Ladies and gentlemen, good day and Welcome to the Q1 FY 2026 earnings conference call of Clean Science and Technology Limited. We have with us on the call Mr. Siddharth Sikchi, Executive Director and Promoter, Mr. Sanjay Parnerkar, Chief Financial Officer, and Mr. Pratik Bora, Vice President. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing * then 0 on your touchtone phone. I now hand the conference over to Mr. Siddharth Sikchi for opening remarks. Thank you and over to you, sir.
Thank you so much. Good evening, everyone. I am happy to connect with you all to discuss the business performance for Q1 FY 2026. At the outset, let me highlight that the operating environment for the quarter gone by has been marked by high volatility driven by global trade uncertainties and geopolitical tensions. We have observed a degree of client caution resulting in extended decision cycles. The business performance during the quarter has remained resilient and promising in this context. Let me first discuss the standalone financial performance. Starting with Q-on-Q comparison, on a sequential basis, revenue decreased by 9% to INR 217 crore. EBITDA and CAC were INR 101 crore and INR 77 crore, respectively. We are very pleased to report a record-high EBITDA margin of over 46% since our listing. Coming on year-on-year comparison, the sales were steady for the quarter.
Favorable product mix led to lower RMC and record-high EBITDA margins. To speak a little bit on more granular context to sales performance during the quarter, please note that the sales momentum in established products has remained intact. In fact, we have witnessed 5% sequential and 8% annual growth, which is primarily volume-led. Sales mix is highly favorable during the quarter, with established products contributing highest to the standalone sales at 83%, as against 75% during Q4 and 80% during Q1 last year. On account of this favorable product mix, the RMC has significantly improved by 13% sequentially and 4% annually. While non-established products have seen slower momentum due to softer demand, more importantly, we do not observe any loss in market share. Let me speak on consolidated financial performance.
The company recorded INR 240 crore of sales for Q1, which is 8% higher on an annual basis and 6% lower on a sequential basis. The consolidated EBITDA is INR 100 crore, implying 42% EBITDA margin. For the HALS performance, for the quarter, the sales increased by 8% sequentially, led by better volumes. Geography mix diversified as 73% of HALS sales came from the domestic market, as against 84% during last quarter. As we have mentioned in the past, HALS business will be a bit of break-even at monthly run-rate sales of INR 10 crores. We are pleased to report that we are now nearing the break-even basis ongoing sales momentum. We are pleased to announce that over the next two quarters, we plan to commercialize more advanced grade of HALS, priced in the range of $11 to $35 per kg. These newer HALS will positively impact the margin.
A little bit on sales profile, the revenue contribution from Performance Chemicals, Pharma and Agro Intermediates, and FMCG was 74%, 16%, and 10%, respectively. During the quarter, the performance segment contribution improved, led by increased contribution from the HALS series. On a CapEx update, Clean Science and Technology invested INR 80 crore during the quarter in the subsidiary Clean Fino-Chem Limited. The construction of Performance Chemical 1, which is expected to commercialize in Q2, is on track. The water trials for Performance Chemical 1 are expected to commence in the next four weeks, and commercial production to begin in September. CapEx for Performance Chemical 2 is underway, and we expect the plant to commercialize by Q4 FY 2026. Regarding DLGT, the pharma intermediate, the plant is now commercialized.
The production process is more or less stabilized, and now the samples have been sent to a variety of customers for validation. Regarding another product called barbituric acid, we are in the process to rebuild the existing facility of PBQ to convert it into barbituric acid, and this is estimated to commercialize by August end. The growth driver is the commercialization of newer launches, including HALS, Performance Chemical 1, Performance Chemical 2. The addressable market is set to expand by over $1.7 billion over the next three quarters. These newer launches give us visibility in terms of revenue acceleration going forward. With this, I conclude my opening remarks and look forward to the Q&A session. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press * and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have a first question from the line of Rehan Saiyyed from Trinetra Asset Managers. Please go ahead.
Hello. Am I audio?
Yes, sir.
Yes.
Please go ahead.
Good evening.
Okay.
Good evening, team, and thank you for giving me the opportunity. I have a couple of questions regarding the research. First one, sir, could you please tell what is the capacity utilization across the categories like MEHQ, Guaiacol, and Palmitate intermediate? If you can answer that.
Yeah, hi. We would like to mention capacity utilization across segments rather than products. Performance and FMCG are in the range of 75%. Pharma is around 68%, and HALS is around 22% for the quarter gone by.
