Ladies and gentlemen, good day and welcome to Himadri Speciality Chemical Limited, Q2 and H1 FY 2026 conference call hosted by MUFG Intime. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during the conference call, please signal an operator by pressing star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Pooja Swami from MUFG Intime. Thank you and over to you, ma'am.
Thank you, Shran. Good evening, everyone, and welcome to the Q2 and H1 FY 2026 earnings conference call of Himadri Speciality Chemical Limited. Today on the call, we have with us Mr. Anurag Choudhary, CMD and CEO, Mr. Somesh Satnalika, EVP Tire and Strategy, and Mr. Kamlesh Agarwal, CFO. Before we proceed with the call, I would like to give a disclaimer that this conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations as of today. Actual results may differ materially. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is given on page two of the investor presentation of the company, which has been uploaded on the stock exchange and company website. With this, I now hand over the call to Mr. Anurag Choudhary o ver to you, sir.
Thank you, Pooja. Good evening, everyone, and thank you for joining us today on Q2 FY 2026 earnings call of Himadri Speciality Chemical Limited. It's always a pleasure to connect with you all and share our progress. This quarter has been another milestone for Himadri, a period where our strategy, execution, and innovation have come together to deliver record results. I am pleased to share that in Q2 FY 2026 we have achieved our highest ever quarterly EBITDA and PAT, reflecting the strength and resilience of our business model. Our EBITDA stood at INR 243 crore, up 21% year on year, and PAT came at INR 187 crore, a 39% growth compared to last year. For the half year, we delivered INR 477 crore in EBITDA and INR 369 crore in PAT, both our highest ever levels.
Strategic emphasis on high-value specialty and advanced materials drove strong margin performance in this quarter, delivering year-on-year improvement in both EBITDA and PAT. The impact of softer raw material prices was marginal, and with a large export order scheduled for recognition in Q3, we are poised for continued growth. Over the past few months, we have made steady progress across multiple initiatives, from advancing our pipeline of new product developments and pilot trials to executing capacity expansions, deepening global collaborations, and strengthening sustainability frameworks. At the heart of this progress lies our in-house R&D and technological capability, with continuous drive to innovation, integration, and value creation across business. We have continued to expand our international engagement, showcasing our capabilities at major global platforms. These events not only helped strengthen Himadri's brand visibility but also deepened partnerships with global leaders in specialty chemicals and new energy materials.
We were proud to partner with Asia's Premier Cricket Tournament as the official tire partner of Asia Cup 2025. Just as the champions on the field crossed boundaries and overcame every challenge, Birla Tyres continues to stand for performance, reliability, and an unwavering spirit on the road and in life. Through our campaign, Rolling with Champions, we celebrated the passion of the game, the unity of billions of fans, and our commitment to delivering strength and trust in every mile. This association marked a proud chapter in the brand journey. Before I move to other updates, I want to highlight an initiative that truly embodies our culture at Himadri, Bihan. This platform brings Himadrians from across levels and functions together to engage, learn, and exchange ideas in a collaborative environment. Bihan fosters a culture of continuous learning by facilitating meaningful interactions between young talents, passionate professionals, and senior leadership.
Through this initiative, emerging talents gain exposure to real business challenges, receive valuable mentorship, and benefit from the collective vision of our experienced leaders, helping shape the future leaders of Himadri. Bihan is a powerful catalyst for innovation, fresh thinking, and leadership development that drives long-term value for our organization. Building on the robust performance and strategic executions we have demonstrated so far, Himadri is accelerating its journey towards long-term financial milestones. Our focus on high-valued segments and operational excellence has positioned us ahead of schedule to achieve our ambitious target. We have earlier guided that our ambition was to double our PAT from FY 2024, which was INR 411 crore, by FY 2027. Today, with our progress in just two years, we are already nearing this milestone, well ahead of plan.
This momentum not only strengthens our belief that FY 2027 will far exceed our original expectations but also sets the stage for Himadri to establish industry-defining benchmarks and shape the next era of growth. On our strategic roadmap, we are moving steadily towards FY 2028, guided by a clear ambition to build a diversified and future-ready portfolio anchored in high-value growth. Over the next three years, we expect meaningful contributions from our specialty carbon black expansion, the ramp-up of Birla Tyres, the forward integration into specialty chemicals, and the commercialization of our lithium-ion battery material business. Having shared a snapshot of our strong quarterly performance, I would now like to walk you through the detailed progress and exciting developments across our core business segments and strategic initiatives. Let me begin with our core specialty value chain, where we continue to see robust growth and on-track expansion.
