Earnings call transcript: PCBL Chemical Q2 2025 sees stock dip amid tariff impacts

PCBL Chemical Ltd, a prominent player in the chemicals industry with a market capitalization of $1.56 billion, reported its second quarter fiscal year 2026 earnings call results. Despite achieving a 5% increase in carbon black sales and 99% capacity utilization, the company’s shares fell 4.45% to 378.85 INR, reflecting investor concerns over U.S. tariffs and crude oil price fluctuations. According to InvestingPro analysis, the company maintains a GOOD financial health score, supported by its consistent dividend payments for 11 consecutive years.

Key Takeaways

• PCBL Chemical reported a 5% increase in carbon black sales volume.
• The company’s stock fell by 4.45% post-earnings announcement.
• High capacity utilization was achieved at 99%.
• The firm reduced its gross debt by over INR 300 crore.
• U.S. tariffs and crude oil prices impacted profitability.

Company Performance

PCBL Chemical Ltd demonstrated robust operational performance in Q2 FY26, with an increase in carbon black sales volume to 161,728 metric tons and maintaining high capacity utilization. The company’s revenue growth stands at 16.06% over the last twelve months, with a gross profit margin of 30.56%. The company also made significant strides in reducing its gross debt by over INR 300 crore since March 2025, highlighting effective financial management. For deeper insights into PCBL’s financial metrics and growth potential, InvestingPro subscribers have access to over 30 additional financial indicators and expert analysis.

Financial Highlights

• Revenue: INR 2,164 crore (Q2 FY26)
• EBITDA: INR 278 crore (Q2 FY26)
• Profit Before Tax (PBT): INR 78 crore
• Profit After Tax (PAT): INR 62 crore
• Carbon Black Sales Volume: 161,728 metric tons (5% QoQ increase)

Market Reaction

The stock of PCBL Chemical Ltd experienced a notable decline of 4.45% following the earnings release, closing at 378.85 INR. This movement contrasts its 52-week high of 498.4 INR, indicating a negative investor sentiment influenced by external economic factors.

Outlook & Guidance

PCBL Chemical is optimistic about future growth, targeting over 1,000,000 tons of carbon black capacity in the next two years. Analysts share this optimism, with consensus recommendations leaning positive and projecting the company to remain profitable this year. The company anticipates improved EBITDA per ton in upcoming quarters and expects AquaPharm to reach an EBITDA exit rate of 75 crore INR by the end of the financial year. Get comprehensive insights and detailed valuation analysis through the exclusive Pro Research Report, available on InvestingPro, which covers this and 1,400+ other top stocks.

Executive Commentary

"We believe that this phase has largely bottomed out and expect a steady recovery in profitability in coming quarters," stated Kaushik Roy, Managing Director. This sentiment underscores the company’s confidence in overcoming current challenges. Suresh Kalra, CEO of AquaPharm Chemical, highlighted their goal to achieve a 75 crore INR EBITDA exit rate by year-end.

Risks and Challenges

• U.S. tariffs are affecting approximately 2,000 tonnes of carbon black exports.
• Fluctuating crude oil prices are impacting profit margins.
• Market conditions remain volatile, posing risks to profitability recovery.
• Global economic uncertainties could affect demand in key markets.
• Regulatory changes in export markets may impact future sales.

Q&A

During the earnings call, analysts raised concerns about the impact of U.S. tariffs and crude oil price volatility on the company’s margins. Executives addressed these issues, emphasizing efforts to mitigate their effects through strategic initiatives and cost management.

Full transcript - PCBL Chemical Ltd (PCBL) Q2 2026:

Conference Moderator, ICIC Securities Limited: Ladies and gentlemen, good day, and welcome to PCBL Chemical Limited Q2 FY ’twenty six Earnings Conference Call hosted by ICIC Securities Limited. 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. I now hand the conference over to Sanjay Jain from ICIC Securities. Thank you and over to you sir.

