Balaji Amines Limited (530999) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Balaji Amines Limited Quarter 2 First Year 2027 Earnings Conference Call hosted by Elara Securities Private Limited. [Operator Instructions] I now hand the conference over to Mr. Akshat Vijay from Elara Securities Private Limited. Thank you, and over to you, sir.

Ladies and gentlemen, good day, and welcome to the 2Q FY '27 Conference Call of Balaji Amines hosted by Elara Securities Private Limited. I now hand over the conference to Mr. Ram Reddy from Balaji Amines. Thank you, and over to you, sir.

Thank you, Akshat. Good evening, everyone, and a warm welcome to Balaji Amines Limited Earnings Conference Call for the second quarter and half year ended September 30, 2026. I hope all of you have had an opportunity to go through our financial results, press release and investor presentation, which have been uploaded on the stock exchange and on our company website. Let me begin by putting the first half performance into perspective. H1 FY '27 has been a strong period for Balaji Amines from a profitability standpoint. While the overall operating environment and sales volumes remained somewhat challenging, we have delivered meaningful improvement in revenue, EBITDA and profitability. This reflects our continued focus on product mix, operating efficiencies, cost management and strengthening the contribution from our diversified business portfolio. More importantly, we have continued to advance our expansion program with the commencement of commercial production at our expanded Acetonitrile facility and the commissioning of our DME plant. These developments mark an important transition in our growth journey as our focus increasingly shifts towards commercialization and utilization of the capacities created. The financial performance. Coming to our consolidated financial performance for Q2 FY '27, revenue stood at INR 472 crores compared to INR 348 crores in Q2 FY '26, registering year-on-year growth of approximately 36%. Consolidated EBITDA for the quarter stood at INR 106 crores compared to INR 67 crore in the corresponding quarter last year, reflecting a growth of approximately 58% EBITDA margin stood at 22% compared to 19% in Q2 FY '26. Profit after tax for the quarter stood at INR 67 crore against INR 37 crore in Q2 FY '26, registering a growth of approximately 82%. Diluted EPS for the quarter stood at INR 20.76 per equity share compared to INR 10.67 in the corresponding period last year. On a sequential basis, revenue improved to INR 472 crore from INR 461 crore in Q1 FY '27. Sales volumes also increased to 24,491 metric tons from 21,587 metric tons in the preceding quarter, indicating an improvement in overall offtake. However, EBITDA moderated to INR 106 crores from INR 121 crores in Q1 FY '27 with margins moving from 26% to 22%. While profitability moderated sequentially, the year-on-year performance continues to reflect a significant improvement in our earnings profile. Looking at the first half of the FY '26, '27 performance, consolidated revenue for H1 FY '27 stood at INR 933 crore compared to INR 715 crore in H1 FY '26, registering a growth of approximately 31%. Consolidated EBITDA increased to INR 227 crore from INR 131 crore, representing a growth of approximately 74%. EBITDA margins improved to 24% from 18% in the corresponding period last year. Consolidated PAT for H1 FY '27 stood at INR 146 crore compared to INR 74 crore in H1 FY '26, registering a growth of approximately 98%. What is particularly encouraging is the improvement in profitability despite lower aggregate sales volumes. This demonstrates our ability to maintain earnings resilience through product portfolio management, operational efficiencies, and a continued focus on value addition. On a stand-alone basis, revenue for Q2 FY '27 stood at INR 434 crores, EBITDA at INR 103 crores and PAT at INR 69 crores. Balaji Amines Limited continued to maintain a 0 debt position at the stand-alone level. Moving to our operational performance. Consolidated sales volumes for Q2 FY '27 stood at 24,491 metric tons compared to 26,165 metric tons in Q2 FY '26, representing a moderation of approximately 6%. However, on a sequential basis, volumes improved by approximately 13.5% compared to Q1 FY '27. This improvement is encouraging and reflects better uptake during the quarter. Segment-wise, Q2 volumes comprised 6,525 metric tons from Amines, 8,974 metric tons from Amines Derivatives and 8,992 metric tons from Specialty Chemicals. For H1 FY '27, consolidated sales volume stood at 46,078 metric tons compared to 53,735 metric tons in the corresponding period last year. Our diversified presence across Amines, derivatives and specialty chemicals continues to provide stability to the business. We cater to several end user industries, including pharmaceuticals, agrochemicals, paints, resins, solvents, rubber chemicals and other industrial applications. Going forward, improving volumes alongside maintaining the improved profitability profile will remain an important priority. Let me now share some of the important developments across our manufacturing facilities. During the quarter, we achieved a significant milestone with the commencement of commercial production of our process improved Acetonitrile plant. With this improved process, the expanded capacity has increased to 1,440 tons per month. The upgraded facility incorporates improved technology and enhanced process efficiencies. This expansion strengthens our ability to cater to customer requirements and increases our strength in the Acetonitrile market. Our