India Glycols Limited (500201) Earnings Call Transcript

Ladies and gentlemen, good day and welcome to India Glycols Limited Q2 and FY '26 Earning Call hosted by InCred Equity. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. The statements are not the guarantee of future performance and involve risk and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Awasthi from InCred Equities. Thank you and over to you, sir.

Thank you. Good evening, everyone. Welcome to the Second Quarter FY '26 Earnings Conference Call by India Glycols. Firstly, I would like to thank the management for giving us this opportunity to host the conference call today and also congratulate them on a good set of numbers. India Glycols management is represented by their CEO, Mr. Rupark Sarswat; their CFO, Mr. Singhal; the Head of Liquor Business, Mr. Shukla; Head, Legal and Company Secretary, Mr. Ankur Jain. I would now like to invite Mr. Rupark to initiate the proceedings with his opening remarks, post which we shall open the floor for Q&A session. Thank you and over to you, sir.

Thank you, Nitin and a very good afternoon to everybody. Let me start by apologizing for making you wait for about 10 minutes, we had a minor issue to deal with. And as Nitin said, I'll give you a quick overview of our performance, and we'll give you also a quick overview of how the various segments have done, what the key factors have been and so on. Some of it would be a bit of a repetition for you. But for the sake of completeness, I would do that. So if you look at the quarter 2 performance for the financial year 2026, our gross revenues have increased from INR 2,144 crores to INR 2,412 crores, which is up 13%. Our net revenue is up from INR 961 crores to INR 1,092 crores, which is up 14%. Our EBITDA is up INR 120 crores to INR 160 crores, which is up 33% and the EBITDA margin is up, 12.4% to 14.6%. Our PAT is up INR 50 crores to INR 65 crores, which is up 31% and the PAT margin is up from 5.1% to 5.9%. So overall, we've seen a good strong growth and net revenue growth for the business. And we've also reported an EBITDA margin, which is -- has a healthy upside of 216 basis points, where the absolute EBITDA has grown by 33%. If you look at the H1 performance, I am pleased to also report a good performance where we've seen strong sales in Bio-Fuels and Potable Spirits segment, particularly, which have contributed to strong growth in both contribution as well as revenue. EBITDA margin has also grown strongly for these 2 segments. Specialty Chemicals and Ennature Biopharma have seen a quarter under pressure, somewhat weak. But for BSPC, we registered a modest margin expansion during the period. So for H1, our gross revenues have grown from INR 4,426 crores to INR 4,916 crores, which is up 11%. Our net revenue, which is up from INR 1,930 crores to INR 2,133 crores, which is up 11%. Our EBITDA, which is up from INR 248 crores to INR 311 crores, which is up 25% and margins up from 12.8% to 14.6%. Similarly, PAT is up from INR 110 crores to INR 138 crores, which is up 26% and in percentage terms from 5.7% to 6.5% is the PAT margin. In terms of business performance in Q2, our net revenue, which stood at INR 1,092 crores in Q2 FY '26 is -- this is compared to INR 961 crores in Q2 FY '25, which is up 13.6%. Our Bio-Fuels sales increased by nearly 63% to INR 423 crores for the quarter. And our Potable Spirits sales is up by 24% nearly year-on-year to INR 338 crores. For the chemicals business, the sales are at close to INR 290 crores, which has been a weak quarter, as I said and similarly for Ennature Biopharma, INR 43 crores. Our EBITDA increased by 33% at INR 160 crores, as you know. And for the segments, Bio-Fuels EBIT margins have increased from 5.1% to 6.9%. For Potable Spirits, EBIT margins have increased from 20.5% to 21.4%. And for chemicals, EBIT margins have expanded from 8.1% to 10.9% or nearly 11%. And amongst other things, share of profit from the JV has also increased by 6.8% year-on-year to INR 12 crores. If you look at the H1 performance, our net revenue at INR 2,133 crores versus INR 1,930 crores is up by 10.5%. Bio-Fuels increased by 54.5% to INR 770 crores. Potable Spirits up by 23.4% to INR 338 crores. BSPC stood at INR 588 crores and Ennature Biopharma INR 94 crores. Our EBIT (sic) [ EBITDA ] increased by 25%, as I mentioned earlier, from INR 248 crores to INR 311 crores and EBIT (sic) [ EBITDA ] margins from 12.8% to 14.6%. Biofuel margins have increased from 6.4% to 6.8%. For Potable spirits, EBIT margins have improved from 19% to 21.3%. And for the chemicals business, other than biofuels now, EBIT margins have expanded from 9% to 10.9%. This is for the first half. Another thing which is -- I have also looked at, at an overall level when I looked at our EBITDA trends over the last several years. We had relatively lower year in the year 2022 at an EBITDA margin of close to 11% and that has improved steadily from 11% to close to 15%, as you would see now, which has been a steady, you would say, recovery for the business or growth in the business, not only in terms of top line but also in terms of the quality of the business. So we had it at 11% in the year '22, then 13%, 14%, 14% and now we are closing up nearly close to 15%, which is good. I'll take a short pause here. And Anand ji, would you like to give a quick summary of financials?

