Balaji Amines Limited (BALAMINES.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Balaji Amines Limited Q2 FY '26 Earnings Call hosted by Elara Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Gagan Dixit. Thank you, and over to you, sir.

A very warm welcome to everyone to discuss Balaji Amines Q2 FY '26 results. It is our pleasure to be able to bring to you the management of Balaji Amines Limited led by Mr. D. Ram Reddy, who is the Managing Director. So with these words, I would now hand over the conference to the Balaji Amines management. Over to you, sir.

Good afternoon, everyone. I extend a warm welcome to all our investors and stakeholders joining us to discuss the performance of Balaji Amines Limited for the quarter and half year ended September 30, 2025. During Q2 and H1 FY '26, our performance reflected stability amidst evolving demand dynamics across end user sectors. The quarter witnessed a mixed operating environment characterized by steady commodity prices and moderated demand in select pharma and agrichem segments. Despite these external challenges, we sustained healthy margins and maintained volumes at levels comparable at last year, underscoring the strength of our diversified product portfolio and efficient operations. On a consolidated basis, revenue from operations from Q2 FY '26 stood at INR 341 crores as compared to INR 358 crores in Q1 FY '26. And EBITDA came in at INR 67 crores with margins improving to 19% against 17% in Q1 FY '26. Profit after tax was INR 37 crores as compared to INR 37 crores in the previous quarter. For H1 FY '26, consolidated revenue stood at INR 715 crores, while EBITDA was INR 131 crores, translating into an EBITDA margin of 18%. PAT for the half year stood at INR 74 crores with PAT margin at 10%. Operationally, total for Q2 FY '26 were 26,165 metric tons, broadly steady year-on-year. Within this, amines volumes were 7,685 metric tons, amines derivatives at 8,374 metric tons and specialty chemicals at 10,107 metric tons on a stand-alone basis. We continue to remain a 0 debt company with a healthy cash position and prudent working capital management. Looking ahead, we anticipate a gradual improvement in operating performance over the coming quarters as new capacities move closer to commissioning our DME plant at Unit 4 and N-Methyl Morpholine projects are advancing well and are expected to be commissioned during financial year 2025 and '26. While the acetonitrile expansion based on an improved process is on track for commissioning in FY 2026, '27. All ongoing projects are being funded through internal accruals, reinforcing our strong balance sheet and prudent financial management. Our subsidiary, Balaji Specialty Chemicals Limited is making steady progress on its INR 750 crore expansion plan, which has been granted mega project status under the Maharashtra government's Package Scheme of Incentives 2019. The expansion encompasses a wide range of specialty products, including hydrogen cyanide, sodium cyanide, and EDTA and EDTA-2Na among others. The Unit 1 brownfield expansion for EDA-based products is expected to be commissioned by September 2026, while the Unit 2 greenfield project at Chincholi is progressing with equipment installation underway and expected commissioning by December 2026. On the capacity front, the ramp-up of our electronic grade DMC and pharma-grade propylene glycol lines remains a key strategic lever, while the financial contribution from these new segments is expected to be more visible in the coming quarters. They are aligned with the broader import substitution theme in India and will strengthen our long-term growth visibility. Given the prevailing global uncertainties, near-term utilization levels for some of our newly commissioned assets may remain below optimum. However, the medium- to long-term outlook remains positive, supported by expanding applications in downstream sectors, import substitution opportunities and India's growing demand for specialty intermediates. Our near-term focus remains on operational execution and achieving stable realizations, while our long-term growth strategy is anchored around product diversification, process innovation and sustainable manufacturing practices. We continue to prioritize high-value products, disciplined capital allocation and capacity utilization as 3 drivers of growth and margin resilience. In summary, while FY '26 began with a measured basis and second half is expected to reflect gradual traction as new capacities are commissioned and demand from core end markets strengthens. Our investments in R&D, cost optimization and green chemistry initiatives continue to fortify our positioning as one of India's leading manufacturers of specialty chemicals. Now I will leave this forum for the question and answers.

[Operator Instructions] The first question is from the line of Shivkumar Shah, Sameeksha Capital.

My first question is on DME. So what is the status of our LPG blending?

The LPG blending, we've already given to the government. It is in the moving table to table in the Government of India. And in the meantime, we are also taking the PESO approvals for the cylinder as well as road tankers.

And how much DME is required in aerosol industry?

It's approximately about 30,000, 35,000 tonnes we are estimating presently. And we hope -- this being a greener gas, we hope there will be good opportunities in the aerosol.

And have we received any acceptance or approval from our customers?

That is once we receive the cylinder approval, that is just recently, we received that valve approval for the cylinders about 15 days back. So we expect that in coming 2 or 3 weeks, that cylinder permission will receive. The moment we receive the cylinder permission, the plant will be commissioned, then the sample in the cylinders will be submitted to the aerosol customers.

Understood. And my other questions are on DMC and PG side. So what is the capacity utilization on our EV-based products?