Our coal tar pitch business remains a trusted supplier to global aluminum and electrode consumers. While we are actively expanding our footprints in liquid pitch exports with newly commissioned terminal at Mangalore Port, in specialty carbon black, the brownfield expansion project is progressing well, set to more than double our capacity to 130,000 metric tons per annum by the end of Q3 FY 2026, positioning Himadri as the world's largest single-site producer of specialty carbon black. This expansion will take our total carbon black capacity to 250,000 metric tons per annum. With over 60 new grades launched, we are strengthening our leadership and product diversity in this critical segment. In parallel, our new specialty chemical segment is gaining momentum with the upcoming facility of anthraquinone and carbazole production that is expected to be commissioned by Q2 FY 2027.
This forward integration from existing coal tar pitch will not only reduce import dependency but also enhance value addition across the dye, pigment, pharmaceutical, and ecochem industries. Moreover, the introduction of Durofresh mothballs with its industry-leading purity of 99.5% represents a new chapter where Himadri's decades of technical expertise translate directly into a consumer-facing product. It's not just a diversification, but it's about capturing greater value within our existing value chain while enhancing our brand presence in a fast-growing retail market. One of the most transformative areas for us is lithium-ion battery material, where we are making strides to establish India's first commercial manufacturing footprints.
As India rapidly emerges as a key player in the global clean energy value chain, Himadri is proudly contributing to the atmanirbhar Bharat vision by investing to become the world's first commercial scale manufacturer of LIP cathode active material outside China, targeting a phased capacity of 200,000 metric tons per annum. The initial 40,000 metric tons per annum plant is already under development and on track to commence operation by Q3 FY 2027. Concurrently, we are advancing research across anode technologies, including both natural and synthetic graphite, to build a comprehensive self-run battery material portfolio that drives long-term growth, innovation, and energy independence of India. Our partnership with Sicona Battery Technologies in Australia gives us exclusive rights to commercialize this advanced silicon carbon anode technology in India, a technology that offers over 20% higher energy density and reduces charging time by nearly 40%.
Alongside this, our strategic investment in Sicona is 17.6%, International Battery Company 16.2%, and Invati Creations 40% gives us access to cutting-edge technologies, R&D capabilities, and a presence across the entire LIB value chain for anode and cathode materials to cell manufacturing. Another important development this quarter has been our Birla Tyres. The business is on a course of revival, and we are building a comprehensive product portfolio catering to off-highway tires, commercial vehicles, agri and industrial segments. For the passenger car radial unit designed for EVs and SUVs, the installation of plant and machinery is scheduled to commence within the next 12 months. Today, Birla Tyres operates through 29 distributors and over 350 dealers across India and global markets, including Asia, Africa, and Middle East. The new brand identity and digital presence reflect a strong, modern, and consumer-driven direction for this iconic brand.
Sustainability means and remains deeply embedded in our strategy, with several important milestones, recognitions, and forward-looking commitments reinforcing our responsible manufacturing philosophy. Sustainability remains at the core of everything we do. This quarter, Himadri achieved the ISCC PLUS certification for our mining plant, reaffirming our dedication to responsible manufacturing and circular economy principles. We earned an A rating in CDP's Suppliers Engagement Assessment, reflecting strong supplier collaboration on environmental performance. It's also worth highlighting that we have previously received the prestigious Platinum rating from EcoVadis, which placed us among the top 1% of companies globally for sustainability performance. Our net zero ambition for 2050 is backed by measurable science-based targets across Scope 1, 2, and 3 emissions. All our manufacturing sites operate a zero liquid discharge facility, and we utilize in-house clean power for 100% of our electrical energy needs.
For Himadri, sustainability is not merely compliance; it's in the core business philosophy that quotes innovation, drives efficiency, and builds long-term trust with our stakeholders. With our strong balance sheet, robust cash generation, and disciplined capital allocation, Himadri is well-positioned to deliver sustainable value to all stakeholders. Before I conclude, I want to thank our team members, partners, and our investors for their continued trust and support. With that, I would like to hand over the proceedings to our CFO, Mr. Kamlesh Agarwal, to walk you through the financial performance in detail.
