Summary
Gulshan Polyols Limited - Q3 FY 2026 Earnings Call Summary Thursday, February 12, 2026, 12:15 P.M.
Event Participants
Executives 3 Aditi Pasari (Joint Managing Director), Preeti Singhal (Compliance Officer), Rajiv Gupta (Chief Financial Officer)
Analysts 10 Aarav Chheda, Amit Agicha, Ankur Gulati, Gaurav Shelar, Manan Shah, Nagesh, Nirav Bhanushali, Nishita, Pushkar Jain, Viral Jain
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹626.7 crores | + YoY (not specified), primarily driven by capacity ramp-up in the ethanol segment in MP and Assam. |
| EBITDA | ₹85.6 crores | +211% YoY, supported by softening raw material prices and improved business mix. |
| EBITDA Margin | 13.7% | +920 bps YoY, driven by operational leverage and a ₹16.44 crore net subsidy benefit. |
| PAT | ₹40.9 crores | +504% YoY, reflecting strong earnings recovery as new ethanol capacities scale up. |
| Ethanol Capacity | 26 crore litres | Total annual capacity; currently operating at 65%-70% utilization. |
| Ethanol Order Book | ₹1,200 crores | Translates to 17 crore litres for ESY 25-26; 13 crore litres under long-term offtake. |
| Cost of Debt | 7.25% - 7.5% | Blended interest rate for working capital; recently reduced from 7.5% to 7.25%. |
| Debt/Equity | 0.6x | Maintains a stable leverage profile while focusing on cash flow improvement. |
Geographic & Segment Commentary
- Ethanol: This segment is the primary growth engine, contributing ~60% of revenue with operational margins of 10%-11%. Growth is driven by the MP and Assam plants, with management expecting full utilization in FY26-27 supported by a 40% FCI rice mandate which eased grain liquidity.
- Grain Processing: Facing headwinds due to industry-wide overcapacity in starch, leading to price pressure and negative margins. The company is rationalizing starch volumes while maintaining profitability in Sorbitol/Fructose and installing an RDF boiler to reduce energy costs.
- Mineral Chemical: Characterized as a steady-state business providing predictable cash flows and margin resilience. It continues to operate at steady capacity in line with historical performance and long-standing customer relationships.
Company-Specific & Strategic Commentary
- Raw Material Procurement: Management shifted to a staggered procurement strategy for maize (₹18-₹21/kg) and broken rice to reduce exposure to price volatility. The government mandate to use 40% FCI rice has structurally improved market availability for the remaining 60% of feedstock.
- Incentive Realization: Received ₹21.8 crores from MPIDC for state promotion incentives; however, the quarter’s EBITDA reflects a net subsidy of ₹16.44 crores after accounting for interest subvention reversals.
- Product Diversification: Planning a transition toward specialty chemicals and import substitutes in FY28. This move aims to exit commodity-traps in the grain segment by introducing high-value products not currently manufactured in India.
- Operating Efficiency: Focus remains on internal efficiency within the starch segment, specifically through energy cost reduction (RDF boilers) and improving DDGS by-product realizations, which currently add ~25% to ethanol revenue.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue (FY26) | ~₹2,300 crores | Driven by optimization and high utilization of existing ethanol capacities. |
| Revenue (FY27) | ₹2,600 - ₹2,800 crores | Assumes 80%-90% utilization; management is monitoring if ₹3,000 crores is achievable. |
| EBITDA Margin | 9% - 10% | Target consolidated range for FY26 and FY27; ethanol operational margins at 12%-13%. |
| Capex | Zero incremental for FY27 | Focus is on debt reduction and cash flow; next major capex phase planned for FY28. |
Risks & Constraints
| Risk | Context |
|---|---|
| Starch Overcapacity | Significant industry-wide capacity expansion in FY22 has turned starch into a commodity with depressed pricing. Management is mitigating this by shifting to specialty derivatives. |
| Policy & Allocation | OMCs have allocated as low as 20%-30% of capacity to some industry players due to national overcapacity. Gulshan currently holds 70% allocation but needs further tender cycles to reach full utilization. |
| Subsidy Receivables | Delays in receiving Interest Subvention Scheme (ISS) payments led management to shift to a “cash-basis” accounting policy for incentives. |
| Feedstock Volatility | Maize price fluctuations directly impact competitiveness against Chinese exports in the grain segment. |
Q&A Highlights
Ethanol Margins & Pricing
- Question: What is the outlook on maize prices and potential government price cuts for ethanol? (Pushkar Jain)
- Answer: Current maize is ₹18-₹21/kg. Given that many units received only 20%-30% of applied allocation due to national overcapacity, management does not expect the government to reduce maize-ethanol prices further (Aditi Pasari).
Grain Segment Recovery
- Question: When will the grain processing segment see margin improvement? (Nishita)
- Answer: Impact of energy cost-saving measures (RDF boiler) should appear in the next three months. While starch is pressured, Sorbitol remains EBITDA positive (Aditi Pasari).
DDGS Dynamics
- Question: Does the import of DDGS from the USA threaten domestic margins? (Manan Shah)
- Answer: US imports are expected at ₹26/kg vs ₹22-₹24/kg domestic price. Indian DDGS has higher protein and oil content, making it more desirable; imports may actually act as a price floor for domestic product (Aditi Pasari).
Future Capex & Products
- Question: What is the focus for the FY28 capex phase? (Gaurav Shelar/Nishita)
- Answer: The focus will be “specialty chemicals” and value-added starch derivatives that serve as import substitutes, moving away from current commodity chemicals (Aditi Pasari).
Key Takeaway
Gulshan Polyols delivered a strong Q3 FY26, characterized by a 211% YoY increase in EBITDA to ₹85.6 crores and significant margin expansion to 13.7%. This performance was underpinned by the successful ramp-up of ethanol production in Madhya Pradesh and Assam, alongside a beneficial government mandate for FCI rice procurement that stabilized raw material costs. While the grain processing segment remains burdened by starch overcapacity, the company is pivotally shifting focus toward specialty chemicals for its FY28 growth phase. Currently, the company holds ₹1,200 crores in ethanol orders and maintains a disciplined balance sheet with 0.6x debt-to-equity. Management guided for ₹2,300 crores in revenue for FY26, scaling to ₹2,600-₹2,800 crores in FY27 through 85% capacity utilization. Looking forward, the company’s trajectory depends on sustaining ethanol margins of ₹9-₹10 per litre and the successful execution of its energy-efficiency projects in the grain segment.
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