This segment now contributes 52% of total revenue, showing resilience against commodity fluctuations. Management expects significant growth from the Chlorotoluene value chain starting FY27 as customer approvals translate into full truckload orders.
- Chlor-Alkali (Basic Chemicals): Performance was pressured by negative chlorine realizations (approx. -₹7,000) and muted caustic soda demand. Despite new domestic capacities from competitors, the company remains focused on internal consumption (70-75% chlorine integration) to mitigate market volatility.
Company-Specific & Strategic Commentary
- Capacity Expansion: Projects to double CPVC and Epichlorohydrin (ECH) capacities are on track for commissioning by September 2026. These expansions are critical to the goal of 70% revenue from derivatives by FY29.
- Chlorotoluene Value Chain: Commissioned in March 2025, the segment is currently in the customer validation phase. Management expects “sizable” P&L contributions from FY27 onwards as long-term contracts are finalized.
- R&D and Pilot Plant: The company is building a new integrated pilot plant to accelerate sampling for Chlorotoluene derivatives and new chemistries. This facility is designed to reduce the time-to-market for future product launches.
- Export Strategy: While European volumes were affected by geopolitical issues, management sees opportunity as European competitors shut down high-cost plants. The withdrawal of export rebates in China is also expected to improve the global competitiveness of Indian chemical exports.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| EBITDA Margin | 21% - 25% (Q4 FY26 onwards) | Expected recovery as high-cost inventory is cleared and PVC/CPVC prices bottom out. |
| Revenue Contribution | 70% Derivatives & Specialty | Target for FY29 onwards as new capacities and the Chlorotoluene chain scale up. |
| CPVC Market Demand | 500,000 tonnes by FY30 | Driven by real estate growth; current market demand is ~280,000 tonnes growing at 10-12% annually. |
| New Chemistry Announcement | By March 2026 | Management is in advanced stages of finalizing a new chemistry platform to drive growth from FY29. |
Risks & Constraints
| Risk | Context |
|---|---|
| Realization Volatility | Significant pressure in Q3 due to falling PVC prices affecting CPVC realizations (₹95-₹100/kg). Management notes a one-quarter lag in passing through raw material shifts. |
| Competitive Capacity | Major players (Reliance/Adani) are adding PVC/Caustic capacity. This may lead to excess caustic soda supply and further pressure Chlor-Alkali margins. |
| Raw Material Costs | ECH margins are sensitive to glycerin prices, which are rising due to global biodiesel policy shifts. Persistent high glycerin costs represent a new “normal” for the ECH segment. |
Q&A Highlights
Pricing & Inventory
- Question: What caused the sharp EBITDA drop this quarter? (Maneesh Bhadane)
- Answer: Drastic PVC price declines over the last 6 months led to high-cost CPVC inventory and lower realizations (Maulik Patel).
Chlorotoluene Progress
- Question: How is the utilization for the new Chlorotoluene plant? (Rohit Sinha)
- Answer: Volumes are increasing month-on-month, but it hasn’t reached a “sizable” percentage yet. Major revenue contribution will begin in Q1 FY27 as testing/sampling phases conclude (Milind Kotecha/Maulik Patel).
Competition in CPVC
- Question: Are you worried about competitors like Astral or Adani entering the CPVC resin market? (Pranav Jain)
- Answer: Most competitors are focused on B2C (pipes). CPVC resin manufacturing is a complex B2B business with a steep learning curve. The market will absorb new supply as demand reaches 5 lakh tonnes by FY30 (Maulik Patel/Milind Kotecha).
Chlorine Integration
- Question: What is the current chlorine utilization and pricing? (Pujan Shah)
- Answer: Chlorine integration is at 70-75%. Current market pricing for chlorine is approximately negative ₹7,000 per tonne (Milind Kotecha).
Key Takeaway
Epigral Limited reported a challenging Q3 FY26, with EBITDA margins contracting to 17% due to a sharp decline in PVC/CPVC realizations and the liquidation of high-cost inventory. Despite these headwinds, the company grew its Derivative & Specialty revenue share to 52%, signaling progress in its structural transformation. Management remains committed to doubling CPVC and ECH capacities by September 2026 and expects the Chlorotoluene value chain to become a meaningful earnings driver in FY27. While short-term profitability was impacted by a prolonged monsoon and volatile commodity prices, management observed a volume pickup starting mid-November and guided for margins to return to the 21-25% range in Q4. Investors should monitor the upcoming announcement of a new chemistry platform and the stabilization of ECU levels as the company moves toward its FY29 target of 70% specialty revenue.
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