Thank you, Anuragji, and good evening, everyone. Now, let me take you through the key financial highlights for the quarter and half year ended 30th September 2025. On a standalone basis, our revenue from operations for Q2 FY 2026 stood at INR 1,070 crore compared to INR 1,135 crore in Q2 FY 2025, primarily impacted by the correction in raw material prices, increased focus towards high-value added products, and deferment of sales recognition for export shipment to Q3. Driven by our strategic emphasis on value-added offerings and operational efficiency, profitability continued to strengthen even as topline remained soft. EBITDA for the quarter came in at INR 243 crore, a growth of 21% year on year, over INR 201 crore in Q2 FY 2025. PAT stood at INR 187 crore, reflecting a 39% increase year on year compared to INR 134 crore in the same quarter last year.
For the first half year of FY 2026, revenue stood at INR 2,171 crore, while EBITDA reached INR 477 crore, up 23% year on year from INR 389 crore in the first half of FY 2025. Profit after tax for the half year stood at INR 369 crore, up 43% year on year, over INR 258 crore reported in H1 FY 2025. On a consolidated basis, revenue for Q2 FY 2026 stood at INR 1,071 crore versus INR 1,137 crore of the same period last year. EBITDA for Q2 FY 2026 stood at INR 238 crore, recording a growth of 17% year on year, and PAT at INR 176 crore, with a growth of 30% year on year. Our half-yearly revenue stood at INR 2,189 crore, EBITDA at INR 473 crore, PAT at INR 356 crore, reflecting strong performance across all the business segments.
We continue to maintain a healthy liquidity position with a comfortable leverage profile. Our debt-to-equity ratio remains low despite ongoing capital expenditure. In summary, Q2 FY 2026 was another strong quarter with record profitability, robust margins, and a healthy balance sheet laying the foundation for sustainable growth in the upcoming quarters. That's all from our side. We will now open the lines for questions and answers. Thank you. Pooja, you can start the Q&A session.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use headsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. The first question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Thank you. Good evening, sir.
Good evening.
A couple of questions from my side. First, on the volume growth, if I look at the volume growth for last, since Q4 2024, we are stuck between 135,000- 140,000. It's because we don't have capacity or the demand remains soft. What's leading that the volume has been in that range of 135,000- 140,000 metric tons for almost seven, eight quarters now?
The volumes are at the same level, basically, because we are more or less at peak capacity utilizations. With the new capacity being added in the next quarter for specialty carbon black and debottlenecking for the coal tar pitch, it's also happening. We can see volume growth from Q4 onwards.
Okay. This basically, we are capped by the capacity constraint. You don't see issue on the demand side of it?
No, not at all.
Got it. Got it. How much are we adding or debottling the coal tar pitch distillation capacity?
Our current capacity is 500,000 metric tons. We are going to become 600,000 metric tons.
How should we think this utilization? Because around 40%.
This utilization from Q4 will start. Q3 will have some impact, and Q4, and then from Q1 next year.
Because India is.
From Q3, you'll start seeing the impact.
From a demand perspective, aluminum capacity in India is not going up. 40% of this incremental [ 100,000] need is demand from the aluminum, and the remaining will go as a raw material into carbon black manufacturing. How should we think the capacity which can come as a sales out of this addition we are doing?
For coal tar pitch, as we highlighted previously also, we have started export of liquid pitch, and we have recently started Mangalore terminal also. This month, now, in November, we are affecting our first shipment from Mangalore terminal. With this, now we'll be supplying to the global market. The new capacity will basically cater to the global market.
Why can't we export it from our Kolkata port, and why do we need to come to Mangalore port?
We have over two one unit in Visakhapatnam also.
Correct.
For that, we are using Mangalore port. From Kolkata, we are using Haldia port.
Got it. Got it. How much do we have the visibility for this incremental 40,000 metric ton of coal tar pitch demand from the export market?
Yeah, we have very clear visibility.
Got it. Second, from the carbon black, and sorry, just to complete that, which geography are we seeing this incremental demand coming in for the coal tar pitch?
Middle East.
Largely Middle East.
Largely Middle East, because a lot of smelters are there in the Middle East. Significant capacities, and all of them are importing coal tar pitch.
We are approved there.
Yes, we are.
The whole process will start now.