Sanjay Jain, Analyst/Moderator, ICIC Securities: Thanks, Dhanish. Good evening everyone. First of all, Dantiras and happy Diwali to everyone. And thanks for joining on to PCBL Chemicals Limited Q2 and H1 FY twenty six earnings conference call. We have PCBL Chemical management with us on call represented by mister Kaushik Roy, managing director mister Suresh Kalra, CEO, AquaPharm Chemical mister Raj Gupta, CFO Mr.

Anand Kumar, Group Head, Investor Relations Mr. Pankaj Kedia, ED, Investor Relations. I would like to invite Mr. Kaushik Roy to initiate the call with his opening remarks, post which we will have a Q and A session. Over to you, sir.

Kaushik Roy, Managing Director, PCBL Chemical Limited: Hi. Good afternoon, everyone, and thank you for joining us for the Q2 FY ’twenty six earnings conference call of PCBL Chemical Limited. It’s a pleasure to connect with all of you once again as we share the highlights of our performance for the quarter and discuss key business developments. Our results and investor presentation have been uploaded on the stock exchanges and the company website for your reference. In Q2 FY ’twenty six, PCBL Chemicals reported healthy growth in Carbon Black sales volume on both year on year basis as well as quarter on quarter basis and improved capacity utilization across three product lines.

However, the margins are impacted by continued pricing pressure in a relatively softer market environment. We believe that this phase has largely bottomed out and expect a steady recovery in profitability in coming quarters. This quarter, we achieved high stable power generation and sales volume. Our working capital cycle improved by twelve days in H1 FY ’twenty six, releasing around INR240 crores of cash and overall cash generation remains healthy, with a reduction in gross debt of over INR300 crore since March 2025. Our Specialty and Solutions segment under Aquaform witnessed a gross margin improvement by 10% on the back of a better product mix.

Margins in Carbon Black during the quarter were influenced by a challenging global environment following the imposition of high input tariffs by United States. We have also noticed customers being quite cautious in their purchasing patterns, reflecting broader economic uncertainties and tighter inventory position across

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: supply chain.

Kaushik Roy, Managing Director, PCBL Chemical Limited: Currently, our carbon black exports to U. S. Account for around 5% of total volumes and with a 50% tariff in place, the business mix remains constrained. However, as US continues to be import dependent for Carbon Black, we expect both volume and margin to recover once the situation stabilizes. Meanwhile, we are proactively taking steps to mitigate the impact and strategically rebalance our export strategy.

Given this backdrop in this environment, we have identified specific areas where operations can be improved and efficiencies can be enhanced. Dedicated teams are already working and actively implementing initiatives across functions to optimize process, manage costs and strengthen overall competitiveness. These focused efforts are helping us stay resilient and well positioned for recovery. With the recent GST cart in India, we are already seeing signs of recovery in auto sector. Demand is picking up and we expect this growth to sustain.

Domestic tire demand is projected to grow at 6% to 8% in FY ’twenty six, led by stronger replacement demand in the second half. Now coming to global scenario, major international tire companies has announced significant investment to expand production capacity in North America with projects planned through 2029. Just for instance, Goodyear is investing around $865,000,000 and Cook is committing $1,600,000,000 Bridgestone is bringing in about $610,000,000 and Michela plans to invest nearly $540,000,000 and some other tech companies together are investing approximately $4,000,000,000 This reflects long term optimism in the sector despite current demand softness. While this quarter reflected certain short term challenges, including the impact of U. S.

Tariffs, temporary deferment of purchases following the GST rate cut and subdued overall economic sentiment, the long term carbon black demand supply dynamics of the industry remain strong. With improving market conditions and expected pickup in demand, we are entering a phase of renewed growth momentum. In line with this, PCBL Chemicals poised

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: for an exciting period ahead,

Kaushik Roy, Managing Director, PCBL Chemical Limited: with several strategic projects scheduled to come on stream in phases over the next eighteen months, positioning us well for sustained growth and long term value creation. Let me share some of these projects with you. Specialty black line dedicated for superconductive grades of 1,000 MTT per annum capacity will be commissioned in Palij, Gujarat by this mountain and commercial production will begin from twenty twenty five November, which is next month. Roundfield expansion of 90,000 tonnes rubber line in Tamil Nadu is under commissioning stage and likely to be operational in the current quarter itself. Three.