focus will now be on stabilizing operations, developing the customer base and progressively improving utilization of this expanded capacity. It is with great pleasure to share the news of Dimethyl Ether Road Tanker valves approved from the PESO Nagpur office after a thorough testing process. We are actively working towards developing the customer ecosystem and exploring opportunities in both domestic and international markets. The Aerosol segment represents an important opportunity for DME and our efforts are directed towards establishing a sustainable customer and distribution network. We believe DME can become an important addition to our product portfolio as the market develops and the commercial volumes gradually scale up in the Aerosol space as this is directly serving the health care and personal care sectors. Our next product in the pipeline is N-Methyl Morpholine or NMM, which will further strengthen our specialty chemicals portfolio. The project is progressing, and we remain focused on its commercialization during FY '27. Alongside capacity expansion, we continue to invest in process improvements and indigenous manufacturing capabilities. Our efforts towards improving the manufacturing process of Diisopropylamine have also yielded positive results, reinforcing our emphasis on process optimization and operational efficiencies. Coming to Balaji Specialty Chemicals Limited, the company continues to progress with its expansion program being implemented in phases. The objective is to broaden our specialty chemicals portfolio and increase our participation in products that offer import substitution opportunities and higher value addition. In Unit-1, the brownfield expansion project involving EDA-based derivatives, including DETA, TETA, Piperazine, AEEA, and AEP is progressing and is expected to be commissioned towards the end of FY '27. At Unit-2, the greenfield expansion project at MIDC, Chincholi for the manufacture of hydrogen cyanide, sodium cyanide, EDTA and EDTA-2Na is progressing with equipment erection and installation activities. The project is targeted for commissioning in Q4 FY '27. These projects are strategically important as they will strengthen our product portfolio, enhance integration and expand our presence in specialty chemicals catering to multiple industrial applications. We believe these investments will provide a stronger platform for Balaji Specialty Chemicals and create additional opportunity for growth over the coming years. Moving to our balance sheet. Our financial position continues to remain comfortable. As of September 30, 2026, consolidated net worth stood at INR 2,023.02 crores compared to INR 1,976.46 crores as of March 31, 2026. Consolidated debt stood at INR 161.15 crores, while cash and cash equivalents stood at INR 52.62 crores. During H1 FY '27, cash flow from operating activities stood at INR 54.46 crores. Investments towards ongoing expansion projects and capital expenditure resulted in cash outflow of INR 99.38 crores. On a stand-alone basis Balaji Amines continues to maintain a 0 debt position. Our capital allocation approach remains focused on funding strategic growth initiatives while maintaining financial discipline and ensuring adequate financial flexibility. As we move into the second half of FY '27, we believe Balaji Amines is well positioned to pursue its next phase of growth. The first half has demonstrated our ability to deliver sustained earnings growth despite moderation in aggregate volumes. The focus now is to build on this performance through better capacity utilization, commercialization of new products and enhancing our customer base for new expanded facilities as well as new lines of DME and ACN streams of our expansion program. We see 3 important growth drivers coming together. First, our core amines and derivative business will continue to provide the operating foundation. We will focus on improving values strengthening customer relationships and enhancing manufacturing efficiencies. Second, the commissioning of our expanded Acetonitrile facility and the DME plant provides additional opportunities to expand our presence in value-added and import substitution products. Our immediate priority is to establish the customer base, stabilize operations and progressively scale up commercial volumes. Third, the expansion program at Balaji Specialty Chemicals will significantly broaden our specialty chemicals portfolio. As these projects are commissioned, they will provide access to additional products and end user industries, strengthening our long-term growth platform. Importantly, our strategy is not limited to increasing manufacturing capacities. We are focusing on moving towards higher-value products, strengthening backward integration, developing indigenous manufacturing processes and improving the overall quality of our earnings. We remain mindful of external factors, including raw material prices, global demand conditions and geopolitical developments. Nevertheless, the progress made across our projects, together with the strength of our existing businesses gives us confidence as we enter H2 FY '27. Our emphasis will remain on disciplined execution, improving capacity utilization and ensuring that the investments made translate into sustainable business growth and shareholder value. With our established position in the amines industry, diversified product portfolio, integrated manufacturing capabilities and a visible expansion pipeline, we remain confident about the long-term prospects of Balaji Amines. Thank you all. Now I leave the floor for the question answers.