Okay, another question, sir, is regarding the HALS 944 and 783 performance. Are you seeing any uptake momentum towards the INR 210 crore target for FY 2026 that we have quoted in the last half month?
Sorry, we couldn't follow you. Your voice was muffled. If you could repeat that.
Hello. Am I audio?
Yes.
Sir, I'm asking how are the HALS 944 and 783 performing? Are we seeing any uptake momentum towards the INR 210 crore target for FY 2026 that we have quoted in the last quarter?
Yes. I mean, the volume for 944 and 783 during this quarter was encouraging. In fact, we have seen a good volume mix contribution coming from these two products also.
Okay. Sir, regarding the capital expenditure guidance that you have given in the last part in FY 2026, how much amount have you deployed in quarter one?
In quarter one, INR 80 crore is infused. Quarter one, INR 80 crore is infused. Additional INR 120-odd crore could be infused in the subsidiary company.
Okay. Okay. That's it from my side. Thank you.
Thank you.
Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Thank you. Good evening. I'm Siddharth.
Hi, Sanjay.
Yeah, so a few questions I have. First, starting with the standalone, I think phenol prices have fallen 8%, and we are largely growing by volume. That implies that even the lower raw material benefit is benefiting us on the margin side. Will that be a fair assumption?
No, no, Sanjay. For the quarter, our consumption prices for the phenol specifically have remained in line with the last quarter on a sequential basis.
No, no. Why?
We have not even derived that benefit. Yeah, on a YOY basis, you're right. On a YOY basis, we have got some benefit there.
Okay. Thanks. Second thing, sir, we have said that.
Louder, louder, Sanjay.
Can you hear me now?
Better, better, better.
Okay. Sorry. What has gone with the non-established product? When we say non-established product in the standalone, what exactly are we referring to the products?
These are products like DCC, TBHQ, Veratrole, Ascorbyl Palmitate. There was just a little slower demand in this quarter.
Because if I see, it's always a relief. They have talked about slowdown in phenol and phenol derivatives. Globally, the demand is coming down. That's the same thing given we are seeing the same trend, right? There is no difference in that.
Absolutely. Absolutely. We are seeing, but we are still trying to maintain volumes in our existing businesses, I mean, in our established products. Overall, there has been a numbness or a slower in demand. That is why we are seeing that in more impact giving in our non-established products.
Any geographically different? We are seeing India being fine, China, U.S., Europe. Which are the geographic?
China is very slow. Europe is slow. China, Europe, and the U.S. were still dabbling between the tariff tensions. That has also been a little slow.
Very clear, very clear. Particularly Pharma, I see there is a 29% sequential decline this quarter. Anything which has gone wrong there, or it is just Guaiacol, which is still continuing to be very volatile?
No, no, no. It has been the other way around. What happened is because, like you knew, Guaiacol was very slow, and we got a lot of pickup. I mean, we picked up Guaiacol in quarter four. Today, Guaiacol is sold out, but the base was very high in quarter four because we sold maximum Guaiacol during quarter four to Vanillin producers.
Oh, okay. Instead of cough syrup, we have now even reached out to Vanillin. Earlier, we used to be.
You remember, we had surplus stock. We had excess inventory, which we were able to sell to Vanillin producers.
Very clear, very clear. No, no, that's fair. Because that also restricts our MEHQ production, right?
Absolutely. That is why we never hold MEHQ production. We rather prefer to stock up Guaiacol.
Very clear. My next question is on the gross profit margin in a console minus standalone. That swung a lot. Last quarter, it was like 62%, and this quarter, 42%. What explains such a calm moment? I know it's a small base, but still curious.
Sanjay, last quarter, our RMC was 45% for the subsidiary company, which this quarter is around 62%. That is primarily because last quarter, we were carrying a higher closing stock and hence related overheads. That led to a lower RMC last quarter. It's more of an accounting impact. As we have been maintaining, HALS RMC is in that range of 65%.
Got it. Got it. 35% gross profit margin is what we are telling, and that we hold on.
Yes, yes.
Okay. From the full-year perspective, what we talked about earlier, I think revenue we may miss, but margin we may still achieve. That's the way we look at it, correct?
For subsidiaries, we achieve HALS.
See, subsidiaries are a little tricky because we are like seeing a slower demand. However, HALS will pick up, and with the Performance Chemical 1, we are very upbeat about the quarter four numbers. Hence, we feel we should not, we should not really miss the profitability, even if we miss on the revenue side.
