Himadri Speciality Chemical Limited (500184) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Himadri Speciality Chemical Limited Q3 and 9M FY '26 conference call hosted by MUFG. [Operator Instructions] I now hand the conference over to Mr. Chirag Bhatia from MUFG. Thank you, and over to you, sir.

Good evening, everyone, and welcome to Q3 and 9 Months FY '26 Earnings Conference Call of Himadri Speciality Chemicals Limited. Today on the call, we have with us Mr. Anurag Choudhary, CMD and CEO; Mr. Somesh Satnalika, EVP, Tyre & Strategy; and Mr. Kamlesh Agarwal, CFO. Before we proceed with the call, I would like to give you a disclaimer that this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations as of today. Actual results may differ materially. The statements are not the guarantees of the future performance and involve the risks and uncertainties that are difficult to predict. A detailed safe harbor statement is being given on Page 2 of the investor presentation of the company, which are being uploaded on the stock exchange and the company website. With this, I now hand over the call to Mr. Anurag Choudhary. Over to you, sir.

Thank you, Chirag. Good evening, ladies and gentlemen. Thank you for joining us today to discuss the performance of Himadri Speciality Chemical Limited for the third quarter and 9 months ended 31st December 2025. We essentially appreciate the continued interest, trust and engagement with the company. I am pleased to say that we have started trial production of speciality carbon black expansion project, a landmark achievement for Himadri. With this, Himadri has the world's largest single-site speciality carbon black plant with a total capacity of 130,000 metric tonnes per annum. This milestone underscores our continued focus on high value-added solutions and marks the beginning of next phase of growth in our speciality carbon black journey. In coal tar pitch, we achieved a key milestone with the commissioning of a Mangalore port terminal, successfully delivering 3,600 metric tonnes of liquid coal tar pitch to the Middle East. This establishes our second export corridor along with Haldia, significantly enhancing our logistics flexibility and opening up access to new global markets. We are well positioned to cater to rising international demand while offering best-in-class quality and global most competitive prices. Supported by operational excellence, continued improvements in yield and waste heat recovery systems, we continue to drive sustainable profitability. Our commitment to sustainability was once again reaffirmed as EcoVadis awarded Himadri the platinum medal for a second consecutive year, placing us amongst the top 1% of over 150,000 companies globally assessed on ESG parameters. This recognition reflects our deeply embedded approach to sustainability, anchored in a strong governance, climate conscious, operations, ethical business practices and responsible supply chain management. At the heart of Himadri's performance are our people. We are honored to be certified as a Great Place to Work, a testament to the strong and inclusive culture we have consciously nurtured over the years. The year-to-date has been marked by steady execution and meaningful progress. We have remained firmly anchored on operational discipline, deepening customer relationships and strengthening institutional capabilities to support long-term growth. This consistency of approach continues to deliver results reflected in our robust financial performance, with PAT growing 41% year-on-year, with 9 months FY '26 PAT exceeding PAT of FY '25. Let me look ahead, we do so with the confidence what we set out to achieve in FY '26. We have -- has realized and the present preparation for future projects are already progressing well, laying a strong foundation for sustained and profitable growth. We have also been actively investing in our rubber plastic and coating laboratories to enhance product performance across critical parameters, such as ease of dispersion, reduced filter press values and improved conductivity lower loading. With the commencement of tire production and especially the carbon black expansion project, we have significantly strengthened our ability to serve the growing demand of customized and application, especially carbon black grade. This places us in a strong position to address the global requirement for performing enhancing speciality carbon black used in premium and high-value applications across plastics, inks, high-performance coatings, batteries, paints, wires and cables, fibers, rubber, EV tires and several other niche applications. In parallel, our recently launched branded naphthalene ball brand, Durofresh, has received an encouraging response in the retail market, adding further depth to our diversified portfolio. The first of its kind commercial anthraquinone and carbazole facility in India remains firmly on schedule for Q2 FY '27. This project reinforces our commitment to innovation and impose substitution. While aligning closely with government of India's vision of Atmanirbhar Bharat aimed to strengthening domestic manufacturing capabilities. Over the past 2 years, volume and [ line ] were largely constrained by operating at peak capacity utilization and dynamic raw material prices. With the start of trial production at a speciality black expansion project, along with debottling of our old [indiscernible] distillation capacity, we are -- now have the necessary headroom to reignite growth in coming quarters and further consolidate our leadership position. Birla Tyres continues to strengthen its footprint across India and key international