Prasol Chemicals Ltd (PRASOLCHEM) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Prasol Chemicals Limited Q2 FY27 Earnings Call, hosted by DAM Capital Advisors 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 opening remarks. Should you need assistance during the conference call, please signal an operator
Moderator: by pressing *, then 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Talwar from DAM Capital Advisors. Thank you and over to you.
Karan Talwar (DAM Capital Advisors): Thanks, Ikra. Good morning, everyone and a very warm welcome to Prasol Chemicals Limited's Q2 FY '27 post-earnings call. On behalf of DAM Capital Advisors, we thank the management for providing us with this opportunity. On the call today representing Prasol Chemicals Limited, we have Mr. Nishit Shah, Chairman and Whole Time Director, Mr. Dhaval Parikh, Joint Managing Director, Mr. Rahul Shroff, Chief Financial Officer and other senior members of the management team. I would like to hand over the call now to Mr. Nishit Shah for his opening remarks, following which we will open the floor for Q&A. Thank you and over to you, sir.
Nishit Shah (Prasol Chemicals Limited): Good morning, everyone. Yeah. Good morning, everyone. A very warm welcome to the Q2 and H1 FY '27 earnings call of Prasol Chemicals Limited. As discussed by DAM, I'm joined by my Joint MD, Mr. Dhaval Parikh, our Financial Director, Mr. Rahul Shroff, our Whole Time Director, Pulkit Dhariya, senior members of the team along with SGA, our investor relation advisor, and DAM Capital, who has been our banker to the issue. I hope you had an opportunity to review our financial results and investor presentation which are available on the stock exchange and on Prasol website. Before discussing our Q2 performance, I would like to reiterate what we had discussed earlier in the earlier call regarding the Q1 FY '27 earnings call. First and foremost, I would like to, for benefit of all, reiterate that in Q1, we had an exceptional pricing environment wherein due to inventory gain, the company had earned Rs. 25 crores extra, which was contributed due to the inventory gain due to the West Asia War, which was discussed with all the stakeholders. So basically, all our figures we'll be now talking in the range of 240, 250 EBITDA for the annual thing without, without the 25 crore gain that we had got in Q1. So to bring everyone on the same page, kindly please understand that when I refer to 240, 250, I'm talking on the actual EBITDA the way we see the company would have done, not taking into account the inventory gain, which we had made. We had guided a revenue, annual revenue of 1,550 to 1,650 and an EBITDA, as I said now, of 240, 250 crores excluding any gains arising from the geopolitical price movements and forex fluctuations. I'm very happy to announce that this has been one of our best Q2 of Prasol ever. Generally, we see that Q2 is slightly softer than Q1 and Q4 is generally the, the best of all the quarters. We have delivered a record quarterly revenue of 413 crores, registering a year-to-year growth of around 38.6%. We are diversified by design and despite the geopolitical headwinds, because of which the company has done exceptionally well and continues to grow as per the guidelines given 6 to 8 months ago. Raw material prices continued to remain elevated during the quarter. We have continued to diversify our raw material sourcing base, on which we have engaged new suppliers and have increased our customer base across various geographies. So not only have we increased our customer base, but we have also increased the supplier base, keeping in mind the volatility and availability of raw material. With respect to acetone, additional domestic capacities are expected to come on stream, starting January 2027. Further, our plans are to develop a storage facility at Khopoli, which will provide us great flexibility to procure material in bulk and optimize the logistic cost as well as the raw material cost. Our diversified product
Nishit Shah (Prasol Chemicals Limited): program would be approximately to the range of 250 to 300 crores and focus on this expansion. We have already invested about 75 crores so far and we will be investing roughly 75 to 100 crore before the end of the year. We will in the process we will be completing about 25% to 30% of the envisaged expansion products that we have been talking of existing products. Basically by next year, half year, we will be completing another 25-30, and so on and so forth. So, the company will constantly continue on its path of growth and investment that it has promised. And I think things are going quite well as per what we had envisaged. All these projects in phase 1 is likely to add about 60,000 tons of capacity additional capacity taking our overall installed capacity to 1,50,000 to 1,60,000 over the next 12 to 24 months. Beyond the Phase 1, we are also on track for Phase 2 investments of approximately 250 to 300 crore, which will focus on developing new R&D led products with better margin potentials, leveraging our existing plots of adjacent land that we have, land bank that we have already purchased. Looking ahead, the global operation environment remains dynamic, volatile, as we may call, at the same time demand for both domestic and international customer remains healthy and our order book continues to be strong. In fact, you will be happy to know that even going forward, last month, we have registered the highest sale ever in Prasol. We expect export performance to improve as shipping availability and freight conditions normalize. The price increase undertaken across our product portfolio should also support profitability, while the capacities being added to our expansion program are expected to contribute incrementally over the coming years. Based on a current assessment, we remain on track for our 27 guidelines of a revenue, which I am repeating in the range of 1550 to 1650 crores, EBITDA of 240 to 250 crores, approximately 70% to 75% EBITDA growth year-on-year as compared to last year. We remain focused on scaling the business to around 2,800 crores to 3,000 crores in the coming 5 years supported by our existing expansions, product expansions, and the new products which we have developed and are continuing to develop in our R&D. We are focused on value-added chemistry. With this, I would hand over to our Finance Director Mr. Rahul Shroff to take you through our finances in details. But before I hand it over, I'm happy to announce that profit before tax half-yearly has already surpassed the last year's profit and even last year, if you see the growth was more than 60-70%. So with this I give it to hand it over to Rahul to take you through the numbers. Rahul, please.