Got it. One last question from my side. Can you now, now that we have started water trial and all, can you throw more light on the, this product one we are now going to expect, say, by end of next quarter?
Sanjay, water trials will begin in the next three to four weeks, and post that, we will share much more details.
Clear. Probably in the next quarter, we will hear more on it.
Absolutely. Absolutely. In the next quarter call, we will have all the details.
Thanks, Siddharth, for all those answers and the support for the coming quarters.
Thanks, Sanjay.
Thank you. The next question is from the line of Jason Soans from IDBI Capital. Please go ahead.
Thank you so much, sir, for taking my question. Sir, just wanted to know, last call, we had a very sanguine roadmap for HALS for FY 2026 and targets beyond that also. The volume target was probably 4,500 and the sales of INR 210 crore, which were targeted for FY 2026. Just wanted to know, sir, with the run rate in Q1, are we still maintaining that or just some color on that? How do you see that shaping up?
We are trying to maintain that number. In fact, by the newer HALS, which we are trying to introduce, which are more expensive and which we feel will be able to help us to complete the number which we have stated in the last call. As of now, we are holding to that statement.
Sure. Sir, possible to give the volume and the sales this quarter for HALS?
This quarter, the sales is close to INR 24 crore in terms of value, and in terms of volume, it's close to 580 tons.
Okay. Thanks for that, sir. Sir, just wanted to understand also one more thing. I mean, in terms of competition, of course, you're looking at it as a post-substitution product, which is HALS. Now, I understand that, you know, everything can't be spelled out, but just wanted to know, there are players like Chinese players like Rianlon also competing with, in this segment in the market and being a major competitor as well. Just wanted to know if just whatever you could share, what steps are we taking to basically compete with such players, you know, with such a big TAM market for us? Just wanted your perspective on that.
Yeah. The perspective is Rianlon is not the real competitor. The real competitor in China is Suqian, Shunda. Please note that. Its English means United Kingdom.
Okay.
Okay. That is the major competitor for all the HALS producers, not just to us, but for all the players. What we are trying to do is, A, of course, trying to increase our yield efficiencies, which is happening as we speak because as and when our plant is running more, capacities are coming up, whatever we are understanding from this process, the yield is improving, which will help us to compete. Secondly, we are trying to diversify into more complex products. One is 2020, which we mentioned, which we are starting next month. All this is giving customers confidence that it is not that we are only into four or five basic HALS products, but we are also into more complex series, which gives them the confidence to switch over as my base keeps increasing, my fixed costs keep reducing, and thus the EBITDA margin should improve.
Sure. Thanks. Thanks for that, sir. Just finally, just want to know, sir, you did mention that established products saw and exhibited good growth in this quarter. Any particular reason for that? I would assume MEHQ, BHA, that did well for you. Just any particular reason you saw in this quarter for this growth?
It was just volume momentum. Nothing in general, this was just regular for us. The most important point which we are trying to make is we have not lost any market share to any competitor if that is important for others to understand.
Sure. Thanks. Thanks. Those were all my questions. Thank you for answering them.
Thanks, sir.
Thank you.
The next question is from the line of Rohit Nagraj from B&K Securities. Please go ahead.
Thanks for the opportunity. First question is, you mentioned this one in your earlier remarks as well, that we will be going into the premium HALS. In terms of the market, in terms of the customer, will it be a similar set of customers or will we have to scout for a new set of customers? How are we looking at it from the marketing and scale-up perspective? Thank you.
Similar customer base. In fact, by introducing these higher versions of HALS, we are trying, the customer is getting that confidence that we are equivalent to any other European player who has the entire basket to offer. It is helping us so that, I mean, when we are supplying these higher grades, the regular grades, they will increase that wallet share with us.
Right. Got it. That's helpful. Second question, in terms of, you know, we've been hearing that Q4, there was generally front-loading in the U.S., and subsequently, you know, there has been some impact in terms of exports, particularly to the U.S. market. Have we also experienced a similar situation during the quarter gone by and probably for the last maybe 15 days during this quarter?
That has happened overall because the customers wanted to stock up because they were really unsure about the tariffs. Yes, to some extent, yes, but it's not like the biggest item in our list.
Sure. Just one last clarification. On the standalone numbers, we have clocked the highest ever EBITDA margins. Is there any specific reason beyond the raw material cost being low?
Product mix. Product mix. I mean, the non-established products sold lower than the established ones, and hence the margins in our established products have always been better than the non-established products. That's all.
Okay. Got it. Thanks a lot and all the best, sir.