markets, including Asia, the Middle East and Africa, supported by a robust and expanding distribution network of 36 distributors and over 640 dealers. Its diversified portfolio now comprises more than 80 products across flagship names such as [ Kalapatthar, Load Max, Ultraget, Farm Hall, Platina, San Plus, XLP, LG, Road Mailer, Zeta ], [indiscernible], [ Ultratech ] and many others. Engineered to deliver superior great mileage, durability across varied customer applications, the team at Birla Tyres continues to scale in both capability and size, with modernization initiative progressing well to enhance offering across of the highway tires, commercial vehicles, agriculture, industrial segments for passenger car radial unit designed specifically for EV and SUV installation of plant and machinery is being planned. This will position Birla Tyres to participate meaningfully in fast mobility segment while complementing Himadri's broader strategic ambitions. The most transformational chapter in Himadri's journey is our entry into battery materials. Lithium ion batteries represent a structural shift in global energy consumption. And anode and cathode materials together constitute for 65% of the total battery cell cost, making materials innovation center to long-term value creation. On the cathode side, we are focused on lithium ion phosphate, a chemistry gaining rapid global acceptance, global safety, longevity and cost efficiency. Our long-term vision is to build 200,000 metric tonne of LFP cathode active material capacity in phases, catering to approximately 100 gigawatt hour of battery energy demand. The first commercial piece of 40,000 metric tonnes per annum remains on track for Q3 FY '27, positioning Himadri at the heart of e-mobility ecosystem as the first commercial LFP active material plant globally outside China, serving both domestic and international markets across mobility and energy storage applications. On the anode side, our strong legacy and deep expertise in carbon chemistry provide a clear strategic advantage. We are one of the only company to have backward integration in terms of raw material availability. Intense research and testing are underway as we progress steadily towards development of comprehensive spectrum of anode solution, including synthetic natural hybrid and silicon carbon-based technologies, thereby strengthening our capabilities in this high growth and strategically critical domain. As Himadri writes the new chapter in the Himadri reloaded pace, we continue to expand across multiple high-value categories. While speciality carbon black, coal tar pitch and speciality oil naphthalene remains at our core, we are actively expanding our product portfolio and making sustained investment in research and development to support future growth. At Himadri, R&D is not a department. It's embedded in our DNA. It saves how we think, operate and deliver value. Over the years, we have built a global R&D ecosystem, bringing together exceptional talent, including PhDs and subject matter experts from U.S.A., Japan, South Korea, China, South America, Australia and Europe. This rich techno-cultural diversity fuels innovation, agility and a forward-looking mindset, enabling us to lead in new technologies and product developments for emerging and sunrise industries. Our commitment to innovation is further strengthened through strategic investments in Sicona, IBC and Invati, which have enhanced our technological depth, accelerated our innovation pipeline. With the strong synergies between our innovation and research team, we are not only collaborating on new developments and emerging technologies, but have also been leveraging shared expertise to adopt best practices and strengthen our processes across our core verticals. Together, we are developing a sustainable growth engine that is paving the way for our portfolio of innovative products built on cutting-edge technologies. These collaborations have enabled us to establish a strong joint product development map that leverages our collective expertise across cell chemistry, battery science, material technology and operational excellence. Our shared focus is on developing solutions grounded in principles of sustainability and circularity for sunrise sector, such as high performance and high value-added defense applications, those AI data center, mobility and many more. Today, R&D at Himadri goes far beyond product development. It is about advancing technologies, transforming processes and unlocking new possibilities to keep us ahead in a rapidly evolving global landscape. In parallel, we continue to actively leverage artificial intelligence and digital tools across works teams, procurement, logistics, inventory, material management, quality management, sales and marketing and manufacturing to sharpen execution, improve predictability and build a more agile, data-driven operating model for the future. This year marks a defining chapter in Himadri's journey, characterized by progress, resilience and purposeful execution. The path we envisioned is unfolding with clarity, and we continue to build on that momentum confidence. As we look ahead, the horizon is bright, filled with opportunities that will take us to greater heights and unlock new possibilities. Together, we are saving a future of sustained growth and innovation. Before concluding, I would like to express my sincere gratitude to our colleagues, partners and investors for their continued trust and support. With this, I hand over to our CFO, Mr. Kamlesh Agarwal, who will take you through the financial performance in detail. Thank you. Kamlesh, please?