No, we are approved.
We are approved. We just need to manufacture and supply. That's it.
Right, right.
Got it. Second, on the carbon black side, if I look at carbon black, we got two pieces, right? One is rubber grade, and the other one is the specialty grade. Now, if I look at your peers' number globally and in India, they are seeing significant stress in the overall spread, both specialty and the tire grade. If I look at our number, it shows a very different trajectory here. Though we don't get product-wise, we have increased in the last one year the EBITDA per kg from INR 15 to INR 17. How are we able to buck this trend? How are we able to improve the spread while globally and the peers are showing a decline? Anuragji?
Yes.
Yes.
Yeah. To answer your question, the biggest difference between any other carbon black player and Himadri is that we have always focused on our specialty portfolio. In commodity also, we focus on very niche applications where quality marks a very significant requirement. In difficult times, this is what happens when during testing times, actually, the business model of Himadri is put to test. That is where we prove that the strategy we took over the years is yielding results. The market demand and the prices are inconsistent globally for carbon black, but Himadri has very limited volume of carbon black to sell compared to any of its peers who have significant volume. They have to compromise on different aspects.
We select our customers on a long-term basis, reliable customers who support us in difficult times, given our loyalty in terms of delivery schedule, clarity in terms of pricing formulas, in terms of quality, consistency. That is how Himadri differentiates itself from its peers.
No, that I appreciate. We don't have such a low capacity. We are sitting at about 150,000 metric tons of capacity. It's not.
We are at 180,000.
180,000, correct.
Right.
That's a scalable capacity of 150,000 metric ton, assuming 80% utilization. It's not small. We are fairly decent-sized. Why would anybody in a commodity pay a premium, right? Anybody and everybody is selling the carbon black, correct? We got players like Cabot, Orion. Everybody is reporting stress. I can understand we are smaller than them, but we still have a very decent capacity. Is it sustainable? We had some contract which has flowed through, or you see this as a sustainable number?
We definitely see this as a sustainable number. If you look at any of the players, their volume of tire is significant compared to Himadri. In Himadri, the volume of tire is significantly less compared to our peers. That makes the difference.
No, that mix has always been there. I'm saying if I look at Orion, who reports both specialty and rubber separately in terms of gross profit per kg, we can see clearly stress in both the segments.
When you compare us with the companies in the Western world, they have different cost economics. Their cost, their raw material cost, their overheads are totally different from ours, their operating cost. Himadri, over the years, through its operational efficiency, improvement in yield, better base rate recovery systems have made so much progress that that has always helped us to improve on the margin.
Fair enough. Fair enough. Does this backward integration, having our own carbon black oil, is that a differentiator?
Definitely. That's our USP. When we use, we make product from our own carbon black oil, the quality consistency is very much there because we also use petroleum-based oil. In petroleum-based oil, what happens is consignment to consignment, there's a variation in the quality of the raw material. In our case, since it's our byproduct, there is absolute consistency in the raw material, which gives a big, big advantage. Our raw material is very clean material. That adds to the other advantage for specialty carbon black.
Got it, sir. Got it. No, no, that's all.
Our raw material gives better yield also. All these factors taken together take us in a different league altogether.
No, no, that difference was there a year back also, right, when we were reporting a INR 15 a kg? Or there is a change in the yield over the last one year for us?
Yes, there is consistency. There is change, improvement. If you see our quarter on quarter commentary also, we have been saying that the yield improvement is there, operational efficiency is there, base rate recovery systems are improving. We work on a consistent improvement program on operational efficiencies, which also yield results on a quarter on quarter basis.
Got it, sir. Very clear. Now, next on the tire side, if I look at console minus standalone, which I believe largely will be tire, the number appears to have sharply declined. Last quarter, we reported a revenue of INR 18 crore. This quarter, it is just INR 60 lakh . What am I missing here? If you can just give us what was the tire sales this quarter and last quarter?
Tire sales this quarter was INR 26 crore.
Okay.
Last quarter, it was INR 5 crore.
Oh, what explains this console minus?
If you look at it, the revenue has come down in Q2 compared to the corresponding quarter last year because of the fall in raw material prices. The average raw material prices at that point of time was around INR 45,000. Now it's at around INR 39,500 because of this.
We've got consolidated revenue minus standalone revenue. Not looking at cost. I'm just looking at a revenue line. Our tire is on the subsidiary company, right?