Okay. Just to update on the financials in a summarized manner. As of 30th September, 2025, on standalone basis for the quarter ended, the total income from operations is INR 2,412 crores with EBITDA of INR 160 crores. PBT is INR 72.49 crores and PAT is INR 53.76 crores. Overall growth in all the sectors, all the -- and which has already been explained by our CEO, on consolidated basis, the total income from operations is INR 2,417 crores, which against INR 2,504 crores -- sorry, sorry, half year, on consolidated basis INR 2,414 crores against INR 2,504 crores. The EBITDA is INR 160 crores against INR 151 crores. Net profit PBT is INR 72 crores against INR 71.91 crores and PAT is INR 65 crores versus [indiscernible] INR 75 crores. Okay. So on half yearly basis on a standalone basis our turnover is INR 4,917 crores vis-a-vis INR 4,433 crores with EBITDA of INR 309 crores vis-a-vis INR 246 crores. So EBITDA has gone up almost by, I will say, 23%, 24%. On consolidated basis, the sales is INR 4,919 crores vis-a-vis INR 4,433 crores. And EBITDA is INR 310 crores vis-a-vis INR 248 crores. So all-round growth. The financials as per the -- comparing to the last quarter is showing very good growth overall in the company. So this is the brief of the financials.

Continuing with the highlights to tell you a little bit about the joint venture business which though reported a softer quarter in terms of sales and EBITDA, which has been partly on account of pressures in domestic sales, a slightly higher pressure in terms of export sales, some cascading impact of tariffs and also lower crude prices, which means that RVO prices were slightly higher. So it was a slightly lower quarter. But if you look at the half yearly performance for the JV, it is overall quite good. So there is a marginal sales growth. There is a EBITDA growth of close to 17%. And there is a PAT growth for the joint venture, which is about 35%, which also means that the IGL's share also has grown for the half year by close to 35%, 36%. Now talking about the segmental highlights, let me start with the biofuels first, which has been a segment which has grown -- which has shown good growth for us and has helped us take both our top line and bottom line up. So for the quarter, for biofuels, our net revenue is up from INR 260 crores to INR 423 crores, which is up close to 63%. And for the first half, it is up from nearly INR 500 crores to INR 770 crores, which is up nearly 55%. And at an EBITDA level for the quarter, it is from INR 13 to 29 crores, which is 121% up. And for the first half, it is up from INR 32 crores to INR 52 crores, which is up by nearly 63%. So overall biofuels has given a good growth in terms of numbers that I told you. So it has been supported both by the blending program and I think our adding capacity to continue to service that through multiple feedstock right from molasses to grain, to as and when it is optimal for us also looking at utilizing [indiscernible]. To give you a quick update, IGL has supplied about 15 crore liters in the year '24-'25 and we supplied about [ INR 1,100 crores ] in the year '24-'25 and we expect it to grow in line with the blending program. Talking about the blending program, the good thing is that the blending program has more or less progressed as per plan from nearly 5% blending in '19-'20 to a expected blending of close to 20%, which is expected in this year, which is the year '25-'26. However, what has happened slightly is that the capacity has also caught up with the demand because the blending program is right now at 20%, while there is a discussion on how it can be increased beyond 20% to maybe up to 27%, there is now some excess capacity in the industry. And this is obviously part of a net zero nationally determined commitment, which is a commitment by India by 2070. In short, it has helped rural economy and farmers income, payments to farmers of roughly about INR 40,000 crores happened in '24-'25 and ForEx savings of about INR 43,000 crores happened in the same year. There's also a significant crude oil substitution, which is close to 24 lakh metric tons on account of this. And whilst there has been some talk in the social media about E20 but the government has come out with a paper clarifying and there are definite advantages which have been realized on account of the blending program, both in terms of the economy as well as cleaner air, as well as in some factors, better engine performance while there have been some concerns about slightly lower mileage, which is expected because of ethanol being slightly lower dense in terms of energy. So the government is clear that the policy of 20% blending is up to October 2026. Beyond 