Rossari Biotech Ltd (ROSSARI) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Rossari Biotech Limited Q2 & H1 FY27 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and may involve risks and uncertainties that are difficult to predict. 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Edward Menezes, Promoter and Executive Chairman, Rossari Biotech Limited. Thank you and over to you, sir.
Moderator: Edward, sir, please go ahead. You're not audible.
Edward Menezes (Rossari Biotech Limited): Can you hear me now?
Moderator: Yes, sir.
Edward Menezes (Rossari Biotech Limited): Hello?
Edward Menezes (Rossari Biotech Limited): Yeah, thank you. And good evening and a very warm welcome to all of you joining us for the Q2 and H1 FY '27 earnings call of Rossari Biotech Limited. We are pleased to have you on this call to discuss our operational and financial performance. I'm joined today by Mr. Sunil Chari, Promoter and Managing Director, and Mr. Ketan Sablok, Group Chief Financial Officer, and the SGA team, our Investor Relations advisors. I hope you had the opportunity to go through our financial results and investor presentation, which are available on the stock exchanges as well as our company's website. We concluded the first half of FY '27 on a very strong note. The Q2 FY '27 revenue grew by 19% year-on-year to Rs. 698 crore, and EBITDA grew by 21% year-on-year to Rs. 87 crore, marking our highest-ever quarterly revenue and EBITDA. The growth was broad-based with all three of our business divisions contributing. The external environment during the quarter continued to remain dynamic. Raw material prices stayed volatile, the ongoing geopolitical situation in the Middle East kept pressure on freight and logistics, and customers across several end-user industries remained cautious in their buying behaviour. Despite these headwinds, we delivered a gross margin of 31.6% and EBITDA margin of 12.5% in Q2 FY '27. Innovation remains central to our long-term strategy. Our new Rossari Global Research and Innovation Centre at Navi Mumbai is steadily ramping up and is helping us shorten the journey from idea to commercial scale. Having launched over 70 new products in FY '26, our pipeline continues to strengthen with a sharper focus on intelligent, sustainable, and application-led chemistries such as biosurfactants, personal care ingredients, pharma excipients, agroformulations, and solutions for the oil and gas industries. Looking ahead, our priorities for the remainder of FY '27 are clear: drive optimum utilisation of the capacities we have built, accelerate the commercialisation of new products, and further improve operational efficiency. Supported by strong R&D capabilities and a healthy balance sheet, we remain confident of delivering sustainable and profitable growth in medium to long term. With this, I now invite Mr. Sunil Chari to share his perspective on the business performance and our strategic priorities.
Sunil Chari (Rossari Biotech Limited): Thank you, Edward Sir, and a warm namaste to everyone. The first half of financial year '26-'27 has been a period of steady execution for Rossari. In each of the last two quarters, we have delivered revenue of close to 700 crores compared with an average of around Rs. 565 crores per quarter in the first half of last year. We have achieved this scale-up despite raw material volatility, geopolitical uncertainty and a cautious demand environment, and it reflects the strength of our diversified portfolio, our long-standing customer relationships and the focused execution by our team. We remain committed to continuing discussion and engagement with our customers to deliver tailored solutions according to business requirements. During the first half of FY '27, HPPC, Textile Specialty Chemicals and Animal Health and Nutrition grew by 24%, 24% and 19% respectively. This growth has been driven by a higher share of value-added products and by increasing our wallet share with customers across end-user industries. On the export front, we continued to target new customers in both new and existing geographies across Southeast Asia, Bangladesh, Turkey, Latin America and Africa and increase our wallet share with existing partners. Our new blending facility in Thailand is ramping up steadily. It is helping us serve customers in Southeast Asia with customised formulations, faster turnaround times and lower exposure to freight volatility. I'm pleased to share an important update on our Saudi Arabia initiative.
Sunil Chari (Rossari Biotech Limited): from a long-term perspective. This facility will help us serve and align with emerging industrial requirements in this market. We like to share the key details of the project once they're finalized. As I've mentioned earlier, our margins are yet to reach their full potential and we are actually working on various cost optimization measures to improve them. Our strategic invest initiatives like monetization of non-core assets, rationalization of lower margin businesses, and improvement in product mix are progressing in the right direction. We will continue to sharpen our focus on the core B2B business, and we expect this initiatives to start reflecting on our overall performance over the medium-term. Overall, we remain very confident about our prospects. Our scale, improving improving capacity utilization, a strong product pipeline, and an expanding international presence are the building blocks of a more scalable and resilient Rossari. Our priorities remain centered on disciplined execution, margin improvement, and stronger returns on our existing asset base. Thank you once again for your continued support, and I now invite Ketan ji to take you through the financial highlights.