Right, right.
If I subtract the console minus standalone, that sales largely should reflect the tire company sales?
Tyres and one small company in [Bhavya] also. That's a small number.
That's a small number, right?
Yeah.
If I look at console minus standalone, that number appears to have sharply declined. Last quarter, consolidated revenue minus standalone revenue was INR 18 crore. This quarter, it is only showing INR 60 lakh, INR 6 million.
What happened during this quarter? We have opened a subsidiary overseas, and the sales to that have been knocked off since the sales have not affected in the subsidiary. From the subsidiary, in the standalone, that has been considered as a sales. On a consolidated basis, that has been knocked off because of dispatch during the last cutoff. It has been knocked off.
I understood. I understood what happened. Thanks for that clarification. This quarter, we have sold INR 26 crore worth of material in the tire business.
Right, right, right.
Got it. Got it. When we say 29 distributors, if I just want to benchmark the supply chain of the competition, where are we in our region, as in the eastern region, which we started initially under Central India? What is the penetration right now for us?
Penetration, other than South India and parts of West India, we are present now on a Pan-India basis. These numbers are going to substantially increase quarter on quarter.
When you say this number, you're talking of revenues, right?
No, I'm talking about distributors and dealers.
Dealers. Okay.
Particularly dealers, because our model is to have distributor and below distributor have dealers. Suppose one distributor is having, say, 10- 12 dealers now, it will go up to 30- 40 dealers per distributor. That will also increase significantly.
We are saying we right now have 29 dealers.
Distributors.
We can go distributors, and we can easily go up to 900 retailers or the dealers.
Yes, yes. Plus, we will have more distributors also.
Got it. Next year, assuming when we will have a full-year number in the tire, what is the revenue number we are expecting there?
This year is the startup. To be very frank, we are not considering this as any revenue. Next year, we'll be ramping up the capacities. Currently, suppose we are running at 10% capacity utilization. Next year, we expect at least 30%- 40% capacity utilization.
Got it. When should we commission the PCR plant?
We will start the installation of the machineries. We have the machineries in place. We are getting the machinery tested and checked. After that, we will start the installation in the next 12 months' time. After that, I can give you a commissioning date.
Got it. Next year, it will all be the Bias side only, the PCR.
OTR OXT.
OTR OXT.
Bias and OTR, both.
Got it. Got it. One last question on the battery side of it, sir. Where are we in the LFP supply chain? Have we started the pilot plant, or is it still under the construction phase?
The pilot plant is still in the construction phase. It will start in the next quarter.
Okay, 40,000 metric tons we said will start in Q3 2027.
Right, right, right.
Any initial samples which we have sent, and any reviews you can share from the customer side?
Certainly. The reviews have been very good from our pilot scale plant. We have got very encouraging results. IBC is a clear example. IBC is coming out with a cell Prabal 2000 with LIP cathode material for which we sent them samples, and they tested the material. They were so pleased to see the quality of the material that we had a detailed discussion, interaction, and then we collaborated also. IBC has already launched Prabal 1000, which is an NMC-based cathode material cell. Now they will be launching Prabal 2000, which will be LFP-based, in which Himadri's LFP will be used.
Got it. Got it. One last question on the anode side. We first time spoke about anode natural and synthetic and also silicon that we want to integrate there. We haven't announced any CapEx. Where are we in that anode development, and when can we expect any CapEx announcement on the anode side?
We have done a lot of investment in terms of research and development in technology for all the three types of anodes. We have made significant investment in this, and we are very happy to say that the results have been very encouraging. Once we are in a position to commercialize the technology, which will take another few quarters, we will announce the CapEx program.
Got it. Got it. Now that's very clear. Thanks, Anuragji, for patiently answering all those questions, and best of luck for the coming quarters.
Thank you. Thank you.
Thank you. The next question is from the line of Yash Gupta from Asit Koticha Family Office.
Hello. Good evening, everyone.
Go ahead, sir.
Good evening. Sir, can you throw some light on the earlier participant question on the tire business? Which segment we are focusing on in the tire, particularly once you say the South India and the Central India, and how big is the opportunity in the next two to three years in terms of EBITDA? It could be like INR 10-INR 20 crore of quarterly EBITDA or like INR 50 crore of quarterly EBITDA.
