Clean Science and Technology Ltd (CLEAN) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the Q2 FY '27 earnings conference call of Clean Science and Technology Limited. We have with us on the call, Mr. Siddharth Sikchi, Managing Director and promoter; Mr. Sanjay Parnerkar, CFO; and Mr. Pratik Bora, President Commercial. 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 star then zero on your touch-tone phone. I now hand the conference over to Mr. Siddharth Sikchi for opening remarks. Thank you, and over to you, sir.
Siddharth Sikchi (Clean Science and Technology Ltd): Thank you so much. Good afternoon, all of you, for taking time out to listen to our earnings call on Saturday. So, let me present to you the Q2 FY '25 '27 earnings. So, let me first speak about the basics, the business performance. The quarter marked yet another consequent quarter of being the highest ever revenue in the history of the company, highlighting our continued effort to translate from investment phase to asset monetization phase in the new HALS segment. Where in base business, we continue to increase our volumes in our flagship products, depicting a robust cost-competitiveness. On that on the base business of Clean Science, the base business saw resilient volume-led growth across performance and pharma segment. Export sales increased to 73% of the stand-alone business against 64% during the previous quarter. Otherwise, this base business showed a steady performance. On the HALS segment, on YoY basis,
Siddharth Sikchi (Clean Science and Technology Ltd): That is in H1 FY27, we achieved aggregated volumes of 67% of the total volumes achieved during entire previous financial year. This growth means more to us than just numbers show. It reflects a fundamental shift in how our customers see us. We started as a new entrant providing our quality, and today we are one of the trusted strategic partners with the customers. This trust is very difficult to win and we are very proud to have earned this. Further, as we speak, we continue to add new customers and increase the wallet share from exist- existing customers every quarter. On cost improvement fronts, during the quarter and also in the subsequent quarters, we will be starting some of the key starting material also for some of these HALS products, which eventually will result in improvement in our gross margin. Put all together, healthy volumes, continues continues process improvement and benefits of operational leverage have resulted in EBITDA margin of 12% in the first half of FY27. And during this quarter, we reached a PAT positive. CFCL has conducted and completed trials for the advanced grade of HALS product. This marks a significant milestone towards the commercial launch of the new product expected to commence in H2 of FY27. A little on the input costs. Input costs have remained high during the quarter as the Middle East crises conflicts keep kept the crude link feedstock prices high. Key raw materials, such as phenol, acetone, and methanol, were 50% to 100% higher year on year, alongside in increase in coal and freight costs. With Chinese prices yet to move up, the pass-through to the customers was difficult. Consequently, the raw material cost rose to 43% versus 39.7% on consolidated basis. However, the customer demand remained resilient. Now let me touch upon the financial performance for the period 30th September '26, standalone. Starting with Q-on-Q comparison. On sequential basis, revenues improved by 11% to 226 crore largely due to higher volume across Performance, Pharma and FMCG. EBITDA and PAT margins are at 36% and 24%, translating into EBITDA of 82 crore and PAT of 55 crores. Margin moderation was primarily due to high raw material costs, which rose to 41% from 35% in Q1 FY27. On Y-o-Y comparison, sales grew by 10% during the quarter. The revenue growth was primarily led by improved realization, while volumes were broadly stable. The demand environment continues to be steady. On conso basis, company delivered a healthy volume-led growth of 12%, resulting in revenues of 295 crore on consolidated basis with EBITDA and PAT margin of 92 crores and 56 crores respectively. On Y-o-Y comparison, the sales grew 23% during the quarter. The revenue growth was primarily led by improved volume growth, approximately 10%, and realization by 13%. The increase in revenue is primarily led by consistent sales of HALS business and consolidated EBITDA grew by 6% supported by turnaround in CFCL. On year to date date basis, consolidated sales grew by 17% to 559 crores with EBITDA of 188 crore and PAT of 129 crores. The split was 77% Performance, 14% Pharma Intermediates, and FMCG was 7%. A little on the capex. Performance Chemical II will get commercialized by Q3 to Q4 FY27. During the quarter capital infusion
Siddharth Sikchi (Clean Science and Technology Ltd): subsidiary of approximately 50 crores and 150 crores in H1 FY27. With this, the total investment in subsidiary company stands at 900 crores. With this, I conclude my opening remarks and take this opportunity to also wish you all a very Happy Diwali and looking forward to the Q&A session. Thank you.
Moderator: Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask questions, may please press star and one on their touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and one to ask questions.
Moderator: The first question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Sanjesh Jain (ICICI Securities): Yeah. Hi. Good afternoon, Siddharth. A couple of questions from my side. First, purely on the margin, just to clarify, the percentage margin in this quarter doesn't make sense, right? There is a very sharp inflation in the raw material, which mathematically compresses the margin. We are holding on to the existing run rate of 92%. That means we have retained EBITDA per kg despite all the headwinds and inflation. Will that be a fair statement to make?
Siddharth Sikchi (Clean Science and Technology Ltd): Yeah. No, but Sanjesh, I think, see, we were not able to pass through the price increase to the customer. So, of course, the percentage wise came down. But on absolute, because of the volume growth, we were still able to maintain the absolute number.
Sanjesh Jain (ICICI Securities): So, what was the volume growth for this quarter?
Sanjay Parnerkar (Clean Science and Technology Ltd): Sequentially, the entire growth was volume led, and annually the growth largely is realization led. So, what Siddharth is also trying to highlight and say is that during this quarter, the entire raw material cost increase on account of inflationary pressure was not translated to the sales growth. Sequentially, the sales growth is largely volume-led, and hence the margins have taken that impact.
Sanjesh Jain (ICICI Securities): So, we are now, now, this is purely on a stand-alone basis we are discussing, right?
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