Summary
Pondy Oxides and Chemicals Limited - Q3 FY 2025-26 Earnings Call Summary Thursday, January 29, 2026, 03:00 PM IST
Event Participants
Executives 5 Ashish Bansal (MD), K. Kumaravel (Director Finance & CS), Pratik Gupta (AVP Operations), R. S. Vaidhyanathan (ED), Vijay Balakrishnan (CFO)
Analysts 11 Abhijit Mitra, Akshay Jogani, Avesh Chauhan, Dheeraj Ram, Kaushal Sharma, Khush Gosrani, Mitul Patel, Naman Parmar, Nihar Mehta, Sagar Shah, Samay Shah, Shubham Thorat, Utkarsh Somaiya, Vikas Singh
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Consolidated) | ₹776 crores | +55% YoY, +22% QoQ; driven by improved capacity utilization and higher sales volumes in lead and copper. |
| Revenue (9M FY26) | ₹2,007 crores | +33% YoY; record 9-month performance supported by substantial volume growth. |
| EBITDA (Quarterly) | ₹59 crores | +122% YoY; reflects operational efficiency despite a ₹7.28 crore MTM provision. |
| EBITDA (9M FY26) | ₹157 crores | +96% YoY; margins improved to 7.8% from 5.3% in the prior year. |
| PAT (9M FY26) | ₹101 crores | +114% YoY; PAT margins improved to 5.0% vs over 3% in 9M FY25. |
| Lead Production (Q3) | 33,271 MT | +57% YoY, +26% QoQ; expansion of capacity aiding volume growth. |
| Copper Sales (Q3) | 1,235 MT | Significant scale-up; 9M copper sales grew 15x to ₹296 crores. |
| EBITDA per ton (Lead) | ₹17,427/ton | +39% YoY; management maintains a sustainable range of ₹15,000 - ₹17,500/ton. |
| EBITDA per ton (Copper) | ₹35,325/ton | Remained steady; management targets ₹35,000 - ₹40,000/ton range. |
| Net Cash | ₹35 crores | Balance sheet remains strong; supporting ongoing capex from internal accruals and QIP funds. |
Geographic & Segment Commentary
- Lead Segment: Production increased 23% YoY to 83,746 MT for 9M FY26. Value-added products contributed 65% of lead revenue, aligning with the long-term target of >60%. Sourcing mix shifted this quarter to 70% imports (vs 85% previously) as the company increased domestic scrap procurement.
- Copper Segment: Capacity is set to double from 6,000 MTPA to 12,000 MTPA by the end of January 2026. Sourcing remains 100% import-dependent from global markets (USA, Australia, etc.). Management is planning forward integration into higher-margin copper products starting in FY27.
- Exports: Contributed 67% of total revenue. The India-EU trade deal is viewed as a structural catalyst, with expected zero duties on metals enhancing global competitiveness and securing long-term European demand.
- Plastics: The subsidiary POCL Future Tech was merged into the parent entity during the quarter to enhance vertical integration. Production has commenced at the new Thervoy Kandigai facility, though current demand is reported as soft.
Company-Specific & Strategic Commentary
- Capacity Expansion: Total lead capacity increased by 50% to 2,04,000 MTPA following the commissioning of a 36,000 MTPA phase in December 2025. This capacity is expected to ramp up to 70% utilization in coming quarters.
- Mundra Project: Development of the 123-acre land bank in Mundra is scheduled for H2 CY2027. This facility will target European and Middle Eastern markets due to logistics advantages and focus on existing lead/copper business with new verticals.
- Regulatory Environment: Supportive domestic environment due to stricter Battery Waste Management Rules (BWMR) and EPR frameworks, which are reducing leakages to the unorganized sector and improving domestic scrap availability.
- Hedging & MTM: The company maintains a 100% hedging policy for copper. A ₹7.28 crore MTM provision was recorded this quarter due to a vertical run-up in copper prices, which management expects to reverse as sales materialize.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue/PAT CAGR | 20%+ Growth | Target 2030 vision supported by capacity scaling and non-ferrous expansion. |
| EBITDA Margin | 7% - 8% (Blended) | Target maintained despite copper mix increase; forward integration in copper to offset lower recycling margins. |
| Volume Growth | 20%+ YoY | Driven by recent 50% lead capacity expansion and doubling of copper capacity. |
| ROCE | 20%+ | Focus on maintaining high capital efficiency through working capital optimization. |
| Capex (Q4 FY26) | ₹35 crores | For completion of copper expansion and ongoing modernization. |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Volatility | Vertical price increases in copper (40%+ in short period) have caused a temporary margin squeeze as end-consumers take time to absorb costs and working capital requirements spike. |
| Working Capital | Rising metal prices optically inflate inventory and receivable values; management is mitigating this by targeting a reduction in the working capital cycle to ~47 days. |
| Sourcing Lean Periods | Lean periods in domestic scrap flow can lead to price spikes in the local market, impacting gross margins when domestic sourcing percentages increase. |
| Technology Risk | Entry into Lithium-ion recycling is delayed until 2028 due to rapid technology obsolescence and current lack of feedstock (EV/Electronics scrap) availability in India. |
Q&A Highlights
Copper Margins and Volatility
- Question: How will the copper expansion affect consolidated EBITDA margins given lower margins in copper? (Dheeraj Ram)
- Answer: Blended margins will remain at 7-8%. While current copper recycling margins are lower, upcoming forward-integrated products will carry higher margins to maintain the overall profile (Ashish Bansal).
Lead Pricing and EBITDA
- Question: Why is the guided lead EBITDA lower than the ₹20,000/ton achieved by some peers? (Naman Parmar)
- Answer: Management maintains a conservative and sustainable guidance of ₹15,000 to ₹17,500/ton. Actual performance often exceeds this due to shifting product and procurement mixes (Vijay Balakrishnan).
Working Capital and Inventory
- Question: Will rising copper prices increase inventory values on the balance sheet? (Pranav Jain)
- Answer: While prices increase, the company is squeezing the working capital cycle and increasing rotation frequency to keep inventory levels between ₹220-250 crores (Ashish Bansal).
Mundra Timeline
- Question: What is the status of the 123-acre Mundra land for expansion? (Sagar Shah)
- Answer: Implementation is planned for H2 of CY2027. Focus is currently on completing copper expansions in the south. Mundra will serve as a hub for Middle East and EU exports (Ashish Bansal).
EPR Credits
- Question: How are EPR norms impacting the business? (Khush Gosrani)
- Answer: Norms are notified but the pricing for credits has not yet evolved. Greater clarity and price mandates are expected from the government by April 1st (Ashish Bansal).
Key Takeaway
Pondy Oxides and Chemicals Limited delivered a record performance in Q3 FY26, with 9-month revenue and PAT growing by 33% and 114% respectively. The company successfully executed a 50% increase in lead capacity to 2,04,000 MTPA and is on track to double copper capacity to 12,000 MTPA by January 2026 end. Strategic focus remains on increasing value-added products (currently 65% of lead revenue) and preparing for global expansion via the India-EU trade deal. Despite a vertical run-up in copper prices causing a temporary MTM provision of ₹7.28 crore and a slight margin contraction, management maintained its 7-8% EBITDA margin guidance. POCL remains focused on its “Target 2030” vision of 20% CAGR, underpinned by a transition toward forward-integrated products and a major export hub in Mundra slated for 2027. Current growth is well-supported by a net cash balance sheet and a strengthening domestic regulatory framework for organized recyclers.
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