Thank you, Anuragji, and good evening, everyone. [Technical Difficulty]

I'm sorry to interrupt you, sir, but your voice is breaking.

Now it's okay?

Yes. Please go ahead, sir.

Yes. Yes. Thank you, Anuragji, and good evening, everyone. I trust you have had the opportunity to review our financial results, the latest investor presentation and press release, all of which have been made available on the stock exchanges and on our company's website. Let me now take you through the financials for the quarter and 9 months ended 31st December 2025. On a stand-alone basis, we are pleased to share that we have already surpassed our full year FY '25 PAT within the first 9 months of FY '26. This outcome clearly reflects the [Technical Difficulty]

I'm sorry to interrupt you, sir, but again, your voice is breaking.

Hello? Now it's clear?

Yes, sir.

This outcome clearly reflects the effectiveness of our strategic focus on value-added products, which continues to be the key driver of profitability and margin expansion. From a quarterly perspective, in Q3 FY '26, stand-alone revenue stood at INR 1,133 crores. EBITDA was INR 249 crores, registering a 12% year-on-year growth, while profit after tax came in at INR 195 crores, reflecting a strong growth of 37% year-on-year increase. These results underscore the consistency of our execution despite a dynamic operating environment. Looking at the cumulative performance for 9 months FY '26 on a stand-alone basis, revenue stood at approximately INR 3,304 crores. EBITDA increased to INR 726 crores, representing a 19% year-on-year growth compared to INR 611 crores in 9 month FY '25. Profit after tax stood at INR 564 crores, marking a 41% year-on-year growth over approximately INR 400 crores in the corresponding period last year. Now turning to our consolidated performance in Q3 FY '26. Revenue stood at INR 1,184 crores, with EBITDA at INR 253 crores compared to INR 225 crores in Q3 FY '25, reflecting a 12% growth [Technical Difficulty]

Sorry, but -- I'm sorry to interrupt you, sir. Again, voice is breaking.

Yes. [Technical Difficulty]

Sir, again, it's breaking. [Technical Difficulty]

Hello. Am I audible now? Now my voice is clear?

Yes, yes. It's clear now.

Profit after that came in INR 192 crores, registering a growth of 36% against INR 141 crores in Q3 FY '25. For 9 months FY '26 [indiscernible] consolidated basis, revenue stood at approximately INR 3,373 crores. EBITDA was INR 726 crores, reflecting a growth of around 18%, while profit after tax stood at INR 548 crores, a 37% increase over 9 months FY '25. This performance highlights the strength and resilience across all the business segments. From an operational perspective, our sales volume for 9 months FY '26 stood at 428,072 metric tons as compared to [Technical Difficulty]

I'm sorry to interrupt you, sir, but again, your voice is breaking.

Now [Technical Difficulty]

No, no. We can't hear you properly, sir.

So let me take it over. Anurag here. Kamlesh, let me take it over. Am I audible?

Yes. It's loud and clear from your end -- from mine.

From an operational perspective, our sales volume for the 9 month FY '26 stood at 4,28,572 metric tonnes as compared to 4,15,679 metric tonnes in the previous year, reflecting a growth of 3%. EBITDA per metric tonne stood at 16,934 in 9 months FY '26 compared to 14,707 in 9 months FY '25, representing a 15% improvement, driven by product mix that remains increasingly focused on high value-added offerings. I'm also pleased to share that during the quarter, the promoters have further strengthened their stake in Himadri to conversion of INR 1 crore warrant into equity. The warrant are acquired at a total price of 316 per warrant. Promoter shareholding now stands at 52.5%. This development underscores the promoter's continued confidence and long-term commitment to Himadri's growth journey. Strengthening promoters' stake not only enhances the company's capital structure, but also demonstrate the immense state in our business as we embark on the next phase of expansion and value creation for all our stakeholders. Overall, these results reinforces our confidence that Himadri is well positioned to continue its upward journey and trajectory, supported by a strong financial foundation, disciplined execution and a clear strategic direction. So now Chirag, we can open the session for question and answer session.

