Laxmi Organic Industries Limited Q3 FY26 Earnings Call Summary

Summary

Laxmi Organic Industries Limited - Q3 FY2026 Earnings Call Summary Friday, January 30, 2026 14:00 hours

Event Participants

Executives 2 Dr. Rajan Venkatesh (MD and CEO), Mr. Mahadeo Karnik (CFO)

Analysts 4 Ankur Periwal, Chetan Doshi, Harshil Sethia, Jainam Ghelani, Nitesh Dhoot, Rohit Nagraj

Financials & KPIs

Geographic & Segment Commentary

• Essentials Segment: Domestic demand remains a positive outlier despite global macro challenges, accounting for 70% of segment revenue. Strategy is focused on volume-driven profitable growth and the establishment of a new 70,000-ton ethyl acetate facility at Lote to address capacity constraints.
• Specialties Segment: Currently transitioning through the phase-out of a major agrochemical intermediate. Focus remains on the diketene value chain where the company holds a 50-product portfolio; new capacity at Dahej will position Laxmi as the global #3 player in this space.
• Lote (Fluoro Intermediates): Operations remain on track to achieve a first-year revenue target of ₹70–₹80 crores. Management reaffirmed full environmental compliance and zero hazardous discharge at this facility.

Company-Specific & Strategic Commentary

• Dahej Project Status: Phase 1 is operational and supplying a dedicated customer under a multi-year take-or-pay contract; Phase 2 (diketene/derivatives) is on track for Q4 mechanical completion.
• Feedstock Volatility: Acetic acid prices reached a non-sustainable floor of $320-$330/MT and have recently rebounded to $360-$380/MT, improving ethyl acetate spreads toward the $130 range.
• Strategic Self-Help: Implementing “Commercial Excellence” to reduce freight costs (down ₹5 crore YoY) and “Execution Excellence” to ensure large capex projects meet timelines and scope.
• Hitachi Partnership: Remains in execution mode for specialized projects; management clarified the relationship is not a JV and Laxmi retains all IP and know-how.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Pricing & Spreads

• Question: What is the outlook for ethyl acetate spreads and acetic acid pricing? (Jainam Ghelani)
• Answer: Acetic acid prices dropped >20% over two years to an unsustainable $320 floor but have rebounded to $360-$380; spreads have improved from $90 to approximately $130 (Dr. Rajan Venkatesh).

Specialties Performance

• Question: Why did Specialties margins drop to 12-13% and when will they recover? (Jainam Ghelani)
• Answer: Drop was due to feedstock price moderation, the phase-out of a 10% revenue contribution product, and incremental costs from Lote/Dahej. Recovery to the 20-25% range is expected as Dahej ramps up in FY27/28 (Dr. Rajan Venkatesh).

Dahej Capex & Contracts

• Question: Is the Dahej capacity backed by contracts? (Nitesh Dhoot/Chetan Doshi)
• Answer: 65% of the ₹710 crore capex is for Specialties. Phase 1 is backed by a multi-year take-or-pay contract with a customer co-located at Dahej (Dr. Rajan Venkatesh).

International Trade

• Question: Will the EU-India FTA lead to dumping of European chemicals in India? (Rohit Nagraj)
• Answer: High energy/gas costs in Europe make commodity imports (methanol/ammonia) unlikely. The FTA is more likely to provide opportunities for Indian specialty exports to Europe (Dr. Rajan Venkatesh).

Key Takeaway

Laxmi Organic reported a challenging Q3 FY2026, with revenue declining 9% YoY to ₹443.4 crores, primarily due to a 20% deflation in acetic acid prices and the phase-out of a key agrochemical intermediate that previously contributed 10% of Specialties revenue. Despite these headwinds, the company is executing its largest-ever capex of ₹710 crores at Dahej, with Phase 1 already operational under a take-or-pay contract and Phase 2 expected to conclude by Q4 FY2026. Management noted a positive reversal in feedstock pricing and stabilized domestic demand as “green shoots.” While adjusted EBITDA margins were pressured at 3.2% (excluding one-time gains), the strategic pivot toward becoming the global #3 in diketene derivatives and the scaling of the Lote fluoro facility to ₹70-80 crores in its first year provide a roadmap for recovery. Laxmi remains positioned for a margin-led recovery in FY2027-28 as new specialty capacities undergo qualification and ramp-up.