2026, the government is looking at the possibility of increasing it to about 27%. However, that is something which will be clarified in the government -- by the government in the times to come. So that is as far as the biofuels business is concerned. The chemicals business overall has had a weak quarter in terms of sales and from close to INR 369 crores we registered a net revenue to close to INR 290 crores for the quarter. And from close to INR 760 crores we registered a sales revenue of close to INR 590 crores for H1. At an EBIT level, however, our EBIT grew for the quarter from INR 30 crores to INR 31 crores and is marginally lower compared to the first half of last year, which is from INR 69 crores to INR 64 crores. Now there are various factors for this, which I will cover a little later, which includes slightly lower offtake by the JV, some drop in terms of value of some of our products. At a volume level, however, we were closer to flat in the first half. So amongst various things which have put some pressure on is one is a global situation, which has meant that crude has been close to [ $60 ], which has meant that some of the other products like LNG have been lower cost and some other petrochemical-based alternatives to our products have been lower cost and we've had to struggle on price as well as margins in areas like glycol ethers. And also 50% tariff in the U.S. has impacted to some extent the joint venture, some of our products directly and some of our products indirectly. We hope that, that will stabilize, which will mean that the markets in Europe and America and elsewhere will have hopefully a positive impact. Now what we also see, hopefully, is that there is a general expectation that with India, China expected to buy less and less of Russian crude in the months to come as the 2 major Russian oil suppliers have been put under sanction by the U.S., we expect the oil prices to harden a little bit. There is general consensus on this. That is just a projection, which means that relatively speaking, the disadvantage that we were having may become lesser and we are hoping that with the resolution of the trade issues between India and U.S. will also help the overall chemicals market globally and domestically to start to be better. And the highlight for us in terms of the chemicals business -- it's not a highlight, is also that, as you know, we started with new performance chemicals, which is doing well. I'm quite confident about the strong pipeline that we have. That business, while small is doing well with very strong partnerships starting to emerge with significant players like BASF, [indiscernible], Dow, et cetera. We have also become the first ever company globally to make bio-based amine. Whilst we are to start commercial sales in this quarter and the next quarter but nevertheless, it is an achievement where we've worked with customers like L'Oreal and others. And we are working with other partners to see how we can build that bio-based amine business and we are looking at several new technologies, and we will keep you posted. So that has been a quick update on the chemicals business. And let me now go back to last but not the least, which is the Potable Spirits business, which has also done very well for us where for the quarter, sales have improved from INR 271 crores to INR 338 crores, up 24%. For H1 sales are up INR 551 crores to INR 680 crores, which is 23%. EBIT, for the quarter, up from INR 56 crores to INR 72 crores, which is up 30% for the first half, up from INR 105 crores to INR 145 crores, which is up 38%. So that is good. I think our Amrut partnership is doing well. We started with -- we have introduced nearly 8 to 10 different brands of Amrut in various areas. And we continued our solid performance in country liquor, both in Uttarakhand as well as U.P. We are looking at expanding the market as far as IMFL is concerned, in areas like Kerala geographically. We -- as you know, we're seeing good growth in the paramilitary area and we are looking at getting some of our brands approved in the canteen services department for the army, which will drive the next phase of growth in the IMFL business. So we've seen strong growth in paramilitary, as I said, which is up close to 70%, strong growth in the vodka segment, which is up 38%, rum segment up 26%. And as I said, we are starting to see good traction for some of the Amrut brands that we are -- that we had introduced. So that's a quick update on the Potable Spirits business. And I will take a pause and particularly on the liquor business, I will request Shukla ji here to add something more on country liquor and IMFL and then we can go on to questions.

