OCCL Limited Q3 FY26 Earnings Call Summary

Summary

OCCL Limited - Q3 FY 2026 Earnings Call Summary Thursday, February 05, 2026

Event Participants

Executives 2 Akshat Goenka (Joint Managing Director), Anurag Jain (Chief Financial Officer)

Analysts 5 Aditya Khetan (SMIFS Institutional Equities), Anubhav Mukherjee (Prescient Capital), Madhur Rathi (Counter Cyclical Investments), Piyush Bangar (Vidit Global Services), Riddhesh Gandhi (Discover Capital)

Financials & KPIs

Geographic & Segment Commentary

• Domestic Market: Favorable operating environment due to anti-dumping duties (ADD) on imports from Japan and China and 7-8% projected industry growth. While ADD provided a pricing cushion of ~$200/MT, the benefit was largely offset by rising Sulphur costs.
• North America: Significant margin pressure due to 50% tariffs, necessitating 25% price discounts to maintain volumes. Management expects a rollback of these discounts once the anticipated tariff reduction to 18% is formally notified.
• Europe & Global: Relations remain stable with marginal (2.5%) tariffs in the EU. Global insoluble sulphur demand is growing at 2-3%, but a supply glut persists with global utilization significantly below the healthy 85% threshold.
• Sulphuric Acid: Performed strongly during the quarter with a “significant” contribution to EBITDA. Prices in this segment are formula-based, allowing for better pass-through of raw material volatility compared to insoluble sulphur.

Company-Specific & Strategic Commentary

• Raw Material Headwinds: Sulphur prices rose from ₹29/kg in Q3 to ₹52/kg currently. Management is waiting for competitors to exhaust low-cost inventory before further domestic price hikes can be implemented.
• Market Share Acquisition: The company is prioritizing domestic market share growth over immediate margin expansion, supported by the recent demerger and operational agility.
• Export Strategy: Export margins remain higher than domestic despite recent headwinds. Strategy for the US market has been “renewed” following the tariff reduction news, though volume recovery will take time.
• Legal Action: Under consultation with lawyers to potentially seek regulatory action against aggressive imports from Malaysia, which are currently bypasssing ADD.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Pricing & Anti-Dumping Duty (ADD)

• Question: Has the benefit of ADD been lost due to Sulphur price hikes? (Aditya Khetan)
• Answer: Yes, Chinese competitors have not raised prices despite higher RM costs, forcing OCCL to absorb the Sulphur hike to remain competitive. ADD has effectively “kept margins intact” rather than increasing them. (Anurag Jain)

US Export Dynamics

• Question: What was the impact of US tariffs on the bottom line? (Riddhesh Gandhi)
• Answer: To maintain supply, the company gave discounts in the range of 25%. If the 50% tariff had continued long-term, the impact on the bottom line would have been “decently significant.” (Anurag Jain/Akshat Goenka)

Domestic Market Share

• Question: Are we seeing market share gains in India? (Anubhav Mukherjee)
• Answer: Growth is visible, but short-term share is hard to track due to non-linear consumption. Management will provide a clearer picture after June 2026. (Anurag Jain)

Capital Allocation

• Question: Are there any plans for a share buyback following the demerger? (Madhur Rathi)
• Answer: There are currently no plans for a share buyback. (Anurag Jain)

Key Takeaway

OCCL Limited delivered a resilient Q3 FY26 with 19% revenue growth and a 25% increase in EBITDA, largely supported by a strong performance in the sulphuric acid segment and stable domestic demand. However, the core insoluble sulphur business faced severe margin compression as Sulphur raw material prices doubled to ₹52/kg, negating the anticipated ₹12-14 crore annual benefit from domestic anti-dumping duties. In the US market, the company maintained volumes by offering 25% discounts to offset high tariffs, though a pending reduction in US duties from 50% to 18% offers a significant margin recovery catalyst. Strategically, the company is prioritizing domestic market share acquisition over immediate margin protection, operating at 70% capacity utilization. While the domestic outlook remains positive due to 7-8% tyre industry growth and government capex, the near-term performance remains highly sensitive to Sulphur price volatility and the formal notification of US tariff reliefs.