Commissioning of Specialty BlackLine 20,000 metric ton per annum in Munda is likely to be preformed to March 26. On the battery chemical side, Nanovus’ pilot plant project is on track. Process written for the nano silicon for battery applications already granted in U. S. And likely to be received in Japan, South Korea and Europe over the next two quarters.

The company has also applied for two project patents, namely carbon silicon composites and battery grade graphite from BioSources. A citadel black plant of 4,000 metric ton per annum is expected to be commissioned over next eighteen months. We are on track to achieve our targeted capacity of over 1,000,000 tons of carbon black capacity in next couple of years. The global conductive carbon black market continues to grow steadily, supported by rising electrification and the expanding energy transition worldwide. Demand is being driven by multiple sectors, including electronics, energy storage, EVs and industrial applications.

Three key megatrends the global shift to renewable energy, increasing electrification and rapid expansion of data centers are reshaping the need for advanced conductive materials. Asia Pacific remains the largest production and consumption hub, while The U. The United States and Europe continue to be strong, high value markets. PCBL Chemicals’ expansion into superconductive grade carbon black will position us to tap into this growing global market and cater to next generation high performance applications. We are expanding our capabilities via customized offerings and continued innovation, particularly in high performance applications like battery chemicals and energy storage.

We are the first company globally with all three advanced technologies, namely superconductive carbon black, nano silicon and acetylene black, catering to conductive solutions and next generation battery applications. In our Specialty Black business, we maintained growth despite current market challenges, demonstrating strength of our supply chain and customer relations, while continuing to expand product coverage and applications. We have strengthened our sales force, warehouses, technical support, and distribution network to enhance customer connect and service. Our successful use strategy now serves as a blueprint for The Americas, EMEA, and Asia, with a focus on service excellence, faster turnaround and portfolio expansion. The aim is to position PCPL as a local player in each region, defend our stronghold in the Indian Subcontinent, at the same time expand into high potential markets like ASEAN, China and The EU.

During the quarter, PCBL achieved two significant milestones in its sustainability journey. The company successfully registered under the International Renewable Energy Certificate platform entitled to credits for clean energy generated across our plants. In addition, PCBL was once again honored with the Gold Medal in the EcoVadis Sustainability Rating for financial year twenty twenty three-twenty twenty four, placing us among the top 5% of companies globally. Together, these achievements reinforce our commitment to sustainability and further strengthen PCBL’s ESG profile and brand positioning globally. PCVIL Chemical has established a resilient and far reaching global footprint, supported by a seamlessly integrated manufacturing and distribution network.

As the company scales into high margin, high growth segments, it continues to demonstrate discipline in capital allocation and agility in responding to evolving demand cycles. Now coming to the quarterly performance. During the quarter, our consolidated sales volume in Carbon Black business increased by 5% quarter on quarter to reach 161,728 metric tons. This translates into a capacity utilization of over 99% during the quarter. Consolidated revenue from operations during the quarter was INR2164 crore and consolidated EBITDA was INR278 crore.

PBT stood at INR78 crore, while PAT stood at INR62 crore. Of the total Carbon Black sales volume, domestic sales volume stood at 99,549 tonnes, while international sales volume stood at 62,179 tonnes in Q2 FY26, which means a 6% year on year growth. Now moving on to our segmental performance. Tires accounted for 93,892 tonnes. Performance Chemicals stands at 50,331 tons, while Specialty sales volume was 17,505 tons.