Rahul Shroff (Prasol Chemicals Limited): Thank you, Nishith Bhai, and good morning, everyone. Let me take you through the financial performance of the company for Q2 and H1 FY27. Revenue from operations stood at 413 crores, registering a year-on-year growth of 38.6%. The growth was primarily driven by higher realizations along with single digit volume growth in the domestic business. EBITDA stood at 58 crores, registering a year-over-year growth of 86.1%. Profit after tax stood at 38 crores, registering a year-over-year growth of 122.2%. H1 FY27 financial performance, moving to that, revenue from operations stood at 846 crores, a year-over-year growth of 37.1%. EBITDA for the first half was 148 crores, a year-over-year growth of 106%, translating to an EBITDA margin of 17.5%. This includes the exceptional gain of 25 crores and forex gain of 0.92 crores in Q1.
Rahul Shroff (Prasol Chemicals Limited): to 99 crores, a year-over-year growth of 108 38.9%. Overall, H1 performance represents a healthy operating performance and provides a base for achieving our full year EBITDA guidance of 240 to 250 crores, excluding the the gain due to the price fluctuation of the geopolitical event. Moving to our balance sheet and working capital position. Our net working capital cycle increased from 63 days at the end of Q1 FY '27 to 76 days at the end of Q2 FY '27. This increase was primarily driven by lower creditor days following our efforts to diversify our raw material sourcing base. Some of the additional suppliers operate with shorter credit periods. While this has resulted in a temporary increase in the working capital cycle, we believe that a diversified sourcing network is very important for ensuring continuity of operations and strengthening our supply chain resilience in the medium to long-term. We remain focused on improving working capital efficiencies and aim to bring the cycle back within a normal range of 60 to 70 days. On the balance sheet front, post-IPO, we utilized 60 crores of the net proceeds towards repayment of borrowings. This has helped strengthen our balance sheet. We have also utilized the balance proceeds of the general corporate purpose towards various expenses as we laid out in the prospectus. Coming to our capital expenditure program, we incurred approximately 75 crores towards Phase 1 projects during H1 FY '27 and we are on track for our Phase 1 and Phase 2 expansions. To summarize, Q2 delivered a record per- performance in the history of our company. Our focus remains on executing the planned capacity expansions, strengthening our sourcing network, improving working capital efficiencies, and maintaining financial discipline. We will continue to focus on profitable growth, cash generation, and prudent capital allocation as we work towards our growth aspirations. With that, I would like to open the floor for questions.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, they press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use headsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator: First question is from the line of Nirav Jimudia from Anvil Wealth. Please go ahead.
Nirav Jimudia (Anvil Wealth): Yeah. Good morning, sir, and thank you for the brief explanation. Sir, two questions. So, first is since we have been doing very well in FY '27 and with this higher base, when we will start with FY '28, given the kind of expansions and ramp-up of existing capacities which we are already having, how do you see FY '28 in terms of sales as well as EBITDA because there would be some new products which also would be start contributing, and Mahad plant has also now turned around. So, if you can give some flavor of this with respect to the product side, and also which are the newer applications which would be currently not as a part of our portfolio which would now be forming a part of our portfolio from FY '21 '28 onwards?
Nishit Shah (Prasol Chemicals Limited): So, fine. I'll just give you a brief on '28 because it's too far for us to discuss at this stage. But generally, our expansion which are carried out are in the existing products itself. It is based on the demand that we are seeing internationally. Say, a company in India is buying from you, and the same company has its its branch in say Germany or France, or in Mexico, they want you to supply now to France or Mexico as an example. And hence, the new expansion that we are doing in the first part of the coming year will be towards products that we which are already approved by our end-customer and hence, there is very little or almost no waiting required for those products. It is only looking at the geopolitical situation where we will have to see how FY '28 pans out, but we are very optimistic that, as far as the approval quality and the customer demand is concerned, there is absolutely no issue, and we expect to grow quite well in the coming year, as what we are envisaging. And hence, we have already gone ahead with all our investments and we're keeping very, very close control that the project is done in cost and on time. You know, that is very, very important to us.
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