Yasho Industries Limited Q3 FY26 Earnings Call Summary

Summary

Yasho Industries Limited - Q3 FY26 Earnings Call Summary Friday, February 13, 2026, 4:00 PM IST

Event Participants

Executives 2 Chirag Shah (CFO), Parag Jhaveri (MD & CEO)

Analysts 8 Aditya (Securities Investment Management), Harshil Bhayani (Individual Investor), Jay (Star Investments), Manjeet Buaria (Saamya Advisors), Manish Gupta (Solidarity), Naeem Patel (Bastion Research), Parth Agrawal (Bastion Research), Pujan Shah (Molecule Ventures)

Financials & KPIs

Geographic & Segment Commentary

• Industrial Segment: Currently contributes 85-90% of total sales, with a strategic target to reach 90-95% within two years as the consumer segment is expected to remain flat or de-grow. Focus remains on high-growth rubber and lubricant additives.
• Americas: Contributed approximately 20-22% of revenue in Q3; while US tariffs impacted certain products, many were exempted, allowing business continuity despite a 50% tariff on specific restricted categories.
• Europe: Strengthening demand visibility supported by the India-EU trade environment and active local sales presence; management expects the potential removal of chemical duties to 0% to further accelerate growth.
• Domestic (India): Witnessed strong volume growth in Q3 driven by an aggressive pricing strategy and improving demand across both industrial and consumer applications.

Company-Specific & Strategic Commentary

• LTSA Project: Collaborating with a large MNC on a customer-funded project (₹85-90 crores) for a unique molecule; received ₹19.9 crores advance with commercialization targeted for Q1 FY28.
• Pakhajan Capacity: Two new manufacturing lines (₹25.9 crores investment) are scheduled for trial runs in March 2026, with commercial production expected in Q1 FY27 to address high-visibility categories.
• R&D Focus: Prioritizing molecules with at least ₹25 crores annual revenue potential and expanding chemistry applications beyond traditional rubber and lubricants.
• Market Diversification: Actively expanding into South America, Africa, and Asian markets to de-risk the business from US-centric tariff fluctuations.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Tariffs and US Market

• Question: What was the impact of US tariffs on Q3 sales? (Naeem Patel)
• Answer: Impact was material where 50% tariffs applied, but many products were exempted. Management is using this to diversify into South America and Africa (Parag Jhaveri).

Revenue Guidance Clarity

• Question: Is the ₹1,500 crore revenue target for FY28 a committed guidance or an aspiration? (Manish Gupta)
• Answer: It represents the revenue potential at 80% utilization. Current year (FY26) should close near ₹800 crores. FY28 will benefit from the Long-Term Supply Agreement (LTSA) kicking in (Parag Jhaveri).

Margin Drivers

• Question: What caused the sequential gross margin compression? (Parth Agrawal)
• Answer: Primarily change in product mix (80% impact) and volume-linked discounts to bulk buyers (20% impact) (Parag Jhaveri).

LTSA Project Details

• Question: Is customer-funded capex common in this industry? (Aditya)
• Answer: This is a unique molecule with a specialized process. The customer chose Yasho as a long-term partner due to specific technical capabilities (Parag Jhaveri).

Debt and Working Capital

• Question: What are the plans to reduce the current ₹560 crore debt? (Harshil Bhayani)
• Answer: Focus is on reducing the Debt-to-EBITDA multiple through improved profitability rather than cutting absolute debt levels (Parag Jhaveri).

Key Takeaway

Yasho Industries delivered a stable Q3 FY26 with 35% YoY revenue growth, reaching ₹201.83 crores, despite navigating a complex global tariff environment and pricing volatility. The company is undergoing a strategic transition toward an industrial-heavy portfolio (targeting 95% mix) and is diversifying its geographic footprint into Europe, Africa, and South America to mitigate US-specific risks. Significant growth is tied to the Pakhajan facility, where management has secured a customer-funded MNC project and is commissioning two new lines for FY27. While current utilization remains below 50%, management has signaled an aggressive potential revenue target of ₹1,500 crores by FY28 at 80% utilization. Investors should monitor the successful commercialization of the LTSA project in Q1 FY28 and the management’s ability to maintain 17-19% margins amidst rising Chinese competition in the lubricant additives space.