We expect this share to continuously ramp up over next few years with increasing demand and capacity additions. During this time, we also achieved the highest ever power generation and sales volume during the quarter. Power generation increased by 7% year on year from two zero nine million units to two twenty three million units, with an external sales volume growing by around 10% year on year to 138,000,000 units as against 126,000,000 units in Q2 FY twenty twenty five. Coming to the six monthly performance during H1 FY twenty twenty six. Consolidated revenue from operations stood at INR4278 crore as against INR4307 crore in H1 FY twenty twenty.

Sales volume for Carbon Black increased 4% year on year to 315,821 metric tons in H1 FY ’twenty six as against 302,610 metric tons in H1 FY ’twenty five. The consolidated EBITDA for H1 FY twenty twenty six stood at INR603 crores as against INR738 crores in H1 FY twenty twenty five. Power generation went up by around 9% and sales volume by 11% in the first half of the financial year. Despite macroeconomic volatility and evolving trade barriers, ACV is strengthening its position as a multi chemistry platform focused on innovation, scalability and localization. By expanding capacity, leveraging digitalization and automation and partnering with global technology leaders, we are creating future ready solutions.

Let me now hand over to my colleague, Mr. Suresh Kalra, CEO of Accom Chemical, who will update you on Accompan’s performance and outlook. Suresh, good evening.

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: Good evening.

Kaushik Roy, Managing Director, PCBL Chemical Limited: Thank you, everyone, and thank you for joining us. Over to you, Suresh.

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: Thank you, Kashyyk. Thank you. Good evening, everyone. Thank you for joining us in this call. I will update you on the AgpoForm Chemical Limited, especially for Q2 FY ’twenty six.

AgpoForm net gain challenging external environment, the digital dynamic shaping performance across our key markets. I’ll take one by one. So India delivered strong growth, which was supported by expanding reach and deeper engagement with key customer, while Saudi Arabia continue to scale on the back of strategic accounts. Our U. S.

Business faced some near term softness being a cyclical business and the oil prices were almost at very low from a longer time on WTI index basis, but the sales trend seems like improving in August and September. Our home care business delivered robust growth of 18% Q o Q. So quarter two financial year ’twenty six versus quarter one financial year ’twenty six. In quantity sold, it’s driven mostly by expanded feeds and stronger engagement with our key customers, especially our large key customers like the P and G, Unilever, etcetera. Our water solutions maintained strong momentum also grew

Conference Moderator, ICIC Securities Limited: I’m really sorry to interrupt you, sir, but your voice is echoing.

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: All right. Just give me one sec.

Conference Moderator, ICIC Securities Limited: Thank you, sir.

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: I hope it’s better. I to install speakerphone on a normal phone. Okay?

Conference Moderator, ICIC Securities Limited: Yes, sir.

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: Okay. So our Water Solutions maintained also very strong momentum, growing at about 16% Q o Q, driven by strategic accounts. Our another segment, the Food segment is Applications Specific Solutions, which were almost flat amid the slowdown in the domestic textile industry. And Oil and Gas segment, which is, as I said, our U. S based business, the plant at U.

S, their volumes were a little down by 14%. So overall, all of our four market segments, Home Care grew very robust growth, Water Solutions grew very strong growth, Application Specific Solutions were flat and Oil and Gas saw some volume downtrend because of the cyclicality of the oil market in U. S. Geopolitical tensions continue to remain elevated as we understand and the recent 100% tariff imposed by U. S.

And China actually created some good opportunities for that performance, phosphonate and cleanliness business because The U. S. Customers now also looking forward to diversify sourcing beyond China. There were lot dependence on China for them. So that’s creating an opportunity.

At the same time, the recent application of tariffs by The U. S. On India, especially on the biocides and select polymers exported from India has impacted a portion of our business, which leads to some temporary headwinds in the near term. In spite of that, Acreform delivered a steady performance in Q2 FY twenty twenty six, closing the quarter with a revenue of INR395 crores with a growth of 9% on top line and an EBITDA number of INR48 crores. During the quarter, our focus remained on strengthening our commercial capabilities and technical depths to support long term sustainable growth.