Good afternoon. Then In line of our CEO's statement, the liquor business is doing well. And we are though besides the tough situation, July, August and September, we could able to maintain our leadership in the both the segments, country liquor as well as IMFL. And as far as margin is concerned because of the season's expected start from November to March, as far as raw material is concerned, that would be -- and fuel is concerned, both is a very positive sign for us. We are expecting not only the surplus raw material availability but also the price could be the very positive in the next couple of months. So we are expecting next month the excise policies which are in line. So we are hoping better excise policies by the state authorities, which will be -- decides our freight cost for '26-'27. Certainly, it would be in our favor. Thank you so much.

Just to add here that the second quarter for the liquor is always a very lean quarter. And as Shukla ji said that despite the lean quarter, the company is able to maintain its growth and has achieved a very good turnover. Secondly, just to add, that the company has decided to come out with the preferential allotment to the promoters' friends and relatives. Out of that, we have already approved -- the Board has already approved the issuance of INR 467 crores equity at the rate of INR 915 to the promoters' friends and relatives. The EGM has already approved, means the investors has rather blessed that resolution. And we are expecting the approval from the BSE and NSE shortly. After that, we'll issue the equity shares. So this is the update. And the money which -- whatever we will receive out of this provision will be utilized for the reduction of the term loan. So basically, you can expect that from this quarter onwards, the finance costs will start reducing. So this is the update.

S0?? Yes. So we can now take questions, if any.

[Operator Instructions] Our first question come from the line of Vignesh Iyer from Sequent Investments.

So my first question is on the -- again on the fundraise and the debt side. So as you explained earlier that you'll be using the funds that you have raised to repay the debt. So just wanted to understand, can you give a segmental bifurcation on where most of the debt lies, I mean, on which segment? And if you could share the numbers for the same?

Actually, the company is having about INR 1,400 crores long-term debt as on date. And the normal repayment for the remaining period in this year is about INR 180 crores in the next 5 months, means November to March. Apart from this, whatever we are raising, this INR 467 crores will also be utilized for the repayment or you can say the prepayment of the existing debt. As far as the division is concerned, after the demerger, there will be 3 companies, one is India Glycol, other one is IGL Spirit and third one will be the Ennature Bio Pharma. So in these 2 companies, India Glycols and IGL Spirit, the segregate what we have done as of date is about INR 600 crores and INR 800 crores. INR 600 crores in chemical and INR 800 crores in IGL Spirit. So If we pay this INR 467 crores plus INR 180 crores, which comes to about INR 680 crores, INR 467 crores and INR 180 crores -- sorry, INR 640 crores. So then the corresponding, I will say almost equal amount of the debt will be reduced from these companies. And from [indiscernible] onwards, we have, say about repayment of INR 300 crores, which will automatically be paid by these companies.

So if I understand right, you are saying, proportionately, the debt will go down, INR 600 crores and INR 800 crores, right?

Yes, correct.

Okay. Okay. And what is the cost of debt right now, I mean, on the term and on the working capital?

As far as the long-term debt is concerned, our average cost of borrowing is about 10%, while for the working capital, it is about 9.25%. So we are also looking at something like you can say the improvement in the outside credit rating, which will help us to reduce the interest rate as well as we are all focusing for the prepayment. So that overall, the company is on long-term basis, I will say that the interest will come down by about INR 60 crores to INR 70 crores in a year, which will be visible from the next year onwards.

Okay. So just last question. So am I right to understand that after this repayment of INR 600 crores roughly from fundraise plus the internal accruals, we are due for re-rating from the credit rating agencies?

Our credit rating exercise will start about next 15 to 20 days. And after that, we'll see that how credit rating behaves on the -- whatever had happened in the company.

Our next question comes from the line of [ Saket Kapoor from Kapoor & Company ].