[Operator Instructions] Our first question comes from Akshay Satija with Alpha Invesco.

I believe China was earlier dumping DMF into India and hence, it was not viable for us to run plants in comparison with their cost. So I wanted to understand now that DMF prices have shot up, what is the status of this plant running?

It is running in the improved capacities. Earlier, we were running about 30%, 40%. Now I think it's almost more than 50% capacity utilization is going on. Yes, you are right. The prices have been improved. Present prices are going on more than INR 110, INR 115 of the basic for the DMF.

Okay. So that should also imply that the methylamine Unit-3 that you were operating only for a month or so in a quarter. So I believe utilization could improve there also.

No, Unit-3 was operating almost 80% capacity. Hope you are talking about Unit-4 capacity?

Yes, sir. Yes.

Yes. Unit-4 capacity utilization has improved. And we believe that it goes like this, definitely Unit 4 will run in full capacity at least 70% to 80%.

What would be the current utilization for Unit-4?

15%, 20% its utilization is there.

Okay. And sir, for DMC, we had actually signed a contract with one of the battery electrolyte manufacturer and we had said that the volume should start from Q3 and Q4 also if the client picks up further volumes, we could increase our capacity in FY '28. So could you share some light on the progress of the same for DMC?

Yes. This quarter, they are asking in the 100s. Earlier, they used to talk about the 20 tonnes, 40 tonnes, 60 tonnes. And this quarter, they are asking almost 500 to 1,000 tonnes of the both the carbonates like dimethyl carbonate and propylene carbonate. Probably by next month onwards, we should be in a position to deliver these 500 to 1000 tonnes.

Okay. And any comments on the further adding capacity next year for the same client?

No, not yet. This year, they are talking. Many people are talking. Many people are asking us to invest and do the other carbonates also, but we are a little optimistic on this. We just want to see the -- those people should come on the stream, then only we want to set up our facilities for the further capacities. As this existing capacity itself, we were lagging to 30%, 20% as against of the 80%, 90% for the projections.

Got it, sir. The final question on the recent antidumping that has been applied on EDA. So we are still not seeing any substantial increase in volume pickups for EDA. Could you share some light on that part?

I will tell you. There is actually price have been improved on the EDA. We are working at almost 50% to 60% capacity. And the antidumping did not take place because the Commerce Ministry has recommended, but Finance Ministry did not implement that. And now we have prepared for a writ petition for implementing this against the Finance Department. One government department recommends, another government department stops, which is not good. So we are approaching the court like other companies also approach, we are also approaching the High Court. Probably in the coming 1 month, we may file this writ petition.

Okay. But that could still continue to drag the entire case, I believe.

Yes, it will be there. We are working with the government, right? One side, government is talking about the Make in India, Atmanirbhar Bharat, but other side, they are not supporting specifically, Finance Department is not supporting. I don't know what went wrong with them because it's a clear case, the government has clearly mentioned, Ministry of Commerce, the dumping is happening in the country. But now for a short period, there is an opportunity with the price improvements. So there's a possibility that from the next 1 or 2 quarters, the possibility of running in full capacity. And because of the brownfield expansions, we are on and off, we are doing these modifications. We are running for the 20 days and doing the modifications 10 days. Like that, we are doing because we don't want to lose the market. We want to be present in the market, and we want to do the modifications also. So both the things are happening. By end of this financial year, we will see the new products. We'll be completing the brownfield modifications. And also the old plant will be running as per the market conditions, both the plants will be running.

Moving on to our next question. The next question comes from Aditya with HDFC Securities.

Am I audible?

Yes, very well.

Okay. Sir, considering the elevated LPG prices, please give us some color on what approvals are remaining before we can supply our DME for LPG blending.

This is only PESO, part of the valves already approved in this quarter and part of Road Tankers, which are at advanced stage. After this, they were waiting only for the valves approval. Now valves approval is completed. We expect in next 3, 4 weeks for the Road Tankers approval. Once that comes, then the bulk supplies can happen in the country. And second, the important thing I would like to tell here, we have started exporting this in the bulk tanks, bulk ISO tanks. Since the international, there is no problem because the international market is already using and they have all the approvals in place. So almost 7 to 8 tanks have been exported. And it is on a repeated basis, we are getting the orders for the exports in the ISO tank for the Aerosol application.

So we are supplying commercially for Aerosol-based applications right now. Is my understanding right?

Yes, you're right.

So by when can we start commercial supply for the LPG blending? Are we approved with our customers, is that approval...

We are actually working with BPCL, Bharat Petroleum Corporation, which in turn, they apply to their government department to get the approval. The moment they get the approval, then we will be -- it is in the same industrial area within a kilometer or 1.5 kilometer area, both the plants. So we will be -- the moment the approval comes from the Government of India for the BPCL for the blending. So we will be supplying bulk supplies for the blending of LPG. Otherwise, we are working with a few local commercial users who are already started using like in the hotels for the cooking purpose and in the heating areas in industrial that also we have given the sample. Even for aerosol, we have given the sample in the cylinders since we have the approvals in the cylinders. In some of the major aerosol manufacturers have taken in the cylinders. They are doing their trials. So once the trial is finished, probably we will give in the cylinders, maybe 10, 10 cylinders to the each customers, which are 540 kg of each cylinder.

Okay, sir. In our last interaction for DME, we had guided for a pricing of INR 100 per kg. So does that pricing still stand, or should we work with a different pricing for H2 FY 2027?