Thank you, ma'am.
Thank you.
The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead.
Siddharth, thanks for the opportunity. First question on the pricing trend across all the products, the core one as well as HALS side. Any changes that you are seeing from last quarter versus this quarter?
Not during the quarter, but if the raw material prices correct in the future, then yes, we might have to reduce the finished product price, which is a very general trend.
Sure, even in that scenario, the % gross margins that we have been guiding for will largely stay intact there because it's a price of HALS.
Yes, more or less. Yes, more or less.
Sure. Second thing on the new product launches, you know, the Performance Chemical 1 and 2. One, you mentioned that samples have already started going on. How has been the feedback? Is there any sort of teething trouble that one can think of there? Maybe some iteration required or the feedback is reasonable?
Pharma plant, I mentioned, Ankur, the pharma plant, which we started, has now the samples have been going out to the customers. The Performance Chemical 1, where the water trials will begin in the next three weeks' time, the plant will start, the production will come, and the samples will go out to the customer because customers would be keen to test the commercial sample, not the lab or pilot samples.
Sure. That was more for the pharma product there, not performance.
Yeah.
Performance probably will happen next quarter.
Performance Chemical 1, I think the sampling will start somewhere in September, October.
Okay. Fair enough. Just lastly, on the revenue breakup bit, while you did mention that, you know, China and Europe look slower, U.S. and India specifically have shown, you know, reasonably good numbers on a year-on-year basis. Will this delta be largely backed by HALS here or, you know, specifically for U.S.?
No, no. Ankur, on an annual basis, it is largely backed by other products also on the performance segment. HALS is a contributor.
Okay. HALS right now also is largely India, 75% you mentioned.
Correct. Correct. Correct. Yeah, that's what I'm mentioning. Other products also from the performance segment.
Okay. Okay. Fair enough. That's it from my side. Thank you and all the best.
Yeah, thank you.
Thank you.
The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead.
Yeah. Good evening. Thank you so much for taking my questions. Siddharth, if you could please share some insights into this communication from the promoter and promoter group regarding the intent to significantly reduce the stake it sells. If you could please just help us understand the exact plans out here. Thank you.
The basic plan is some fraction of the group family are exerting part of their equity. I am not selling a single share, and the business will remain as usual. I think, I mean, anything more, or I think this is what it is.
At present, the total promoter stake is 75%, and we intend to keep it above 50%. Up to 25% is the.
24-ish.
This is, you know, I mean, entirely to do with estate planning purposes, basically.
Absolutely. Absolutely. From the group family.
Okay. Thank you for that. The second thing I just had was on the 18% - 20% EBITDA growth guidance that we had sort of communicated last quarter. In light of the softness in business conditions, does that still seem like an achievable target for us for this year?
I think it could be in the range of 15% - 18%. We'll have a little more clarity by Q2 end because we are also banking on DLGT stepping up, Performance Chemical 1 starting to contribute, and the higher grades of HALS to contribute. 18% - 20% could be moderated to 15% - 18% at this stage.
Please allow us a couple of months, at least two months more. Once we get this clarity, we would be far more clear on the numbers going forward.
Appreciate that. In terms of the quarterly trajectory, maybe can we expect that 2Q might remain comparably, you know, subdued, similar to 1Q, and then the real pickup in growth starts to happen in 3Q and especially in 4Q? Is that how we should think about it?
Absolutely. Yes, yes. That's a good way to think about it.
Got it. Thank you. Just one last thing from my side. In the MEHQ derivatives business, have we started to see any early signs of any competition products in the market yet, or is that still not visible?
Not yet. Hence, we mentioned that our volumes of our established products have remained intact. We have not lost any business. We are not seeing anybody at the moment.
Okay. Great. Thank you. Thank you so much, Siddharth and Pratik. Thank you. All the best.
Yeah. Perfect. Thanks.
Thank you.
The next question is from the line of Arun Prasath from Avendus Park. Please go ahead.
Yeah. Good evening, Siddharth. Thanks for the opportunity. The first question is on the two grades that you spoke on the HALS. Is this something that we have done recently, or was this always in the plans? How should we look at it?
Out of two, one was already in the pipeline we always wanted to do. The other one, which we are trying to start in Q3, is something which we learned is very critical, and it's a single-source product for the customers. I think we developed the process, we developed the tech, we made pilot samples, submitted to the customers, got approval. I think this is something we should do on priority because it will help us increase our margin, and that product is itself about $30, $35 a kg.