Our focus on tire will be on OXT and OTR segment, along with that EV segment and passenger car radial segment. This will be the focus area. We are starting with Bias, and we'll continue with some capacity of Bias in our portfolio. There is a huge potential in this tire market. In the next three to four years, I see a huge opportunity for Himadri in terms of topline and bottom line both.
The numbers which you told will be significantly higher than what you told.
Okay. Sir, have we done any tie-up with any EV company? I think EV, we have not launched as of now.
No, no. We are in the process, like I told, in the next 12 months, we'll start the installation of our PCR plant. After that, we'll do commissioning. Post that, we will have the tie-up. Now it is in development stage.
We will look for the OEMs, not for the retail?
Definitely, we'll look for retail and OEM both. In retail, margins are much better than OEMs.
Okay. The second question is on the EBITDA margin. In the last six, seven quarters, we look at EBITDA margin is going up despite the volume or almost at the same level. Which raw material prices have gone down in the last four or five quarters, and what's the reason for the decline? Do we expect this decline to be sustainable?
The margins have not improved because of decline in the price of raw material. In our case, any increase or decrease in the price of raw material is passed on to the customers. No improvement has taken place because of any movement or fluctuation in the price of raw material. The margins we have achieved are clearly sustainable margins, which the company has been able to achieve through a lot of operational efficiency projects we are driving in our company, starting from yield improvement, energy saving, base rate recovery system, and a host of other things. We have different initiatives which we take and, based on that, we have been able to improve on our margins. In addition to that, the company is moving towards high-value added products. This transformation from normal value products to high-value added products is giving higher margins with the same volumes.
We are expecting this margin to be sustainable.
Definitely. And improving.
These are sustainable margins.
Okay. Sir, last question on this specialty carbon black forward integration part. Q3 FY 2026 is intact. We are not, we are on timeline.
Yes, yes. I've already announced in my commentary that end of Q3 FY 2026, we'll see the commencement of our specialty facility.
There will be some impact for Q4, but moreover, the full impact will come in the next year only.
Yes. Q4, you will see some impact, and Q1, you will see the full impact.
Okay. Sure. Thank you, sir.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of [Riya Chen] from SDA Finance. Please go ahead.
Thank you for the opportunity. My first question is, given the revenue decline and the inventory receivables movement, what is the current working capital cycle, and how do you see it evolving in the next two, three quarters?
See, current working capital is 31% of the topline, and we expect this to remain in the same levels.
For the next three quarters, right?
Yeah, yeah.
Got it. Also, looking at the short-term borrowings, we observe an increase of INR 300 crore to INR 800 crore on a consolidated basis. Could you please help us understand the rationale behind this rise and what is the target debt-to-equity ratio or leverage level the company is comfortable maintaining?
These are commercial papers we have issued against which we have done deposits with the bank. There is no leveraging we are doing. All the future expansion of the company will be funded through internal equity only. Currently, if you look at net debt, it is only INR 113 crore.
Got it. Got it, sir.
We expect to be cash positive in March in terms of our debt.
Okay, you'll be net debt positive in March.
Yes, definitely.
Got it. Got it. The company achieved ISCC PLUS certification and emphasized sustainability credentials. Congratulations for that, firstly. Could you elaborate on how sustainability initiatives are translating into business advantage, like pricing premium, market access, cost savings, and so on?
Definitely. See, sustainability has been our motto since last more than 15 years. When people, they're not that much focusing on ESG practices. IFC Washington, World Bank invested in Himadri in 2009. After a detailed diligence of 14 months, they invested in terms of environmental practices. We had private equities in our company for the last 15 years, who are no longer there. Those corporate governance best practices and sustainability practices are embedded in the core of the company now. We have been following these practices over the last 14- 15 years. The result of this is what you see, the EcoVadis Platinum rating. It's a very, very prestigious ranking, which only 1% of the manufacturing companies globally have. Himadri has a unique positioning among those 1%.
Now, regarding when we work so much on sustainability in terms of best environmental practices, in terms of governance practices, in terms of social goals, when we interact with our customers, these customers also want these practices to be very strong in their suppliers because on their Scope 2 reduction, they have also highlighted about these things. They get an advantage dealing with Himadri. Following these practices, we get a pricing premium compared to our peers. That is also one advantage Himadri is having.
Right, sir. Thank you so much for taking my questions.