Ketan Sablok (Rossari Biotech Limited): Thank you, Mr. Chari, and good evening, everyone. Let me take you through the financial highlights for the quarter and for the half year ended 30th September 2026. For the quarter ended FY '27, our revenue from operations stood at 697.6 crores, which was a growth of 19% YoY over 586.1 crore in Q2 FY '26. This marks our highest-ever quarterly revenue. Gross profit also grew by 19% YoY to 220.3 crores and by 6.7% on a quarter-on-quarter basis. Gross margin stood at 31.6% in line with the Q2 FY '26 and around 200 basis points higher than 25 29.6% we reported in quarter one. This sequential improvement was driven by a better product mix. The EBITDA grew by 21% YoY to 87 crores, our highest-ever quarterly EBITDA. The EBITDA margin stood at 12.5% compared to 12.3% in Q2 FY '26 and 11.6% in Q1 FY '27, an improvement of 91 basis points sequentially. Employee cost grew by 15% YoY and other expenses by 19%, reflecting our continued investment in people, new geographies, the Thailand facility, and our newly setup R&D center. Profit after tax grew by 5.5% YoY and 11% Q-on-Q to Rs. 38.9 crores. And the diluted EPS for the quarter was at 7.02. Coming to the divisional performance, the HPPC revenue grew by 18% YoY to 541.9 crores in Q2 FY '27 and by 20% to Rs. 1,095.1 crore in H1 FY '27. The growth was led by value-added products in personal care, agro surfactants, adjuvants, and other oil and gas solutions. On the other hand, constrained ethylene oxide availability continued to li- limit ethoxylate volumes, and cautious customer ordering kept HPPC revenues broadly stable on a sequential basis. In the textile chemical side, the revenue grew by 26% YoY to 120.8 crores in quarter two FY '27 and by 24% to 20 226.9 crores in H1 FY '27. Sequentially, textile specialties grew by around 14%. This was driven by our export markets including Bangladesh, Southeast Asia, Turkey, and Latin America. And also contributions from our Thailand facility. The new fiber chemical division and a higher share of silicon-based and sustainable auxiliaries added to this higher revenues. The animal health and nutrition revenue grew by 11% YoY to Rs. 34.8 crores
Ketan Sablok (Rossari Biotech Limited): in Q2 FY'27. For H1 FY'27, AHN grew by 19% to 72.8 crores. The growth was supported by the vitamin premix plant, trace mineral, minerals and our enzyme and probiotic portfolio. On the core B2B and institutional B2C business, excluding the institutional and B2C business, our core B2B business delivered a revenue of 619.9 crores in quarter two FY'27, registering a growth of 21% YoY. The core B2B EBITDA also grew by 15% YoY to piece 87.2 crores and an EBITDA margin of 14.1%, compared to 14.8% in Q2 of FY'26 and 13.5% in Q1 FY'27. The YoY moderation in margin reflects the raw material and freight environment and our ongoing investment in seeing some new businesses and geographies. Our institutional and B2C business reported a revenue of 77.7 crores in quarter two, a growth of 3% YoY. More importantly, profitability improved significantly. This business reported a positive EBITDA of 0.2 crores compared with an EBITDA loss of 3.7 crores in Q2 FY'26. This improvement reflects our calibrated steps on portfolio rationalization, product mix and cost discipline. We will continue to focus on improving the quality of revenues across these segments. On the balance sheet side, our balance sheet remains healthy with strong liquid- liquidity and comfortable leverage. Gross borrowings reduced by around 46 crores during the first half to 361.8 crores. Net debt stood at 221 crores compared to 248 crores in June '26 and 281 crores in March '26. Our net debt to equity ratio stood at 0.16. Working capital days saw a significant improvement and reached 86 days in Q2 FY'27 from 97 days at the end of FY'26. Our priorities going forward remain op- optimum asset utilization, operating leverage and a better product mix, along with working capital effi- efficiency and strong cash flows. Together with a prudent approach to capital allocation, this these should further strengthen the balance sheet. That's all from my side. We can now open the floor for questions.
Moderator: Thank you. 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 will wait for a moment while the question queue assembles. The first question comes from the line of Maithili Shah with Safai Capital. Please go ahead.
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