[Operator Instructions] Our first question comes from the line of [ Deviansh Takur ] from [indiscernible] Capital.

Sir, congratulations on the great set of numbers. So we have mentioned the road map to grow and accelerate towards 2028. So how do you vision that? How do we scale it up? We start our operations for the Phase 1 cathode in quarter 3. We have also Birla Tyres gradually ramping up. So how do we see the coming years? And how do we -- can shape the development for the company going ahead?

So if you look at the profitability achievements for FY '24, we achieved a PAT of INR 411 crores. And in FY '25, we gave a guidance that in next 3 years, that is by FY '27, we'll double the PAT, effectively INR 800 crore plus. But if you look in FY '26, we are already nearing to the target. So now, FY '25, we had a PAT of around INR 558 crores. With all these projects coming in, with new capacities coming in, value-added products coming in, we are confident that the profit will again double from FY '25 to FY '28, so in 2 years from now.

So sir, what you are saying is that the PAT level of FY '25, when we'll see the PAT level of FY '27, it will double. Am I right?

FY '28.

Okay. Okay. Okay. FY '28. But also the...

So we are giving the guidance what we gave 1 year back. We are giving the same guidance which we gave 1 year back. When we articulated that PAT will double in 3 years, same thing we are saying again now 1 year fast forward, the PAT will double again in 3 years from FY '25 to FY '28. Only one disclaimer is that last time when we told it will be done, it was done in 2 years instead of 3 years.

That's great, sir. Sir, also, I wanted to get a look out on how the cathode acting material or the operations that are coming, I think this is the first one in India to come up. And also there, I saw some headlines that you are in talks with some large peers. So if you can give some more information on that?

Sure, definitely. So in terms of cathode, our pilot plant -- demo plant is under construction and expected to be commenced in the fourth quarter. And post that, we will be sending sample B to our customers. There are a series of samples will need to be approved by the customers. So next stage of sampling will start...

Sir, can you name some customers?

Hello?

Hello. Am I audible?

Yes, yes. You are audible. Please.

Sir, can you name some customers?

No, we cannot name some customers. They are global customers, plus India customers, we have NDA, so we cannot disclose the names here on public forum. And regarding the capacities for lithium ion phosphate, so we expect FY '29 to be the full year of operation for lithium ion phosphate.

Our next question comes from the line of Dhruvin Kadakia from SKP Securities.

Congratulations on a great set of numbers. Sir, I just wanted to begin with 3 small questions on our quarterly results, and then I'll join the queue. My first question is, sir, with regards to our EBITDA per tonne, sir. So in this particular quarter, when I did my calculations for EBITDA per tonne, I have noticed that we've seen a decline on a sequential basis despite our revenues, et cetera, which has seen a growth, so I wanted to understand the reason behind it. Second, I wanted to understand the sporadic increase in the total income -- in the other income, sorry. Other income has almost grown by 290% on a year-on-year basis. And last question would be with respect to what are the tire sales that we've made for this particular quarter? That's all.

So regarding EBITDA per tonne, if you look at it, it is more or less in line because depending on quarter-to-quarter, the number changes, but it's very minimum. So that is the level where it is more or less stabilized now. For other income, so we have made investment in [ IBC ], in which we have made -- got this investment at a comparatively much lower cost. So some of the valuation has been done as per the accounting standard. Because of which, there has been some increase in the other income other than the investments that we have made. So if you look at -- we have borrowed a significant amount of money. At the same time, we have invested in banks. So that interest is also there.

Okay, sir. And last was regarding tire sales for this particular quarter, like where do we stand currently? And how much do we expect to end the year in terms of our Birla Tyres revenue-wise?