Thank you.
Thank you. The next question is from the line of Virat from Asit Kotecha Family Office. Please go ahead, sir.
Hi. Good evening. Am I audible?
Yes, yes, please.
Yes. My first question was on the Durofresh brand that we have launched. How are we navigating the naturally involved B2C market with our brand Durofresh? What is our strategy there to grow and gain market share from the existing players? How big is the market, and how much revenue do we expect to make from this market, from this business segment in FY 2027?
See, we have been selling to this market, not directly, but to others. Like we have been suppliers to [Wallet], which is the largest mothball player in the U.S. for years. 80% of their requirements were met by Himadri. Like that with other players. We did a forward integration by introducing our own mothball. The quality of the product has been very well appreciated by the market. We started with a very small capacity to test the market, and the results have been very encouraging. We are setting up a larger capacity for which in the next three to four months, equipment will be installed, and we will see the ramping up in production and sales of Durofresh mothballs.
Next year, we expect in terms of revenue, we will not find significant change, but in terms of profitability because whatever addition will be there, that will directly go to the bottom line.
Okay. Got it. My second question was, we still expect the battery chemical business to contribute INR 2,500 crores to INR 2,700 crores in revenues in FY 2028. Have we signed any contract with an OEM or a bigger player which will help us to achieve this revenue?
At 100% capacity utilization, we will achieve INR 2,500- 2,700 crore topline. Whether it will be INR 2,800-INR 2,900 crore, we have not, you know, made any announcements or commitment on that.
Okay, just wanted to understand, is the product being accepted, or how is the quality of the product, or some feedback?
The quality of feedback has been very encouraging, and that is the reason we are going ahead with the CapEx program.
Okay. Got it. Those were my questions. Thank you.
Thank you.
Thank you. The next question is from the line of Darshan Shah from M&S Associates. Please go ahead, sir.
Hello. Am I audible?
Yes, yes, please.
Hi. Sir, I had a couple of questions more on the macro specific to the industry and demand. First was, are you witnessing any demand recovery in Europe and East Asia after there's been recent history of this slowdown in demand? How is now the demand shaping up there?
See, for us, demand has been strong only. The reason being that we have our volumes of carbon black are fully sold. We don't see any significant positivity or negativity in the demand side earlier also and even today. For us, the demand remains strong only as before.
Got it, sir. If the natural extension to the question is that the demand remains strong, how do you see the competitive intensity in coal tar pitch and carbon black with new entrants coming in, you know, possibility of new supply and pricing pressures?
Coal tar pitch, there are no new entrants who are coming in. Because coal tar pitch, to establish a product also it takes two years' time. Coal tar pitch, I don't see any new players coming in. If someone comes also, it will take two years first to establish their quality. For carbon black, the existing players are only expanding their capacity. I don't see any new player coming in.
Got it, sir. You don't see, you know, you see that there's still enough comfortable demand, no problems of larger supply, pricing pressures that you will have to deal with in the market in terms of your clients and customers?
No, nothing like that.
Great, sir. The competitiveness of Indian carbon specialties versus Chinese and Korean producers in the export market. Any thoughts on our competitiveness versus the other peers, Chinese and Korean peers?
China basically produces carbon black using coal tar oil. The cost of coal tar oil is higher in China because the cost of coal tar is higher in China compared to India. We don't see any competition from China as such in the international market.
Got it, sir. And Korea, sir, Korea?
Koreans are not that focused on specialty. They are more on the commodity side.
Got it, sir. Thank you. Finally, do you expect double-digit growth resumption in FY 2027 once capacity addition starts contributing?
Yes, yes. Definitely, we see double-digit growth.
Great, sir. That was very helpful, sir. Thank you.
Thank you. The next question is from the line of [Preeti] from SK Associates. Please go ahead, ma'am.
Thank you so much for the opportunity. I would like to know that the revenue for Q2 declined to INR 1,071 crore despite strong margins and profit growth. Among your major product segments like coal tar pitch, specialty carbon black, advanced materials, which saw the largest pressure, and is this temporary or structural?
There was no pressure. In fact, if you see the decline, as we clearly mentioned, it was basically because of two factors. Number one, corresponding quarter last year, the raw material prices, average raw material price was 13% higher than current prices, 13%- 15%. When the prices came down, the realization also came down. That resulted in lower turnover. In addition to that, there was a significant export volume, which was not considered in this quarter because of cut-off date. It went to the next quarter. The volume and the turnover went to next quarter. That was the result. It's nothing to do with any pressure or anything.