[Foreign Language] So as our CEO was mentioning that although the revenue for the chemicals segment has been down but our margins were up. So if you could just allude to us, sir, what were the key factors that led to this improvement in margin? And can we expect the continuity of the same post the normalization of trade, which is expected in the latter half of the current financial year?

See amongst -- if you look at our margins, as I mentioned to you, our sales top line was weak in some areas. For example, our top line was weak in glycol ethers. Our top line growth was weak in sales of -- due to the joint ventures, which based on the contract in percentage terms does not make such a lot of margin. And whereas internally, while we don't have that -- we don't -- have not given you that breakup, the product mix in terms of the new performance chemicals, whilst the base is small, has grown quite well. So looking at this mix and some of the volumes which were low, not necessarily very profitable businesses, especially given the current scenario. So not doing some of that business, which is lower margin business or even negative margin business, improving margin mix in some of the businesses like performance chemicals, I think that has led to the improvement in margins in chemicals. Longer term, you can expect that trend because our strategy is to continue to drive growth in new value-added chemicals. Some of that is in the more nearer term but also we have a broader strategy on -- in terms of the green chemicals, yes, so we would expect -- and I also mentioned to you that we are looking at a potential situation where we may see an ethanol price softening in imports and domestic potentially. And we may -- now nobody can say that with -- given today's volatility -- but as India, China nearly are expected to slow down or stop buying Russian oil, 2 of the major Russian oil companies have been sanctioned. It's not only a pressure on India but I think those companies have been sanctioned. So you will see more and more oil being bought by India and China from the Middle East, from U.S., from other locations, which will mean that we could see -- we are likely to see an upward pressure in crude, which means -- and we also expect that the things like tariff issues will get sorted out, which has had an impact, some bit of it directly but some bit of it indirectly for us, as I mentioned, for the joint venture, for our products. So I expect that all in all, these factors are likely to have a positive impact on the -- both the top line and the bottom line of our business. And I say crude going up is good for us because we compete with alternatives from crude. So that is the reason to say that whilst it is very difficult to do a month-on-month and quarter-on-quarter prediction but looking at the fundamentals and how we see the factors change in the months or slightly beyond that ahead, that should be reflected.

Sir, we have invested around, say, INR 80 crores, INR 85 crores for the NSU segment. And as you mentioned about that, [Foreign Language] we have been [indiscernible] the affirmation from the MNCs and some -- we are going to execute some orders. So if you could just give us some color, sir, how will this segment contribute going ahead? I think, sir, some 15,000 or 10,000 metric tons was the total pilot capacity that was envisaged. So where are we, sir, in terms of that upscaling of the same and its contribution.

So I'll tell you ballpark. I mean, if you look at -- we started with a very small base. And I think really speaking up, it takes about 2 to 3 years as a gestation period to do these development projects with companies. And whilst we would have expected it to do much better but we are seeing nearly a doubling of revenue and contribution for the year. And also till date, in fact, for H2, it is much more than doubling of contribution. I'm not giving specific numbers right now because I need to look at the product mix and I don't want to be wrong. But broadly speaking, I expect to see a doubling on a small base of both volumes and contribution and I expect that trend to continue. Now some of the projects that we are working on, while it has led to some slowdown, I can see which gives me confidence, potentially can be 10x the business that we are doing right now over the next few years. Now this is with the rider that I mentioned potentially. But those are the discussions that we are having. And we are also looking at new areas. We are looking at newer technologies. So we'll continue to invest incrementally in this business. And I'm quite confident that this is not a CapEx-intensive business. But once we get our fingers in this business or get our foot in the door in this business, I think the payback and the associations are stronger, longer term and I expect that trend to continue.

Correct, sir. Sir, I have a couple of more points. May I continue, sir, with your permission?

Of course, continue, [ Saket ].

Yes. Sir, now the pain point for the Ennature Biopharma segment, I think so you have alluded and explained the factors of the commercialization of that plant by ITC also in the previous year. And then again, this time, you have in your presentation, mentioned about some factors about some crop and seeds. I'm just forgetting the same. So if you could just give us, sir, what is our thought process for this segment? It is the smallest of the lot. Earlier, its contribution to the profitability was among the highest. So now as you mentioned, sir, here that the nicotine sales were under pressure due to competition and then there's volatility in the Thiocolchicoside market due to disruption in your Gloriosa seed supplies, pardon me for the pronunciation. This is what has been mentioned. So just a ballpark of how things will shape up, the profitability "is now gone" for the segment as a whole.