See, DMC, again, these battery manufacturers are yet to take the -- into full swing. So we are operating at 20% capacity, which is to other fields, other than the battery front. And PG, we are presently giving technical and food-grade PG to various customers. We have applied for the pharma grade PG. So the moment we get the license, we'll start the manufacturing of the pharma grade.

And what about NMP.

NMP, we are already there, that we are ready with the battery grade NMP. And we have given some trial batches also to the 1 or 2 battery manufacturers.

So what are the challenges faced by our domestic EV battery manufacturers? Why we are not able to ramp up?

It's very difficult to tell to me. We will have to understand from them only. In fact, we are also waiting for their gearing up into full swing. The moment they start, we are ready with all our manufacturing battery-grade NMP and even battery grade DMC also.

And any expectations in terms of time line.

They are saying that -- somebody says that by December and somebody says that from April onwards, they will be requiring bulk quantities. We were just waiting for their kick start.

Understood. And my last question is on acetonitrile prices. So how they have moved in the last 6 months?

See, we have existing plant, we are running on and off because we are doing the modifications in the existing plant, and when we are doing it, we are not operating -- hardly, we are doing about 5% or 10% because we are changing the equipment for the latest technology. And as per the latest technology, we are going to produce the very high-purity material at a low-cost -- manufacturing cost, which will take at least first quarter of the next financial year.

But have the prices have improved or has remained stable or what's the status there in terms of pricing?

It's stable around INR 140 to INR 150.

The next question is from the line of Ashish Menon from Value Research.

Yes. In the previous earnings call, you had stated that we would be expecting at least 10% to 12% volume growth for FY '26. Given that in the first half, the volumes have declined by 1%, how confident are you of achieving the 10% volume growth for the full year? And also, could you shed some light on what makes you confident of clear signs of inflection emerging in the second half of the year?

See, we were waiting for these approvals for the 2 things. One is the dimethyl ether PESO approvals and other blending applications. When the movement that comes, we will commission the plant by the -- before end of this quarter. And secondly, the DMC, which is good for the battery, that also we were expecting that the battery manufacturers will go in full swing, but not yet started. Thirdly, PG for pharma, we are waiting for the approval from the authority. The moment we get -- these were the 3 things which we expected that to get the at least minimum 8% to 10% growth. But however, we expect these things will come in this quarter. And I hope that definitely 8% to 10% volume growth should be there in this next half year.

Understood. So in Balaji Specialty, so once the Unit 1 brownfield project is completed, would the entire 37,000 tonnes per annum capacity of EDA be utilized for value-added products, assuming there are no demand challenges? Or would there still be some volumes which is left that we would need to sell in the market?

We are going to sell present 22,000 tonnes of the EDA. We will be utilizing almost 15,000 to 16,000 tonnes. There will be hardly 6,000 tonnes available for the selling into the market.

So is there any update on the antidumping investigation that is going on regarding EDA? So has the oral hearings...

We had an oral hearing. And there was this thing, one officer is retired -- the officer who was investigating this has retired. Now the case has been allotted to a new officer. Probably this month end, we should get another hearing. And maybe by end of the next month, we should be in a position to get some results on the antidumping for the EDA.

So one of your pharma customers, they have backward integrated into methylamines for captive consumption with the excess that they have, they will be selling into the market. So how much does that impact your revenues as well as the overall pricing and demand in the market?

I have not seen a major impact as of now. I don't know whether they have commissioned the plant. They are yet to commission the plant. But we have not seen any major impact to us. And secondly, that plant locationally, it is in the, I think, Gujarat. And our major customers towards this Maharashtra and South. So we have not seen any major impact as of now, even price point of view and the capacity point of view also.

Understood. Another thing regarding ethylene diamine. So have we considered using ethylene oxide route instead of the ethylene dichloride route for making EDA? So I'm thinking more from the cost perspective in order to remain competitive.

In fact, we are using ethylene oxide route only. We use the ethanolamine, which is manufactured with ethylene oxide, not what you're talking EDC, use ethylene oxide only.

Understood. And in your opening remarks, you mentioned something about green chemistry initiatives. So could you shed some light on -- yes.

See green chemistry, as of now, we have installed a solar on the rooftop as well as we have a separate solar park for the company. As of now, almost 80% of the manufacturing will take care of by the solar power.

[Operator Instructions] Next question is from the line of Viral Jain from [indiscernible] Finance.

So my first question was regarding the international market. So could you give us more clear picture on the export momentum and whether there was any logistical or pricing challenge that was affecting the competitiveness in the overseas market?

Yes. There was some back period where we were facing the freight hit -- higher freight hit for the logistics for the exports. But as of now, it's now stable. And because of the -- some of the pharma and agro industries a little lower, we could not achieve what we expected. But we expect in the coming quarters, definitely, it should move further to the export market also.

Got it. And are we seeing any long-term contracts or supply agreements being renewed or expanded in the international market?

Yes. Some of the contracts which we are doing like U.S. and Europe, we have continued, or we got the signals for the continuation coming financial year also for the exports to the U.S. and Europe.

And my last question was regarding the financial aspect. So what is the current working capital cycle? And are we facing any issues with the receivable or inventory building up given the demand normalization?