Understood. A portion of the revenue was also impacted due to the export orders that were executed during the quarter, but not recognized in Q3.
Sir, that's what I did.
Sorry, but it will be recognized in Q3, right? Could you please?
That will be recognized in Q3. Yeah, right.
Okay. Given your presence in the 50+ countries, could you share insight on the overseas demand trends observed in Q2 and highlight the key geographies you expect to drive growth in the second half of the year?
See, the momentum has been strong. Looking forward also, we feel that the demand is going to remain strong only. We are supplying to various geographies, like 54 countries globally, we are supplying our materials.
Understood. The crude oil and coal tar derivatives remaining volatile, how effective is your pricing pass-through mechanism in both domestic and export markets?
100%. Whether price goes up or down, what difference it will make is only in terms of % of margin and in terms of topline, not in terms of absolute margin.
Understood. Okay. All right. Thank you so much, sir.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of [Santos Kesri] from SK Huff. Please go ahead, sir.
Hello, sir. Am I audible?
Yes, yes. Please continue.
Okay. Just one query, and that is about the impact of U.S. tariff on our exports. Is that impacting us too much? Who is bearing the duties? Is it the buyer or are we bearing the duties? How is it happening? If you can also give a detail of demand scenario there.
See, this is already reflected in our Q2 results. You can see there is no impact.
Yeah, that's what I'm surprised that other players are barely, their exports have cut down and their profits are not as good. In our case, it's not happening. Is it the buyers? Are the buyers bearing the duties? How is it happening?
Because of our non-dependence on a single geography, if there is a challenge, we move our product to some other geography. The material we supply to the challenged geography is also very high quality where the impact is not, you know, where the customers want the material. That's why we are not impacted.
Okay. You think that our demand is so huge and we have so much diversity in supplies that we can supply to any geography we can choose?
Yes, yes, and the volumes are low.
Just needed your confirmation, sir.
Thank you.
Thank you. The next question is from the line of [Vyda Shah] from RK Investments. Please go ahead, sir.
Hello. Am I audible?
Yes, yes.
Thank you for the opportunity. I have a couple of questions. While the revenue has fallen, margins have improved significantly, and PAT margins are also up strongly. Could you break down how much of the margin improvement is due to the product mix shift versus the cost control or raw material dealers?
See, because of the raw material prices, there is no impact because that is passed on to the customers, any increase or decrease. However, there's been significant improvement in terms of operational efficiency, yield improvement, and energy efficiency, waste heat, gas treatment, and recoveries, which has led to improvement. In addition to that, what you told, high-value added products. High-value added products contributed around 65%- 70%, and 30% was on account of operational efficiency.
Understood, sir. Also, secondly, given the stagnation in revenue but improvement in margin, what is your guidance for FY 2026 growth, perhaps volume or revenue, and any margin targets that maybe we could look up to?
Two quarters is already there. You can see we are already at a path of INR 369 crore. A year back, we projected to double our profitability from FY 2024 to FY 2027, from INR 411 crore to INR 800+ crore in the next three years. If you look at the actual performance, we are already on that track in two years. We are going to deliver what we promised in three years and around that in two years. The third year will be even better.
Understood, sir. Understood. Lastly, given the emerging EV ecosystem in India, where do you see Himadri's strategic fit as a raw material? Would it be as a raw material supplier or as an integrated advanced materials player?
Definitely, Himadri is going to play a key role in the EV and ESS storage, you know, entire technology ecosystem which is going to play out in India. Because Himadri is going to be the key supplier for raw material components for making lithium-ion batteries. It is going to play a predominant role in this field in the years to come. We have been investing in this for the last over 12, 13 years. It's not that today everyone is talking about lithium-ion that Himadri has started, you know, discussing and talking about lithium-ion batteries. You go back to our 10, 12 years PAC report also. That time also, we have been talking. Now the fruits of all those investments will yield results.
Understood, sir. Understood. Thank you very much for the opportunity and all the best for the quarter ahead. Thank you.
Thank you.
Thank you. As there are no further questions from the participants, this concludes this conference. On behalf of Himadri Speciality Chemical Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.