GHCL Ltd (GHCL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (Emkay Global Financial Services Limited): Ladies and gentlemen, good day, and welcome to the GHCL's Q1, Q2 FY '27 conference call hosted by Emkay Global Financial Services Limited. 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. Please note that this call is being recorded. I now hand the conference over to Mr. Gagan Dixit from Emkay Global Financial Services Limited. Thank you, and over to you, sir.
Gagan Dixit (Emkay Global Financial Services Limited): Yeah, thanks. Good afternoon, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. R.S. Jalan, Managing Director, and Mr. Raman Chopra, CFO and Executive Director, Finance. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
R.S. Jalan (GHCL Ltd): Thank you, Gagan. Thank you very much, Gagan. Good afternoon, ladies and gentlemen. A very warm welcome to the GHCL Q2 FY '27 earnings call. Our results and investor presentation has been published and I trust you have an opportunity to review them. Before I turn the quarter, let me share how we think about our business. GHCL is amongst the lowest-cost soda ash producer, a position that we have sustained through disciplined operational efficiency and backward integration into key raw materials. Our growth initiatives build upon this further. The commissioning of vacuum salt and bromine during the quarter underlines this approach. Let me move on the industry landscape. Globally, the soda ash market remains oversupplied and inventory levels are elevated in certain regions. Demand, however, has held steadily across most user industry and the lithium sector continues to be the clear bright spot with strong momentum. As I have said in the past, the current pricing environment is a continuation of a cycle that has been playing out over the last 2 years, and we expect realization to remain soft over the next few quarters. The conflict in the Middle East continues to disrupt established material flow while adding cost pressure. Given the surplus production, producers are constrained in passing on some of these costs. Coming to the Indian market, during the quarter, demand from the detergent segment was weak, while glass demand remains stable. Import pressure continued to keep realization soft. Over the medium term, our view on India remains positive. The solar glass capacities under implementation will create a sustained and reachable demand opportunity for soda ash. On a positive move, the Government of India has imposed a minimum import price on clear float glass for a period of 1 year to safeguard domestic manufacturers. This should support soda ash demand from domestic glass segment in the coming quarters. Now, let me turn to our growth and diversification initiatives. I'm happy to share that during the quarter, we successfully commenced commercial production of our vacuum salt, powered by waste heat from our soda ash operations. This plant highlights our strategy of extracting maximum value and efficiency from our existing assets. Subsequent to the close of the quarter, we also commenced commercial production of bromine. Both these projects mark an important milestone in our diversification journey. Our focus now shifts to optimizing these newly commissioned capacities. We expect the vacuum salt plant to operate at its intended capacity level by the end of FY '27, while bromine plant will reach its intended capacity by the next financial year. Our backward integration journey continues.
R.S. Jalan (GHCL Ltd): our capacity, as well as developing new salt works at Jhara Jumara, which will be developed in phases. Both these projects will will entail an investment of around Rs 450 crores and will significantly strengthen our raw material availability. Our board has approved a capex of Rs 88 crores for developing the infrastructure of our own railway siding. This will give us better control over the raw material, reduce our dependence on the trucks for the transportation of goods from Kutch to our plant and should also lead to the cost saving. On our greenfield project, this is a significant strategic investment and part of our long-term goal, and we will continue to provide updates as project milestones are achieved. To summarize, our focus through this cycle has been firmly on what is within our control. Disciplined cost structure, operational efficiency sustain our position as a low-cost producer, enabling a swift margin rebound as marketing prices recovers. Our next priority is to ramp up vacuum production as well as the brine to the intended capacity levels. We will continue to execute our pillars with a discipline to make GHCL more diversified, more integrated, and more resilient. I would like to thank all our investors and stakeholders for their continued trust in GHCL. I will now hand over the call to Raman to walk through the financial highlights in detail. Thank you.
Raman Chopra (GHCL Ltd): Thank you, sir. Good afternoon, everyone, and a warm welcome to our earnings call for the second quarter and half year ended 30th September, 2026. Our performance remains steady. This is a result of our focus on operational excellence, cost control, and efficient financial discipline. We achieved this despite the global oversupply situation, elevated energy and freight costs, and a challenging pricing environment. I will now walk you through the key financial highlights. Revenue for the for the quarter came in at Rs 821 crores compared to Rs 739 crore in the same quarter of last year and Rs 798 crore in the sequential quarter. This is a growth of 11% year-on-year and 3% quarter-on-quarter. EBITDA for the quarter stood at Rs 202 crore compared to Rs 175 crore in the same quarter of last year and Rs 233 crore in the sequential quarter, a growth of 16% on year-on-year basis. EBITDA margin was 24.7% as compared to 23.7% in Q2 of last year and 29% in Q1 of this year. As we had indicated in our last last call, the Q1 margin was supported by higher realization and the benefit of low-cost raw material and energy inventories, which were transitioned in nature. In quarter two, margins have moderated, reflecting higher energy and raw material costs. Profit before the tax, before exceptional items, for the quarter came in at Rs 172 crore compared to Rs 145 crore in the same quarter of last year and Rs 204 crore in Q1 of this year, a growth of 19% year-on-year. PAT for the quarter stood at Rs 127 crore compared to Rs 107 7 crore in the same quarter of last year and Rs 151 crore in Q1 of this year. PAT for the last quarter is after adjusting for an exceptional item exceptional gain of Rs 40 crores net of taxes arising from one-time settlement done by ESOP ESOPs trust. For the half year, revenue is Rs 1,619 crores compared to Rs 1,562 crores in half one of last year, a growth of 4%. EBITDA grew by 9% to Rs 435 crores, and EBITDA margin improved to 26.9% as compared to 25.6% in half one of last year. PAT for the half year stood at Rs 278 crore compared to Rs 252 crore in half one of last year, and this is after adjusting the exceptional gain of Rs 40 crore as mentioned above. For the half year end, we had a total cash flow generation of Rs 360 crore. Of this, we spent 68 crore towards on capex and Rs 110 crore towards the dividend payment and around Rs 13 crore on the repayment of borrowings, while working capital increased by around Rs 217 crores. This resulted in a net cash outflow of Rs 48 crore for the half year. The increase in working capital was primarily on account of higher inventory and trade receivables amid supply chain disruptions. In a period of extreme volatility, this reflects the strength of our balance sheet and our commitment to shareholders and our disciplined capital allocation approach.
Raman Chopra (GHCL Ltd): We've closed the half year with a net cash surplus of more than 1070 crores. This financial agility supports our strategic capex execution, including our salt works and railway siding projects, and provides significant growth headroom. With this, I conclude my comments and would now request the moderator to open the forum for questions and answers. Thank you very much.
Moderator (Emkay Global Financial Services Limited): 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Participants who wish to ask a question may press star and one on their touchtone telephone. The first question is from the line of Ashish from Capital One. Please proceed.
Ashish (Capital One): Hello, sir. Am I audible?
R.S. Jalan (GHCL Ltd): Yes, yes, Ashish.
Ashish (Capital One): Yeah. Sir, congratulations for the great set of numbers. I just wanted to get some update on the Greenfield capacity we are building. So, where are we on the acquisition end of it now?
R.S. Jalan (GHCL Ltd): Yeah, Ashish, in terms of the Greenfield, I would say that the, as you remember, in the past also we have said that certain land acquisition which are pending, okay, and certain approvals relating to the land is pending with the government. At this point of a time, I would not say that there is significant improvement has happened in that. But yeah, some improvement has happened, and hopefully, the way we look at, in next few months, some, some positives should happen in that.
133 more turns of this transcript: log in to Stocksigma to read the full call.