[ Saket ], couple of things. First of all, you have done enough reading to give 75% of the answer. So there is -- we know that there is -- a lot of these sales that we do, say, in the Thiocolchicoside segment are outside of India, through Europe, through Turkey and these areas and these businesses because of how the international trade and situation is -- has been under pressure. And there has been a shortage of seed supplies, which has also put some pressure as far as Thiocolchicoside is concerned. And you rightly said that there is a decline in nicotine sales. But what we are focusing on is, as we have mentioned and that will take time. And I will request my colleague, Manish to also add, is not to do more of the same thing. We realize that we got those volumes, the volume business came under some pressure. Some of the things are possibly not permanent. Some of these things will improve. But there are many other things that we are doing. We are looking at getting several standard approvals for our plants, for our businesses, which allows us to register and enter with global players. So that work is going on. Plus, we are also looking at working with several brands so that we look at the branded nutraceuticals market much more. And there are several things which we are doing to differentiate our products through clinical studies, validation and getting our products to be proven to be superior and not only just mere nutraceuticals but demonstration through claim substantiation. So that's broadly the strategy. We have spoken about this over the last few quarters. We understand that there has been some challenges. But I think the strategy is very clear to focus on differentiation through standards, to get registrations in the developing markets and to focus on building the branded portfolio. Now Manish, would you like to add something as well?

So as the CEO says about the branding nutraceuticals because in Thiocolchicoside, there is less crop this year and whatever the material is there is being holded by the farmers and all to, waiting to increase the prices and all. So we are also watching that. And in nicotine, the low-cost production by the new vendors, new manufacturing facilities has dented the volumes and the value both. And apart from this, the Russian and Ukraine war has impacted negatively to nicotine business also. But in branded nutraceuticals, we have some development. And our branded -- if we talk about the branded nutraceuticals means that we are having our own brand, which is being -- which will go to the formulation as a active agent by -- with the name of our brands. So we are in the process of having some contract with the like U.S. companies and European companies to use our branded nutraceuticals. And the margin as, [ Saket ], you too asked about the margin earlier, like 40%, 50%, the same margin we are expecting in this branded nutraceutical business. But this is a slow process because we have to take certain certification of that countries. Like in last quarter, we have got the U.S. FDA for our plant. And now we are going to those particular countries for their certification and then we will start selling the material. And I could tell you that in fourth quarter, the situation will be much, much better than the first 3 quarters.

Okay. sir, I will -- we will wait for the performance to improve. One question on the JV part, sir. Sir, when I look at the balance sheet, the closing balance for investment in joint venture has gone up from INR 381 crores for March vis-a-vis INR 411 crores for September. So can you explain the nature of the sale for what the investment has gone up in the JV?

So investment, there are certain minimal CapEx are being taken up by the JV itself. We have not invested directly into the JV by India Glycol Limited. Whatever the investment has been taken, they are taken by JV itself by their own funds. And those are decisions which the joint venture companies...

Okay, sir. And 2 points for our CEO sir, and then I will join the queue. #1 is, sir, about the -- I think it was the cane allocation policy. I'm getting an echo. Just a second.

Yes, [ Saket ], go ahead. One is cane allocation policy. Second?

First is the cane allocation policy for the country liquor segment for Uttar Pradesh has been up from 19% to 25%. So that would be -- that would add to the margins, I think so and the availability will also improve. So your thought on the same. And sir, secondly, for the U.S. tariff part, I read somewhere that U.S. is trying to come up with a treaty with the -- with our country for imports of ethanol that is in huge availability in their country. So how does these 2 maths work for our company product profile, sir?

[ Saket ], first of all, you still want to join the queue, on a lighter note?

[Foreign Language] No, no.

I said you've asked several questions and you said I still want to join the queue after this, that was on a lighter note one. Taking the liberty with you.

Okay. Thank you. [Foreign Language]