So revenue-wise, we have -- the current quarter, we have already achieved INR 60-plus crores of revenue. And looking forward, we expect the momentum to strengthen further. And this -- from the next year, you will see capacity ramp-up taking place in Birla Tyres.

[Operator Instructions] Our next question comes from the line of [ Smaran ] from [ Moneystory Asset Management ].

So my question was regarding the cathode capacity that we are targeting. So since we are targeting about -- to cater about 100 megawatts worth of cathode, so is it that we expect a huge market share in India and globally? Or is it that we are trying to capture a huge size of market share?

Your question is not clear. Can you repeat it, please?

Okay. So I was asking about the cathode capacity which we are targeting, which is about 100 gigawatts worth of gigawatt per half, which we are targeting, right? So is it that we are expecting a huge market? Or is it that we are trying to capture a huge market share? So I wanted to understand which one is it.

So it's not that we are going to capture a huge market share. FY '30, the global lithium ion cell capacity will be 8,000 plus. And by that time, we are only targeting 100, which is absolutely nothing in terms of global demand. So actually, first time Himadri is going to be in a product where demand will not be a constraint. So growth will depend upon our ability to expand. So this will be a unique positioning for the company.

Okay. Got it. And how do you place ourselves in terms of cost competitiveness within India or else comparatively to China as well?

We'll be very much cost competitive to any geography in the world.

Okay. Just one last question was that were you -- how are you planning on your sourcing of raw materials for the new lithium ion phosphate?

How much?

How are you planning on sourcing our raw materials for the cathode part of it?

So we'll be sourcing from the global market, including Latin America, Australia, China. So where will we get the best which, we'll get the raw materials.

Our next question comes from the line of [ Pratik Shah ] from [ Investing Alpha ].

Hello. Am I audible?

Yes, sir, you are.

Sir, my first question is on the post recent warrant conversion, how does management view equity dilution going forward? Like will future growth be primarily debt funded or accrual driven?

So the entire growth which is going to come for the next 3, 4 years are from internal accrual. So there is going to be no dilution as far as Himadri is concerned. So if you look at shareholding also in the last 3 years, we have increased our stake by 10%. So we won't see any dilution coming forward. And there will be no debt, which will be taken. It will be internal accrual [ equity ].

Great. Great. Okay. And sir, my second question is, what are the key execution risk during the ramp-up phase at Mahistikry? And how is management ensuring that quality consistent is maintained by scaling volumes?

We have a very strong SOP for the projects and for operations. So which ensures that under no circumstances, there is any impact or contamination from the ongoing projects. It ensures there is no problem as far as the quality or consistency is concerned.

Okay. Got it. And sir, one last question. Historically, how long has it taken for Himadri to ramp up speciality capacity to optimal utilization? And should we expect a similar or shorter curve for the new facility as well?

Yes, definitely. To ramp up to the capacity, it will take around 3 to 6 months.

[Operator Instructions] Our next question comes from the line of [ Ishani Jain ] from [ MS Capital ].

My question to you is like with energy being a significant input, so what proportion of power is sourced internally or like through long-term agreement? And how does this influence margin?

So we source 100% of power through our base heat gas capturing plant, where we generate gas into power. So Himadri is using clean power for all its operations.

Okay. Okay. Sir, got it. Also, like at what stage does management gain confidence to commit CapEx and energy materials? But it means post customer qualifications or post binding offtake agreements?

We don't wait for binding offtake agreement. We have full confidence in our quality and our customer relationship. So with the quality reason, we start setting up that capacity. So qualification process, in the same time, we are setting up the capacity. Because unless you have the full noncommercial plants, you will never get approvals.

Okay, sir. Also, my last question will be like in speciality carbon black, how much of the recent pricing has been formula-linked versus like negotiated contracts?

So it depends on customers to customer. I cannot disclose the pricing policy. But yes -- but I can tell you, speciality carbon black has a much better margin than commodity black, and Himadri specializes in this segment.

Our next question comes from the line of [ Viraj Sanghvi ] Asset [indiscernible] Family.

Am I audible?

Yes, sir, you are.