Okay. One day you mentioned as 2020. What does other grades mean? Can you just number it?
Let us start that, Arun. We will give us a couple of weeks, months. Yeah. Perfect. Thanks.
Okay. Okay. Understood. Is there any such more opportunity on the HALS side where we haven't thought about, but customers are demanding or are requesting us to do that? Any such more opportunities?
See, what happens is, Arun, once we started with the basic 770622944119, then the customer asked us, "Can you make these two grades?" Once we have established those, when we start these, I'm sure the customers will come up that since you have made these, can you come up with these as well? It is a lot of interest coming from customer side, and I think we will keep coming as and when we keep gaining their confidence by making such products which are, I mean, not made by all.
Understood.
For a niche market, yeah.
Right. Do we need to do any modifications, or are our existing facilities good enough to handle this?
A little bit of modification. Some modifications are needed, because we are not running our existing plants at full capacities, hence we can take that liberty to quickly change over and produce certain grades so that there is improved plant utilization.
Understood. On the domestic front, have we done any incremental market share gains on a quarter-on-quarter basis, or?
Absolutely. All products, I think, have now increased in domestic. The 622944119, which hadn't picked up so much, now most of the accounts have at least started trying using the product. I think in the next quarter, two quarters, we will have much better penetration even in the Indian market for other HALS as well. Plus, when we are introducing the higher HALS, which was not even available for some of the users, it has given them the confidence that with us or with partnering with us, they will have access to products which were not even accessible to them.
No, no. I just need one clarification, Siddharth, because Q2 our HALS revenue seems to be more or less flat, but our export has grown. I thought domestic we have done a little bit lower on the quarter-on-quarter basis.
No, in terms of absolute prices have come down a little bit.
Okay.
Volume-wise, there is no reduction. Point two is, if you see, our exports have also grown. Month on month, now we are starting exports to Vietnam, which is a market we didn't have probably three months ago. These newer markets are now opening, which, of course, we have started work probably six months ago, and the fruits are now, I mean, now these orders are coming through.
Understood. My second question is on this Performance Chemical 1. Just primarily a domestic product or export market, this is?
Both. Both.
Okay. You said that after the water trials, you'll be doing the sampling from the commercial plant. Typically, what is the timeline from the sampling approvals and then ramping up? Any rough timelines?
Between two months to six months. For some people, it could be as little as two months. Probably in India, it could be a very quick market for us. Taiwan, China, South Korea could be very quick. Europe might take a little bit longer. That's all.
Okay. The bulk of the revenues that we are expecting, that is from these ex-Europe markets? Where is the demand typically coming from?
The demand is global demand, but the quickest market I mentioned would be the Asia market for us.
Okay. That's where the maximum volumes will be, we will be looking to sell?
All major volumes eventually go into Asia only.
Okay. Understood. Thanks, Siddharth, and all the best.
Thanks, Arun.
Thank you.
The next question is from the line of Jason Soans from IDBI Capital. Please go ahead.
Yeah, thanks for taking my question again, sir. Actually, just a clarification. I just wanted to know that at a run rate of INR 10 crore for HALS, there's a break-even. That's what you mentioned. Is that correct?
Absolutely.
Okay. Okay.
I mean.
Yeah.
Okay. Just to clarify, since we just not have any, I mean, if we attain a revenue of INR 10 crore, we will do a break-even in the subsidiaries.
That's a monthly run rate, right, Siddharth?
Of course, monthly, monthly.
Yeah, monthly, monthly. Okay. Okay. If you could, yeah, thanks, thanks, thanks. That's all. Thank you.
The next question is from the line of Abhigyan Srivastav from Marcellus Investment Managers. Please go ahead.
Hello, sir. Is my voice audible?
Absolutely.
Yes.
Okay.
Sir, I wanted to ask a follow-up question on the stake sale that was earlier asked. You mentioned that the final stake would be 51%. Do you mean that the Booth family would continue to retain more than, so the Booth family will continue to retain 51%? Or would it be the total promoter stake that would remain above?
The total promoter stake from 75% will go down to 51%. The difference of 24% will be sold by a fraction of the Booth family.
Okay. Got it. Thanks, sir.
Thank you.
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Siddharth Sikchi for closing comments.
Thank you so much for all of you for taking time out to attend our earnings call. Looking forward to connecting you post the Q3 numbers. Thank you so much. Have a great day.
On behalf of Clean Science and Technology Limited, that concludes this conference. Thank you for joining us, and you will now disconnect your lines.