We also recently onboarded a very senior level industry expert as head of our R and D and Innovation Center, very experienced guy from the industry. And we are now going to steer our innovation efforts also for the future, which help us advance our next phase of product development. We also have enhanced our sales organization in The USA. As I said, the business is driven by cyclicality. So sometimes you really need to work on very strong opportunity pipelines.

So we are enhancing our sales organization with very strong technical orientation people with some great customer engagement focus laying the foundation for improved market reach and the market affiliates in the coming quarters. That effort has already been taken and we are going to see benefit of that in the coming quarters. A few more key business updates I would like to share here. One is, AcquaForm now offers a complete green key linked portfolio. So AcquaForm is possibly the only company today in the entire industry which has the entire portfolio of green chelates.

So green chelates like GLDA, MGDA and IDS, they are ready for commercial sales. Alongside two new polyureth products, one of them is Pesa Granules, which is used in auto dishwashing like racket kind of customers. And second is PM300, which is used in water treatment like Ecolapse like of customer. So these trials and discussions are underway with multiple customers. We have now the complete range ready with us.

We also have commissioned a new plant of PBTC. If you have seen before, it was a traded product for us for a long time and now we have commissioned a plant, so it’s going to move from a traded product to a manufactured product for us. Sampling has been initiated for all strategic accounts and discussions are ongoing for the global water treatment players. We are also undertaking a debottlenecking initiatives, which is also complete for acetyl chloride. This is one of the product lines where we are completely sold out.

So we undertook a debottlenecking operations, is complete now. And that will increase the efficiency of our business. Along with that, we’re also putting granulation lines to support our new granulated products. Coming to our segmental performance in terms of volumes, Home Care, which is our product line basically for fabric care and home cleaning, that reported 10,000 tons of volume. Oil and gas reported 6,500 tons of volume.

Water Solutions reported 5,000 tons and the Application Specific Solutions reported 4,000 tons of volume. We are very confident now of delivering a visible EBITDA improvement from Q3 onwards because of all the initiatives which are complete. We are building new opportunities and have already seen some tender wins, especially a very large tender at Saudi Water Authority’s R And D purification plant has already been, and we are also participating in tenders with Procter and Gamble for the Green Key Lids for the Euless operations. Our focus on expanding the customer base is across key regions, coupled with very strong distributor partnerships. We have also entered into a new distributor partnerships in Africa with Salevo and a couple of other distributors, which we are currently being appointing in the Latin American market.

At the same time, there’s an extensive workshop style approach which we have taken for our new product development to identify new molecules through close collaboration with our customers. We have a very strong standing with a lot of our customers and we are using the voice of customer there to identify the new products required in that workshop channel approach. Our commercialization efforts would be going along with it, strengthening our NPD pipeline, looking forward to enhancing the profitability and supporting our sustained growth momentum. With this, I will conclude my remarks. Thank you for your attention.

I would now welcome for any questions to Kaushik Roy or myself.

Conference Moderator, ICIC Securities Limited: Thank you, sir. Thank you very much. Ladies and gentlemen, we will now begin with a question and answer session. Our first question is from the line of Aditi Ketan from SMIFS Institutional Equities.

Speaker 4: Sir, just a couple of questions. Sir, in your initial remarks, you mentioned this U. S. Tariff impact and GST related changes has led to slower volume uptake. Sir, if you can quantify like if the situations were normalized, if these were not about to happen, how much volumes we have lost in this quarter?

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: This is a question for our EkpoFarm business, right?

Speaker 4: No, sir. This is for the Carbon Black business and for EkpoFarm Sorry,

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: then I’ll go to question first, please.

Raj Gupta, CFO, PCBL Chemical Limited: Yes. This is for specific to U. S, we have cut down our volumes by about roughly about 2,000 tonnes in this quarter. And so far as GST impact is concerned, so while we have not not lost volume, in fact, our domestic volumes have gone up, but it was lot of sales in the spot market, and we did face pricing pressure. So the impact of this deferment of some of the auto purchases kind of a spell, not directly on the volume, but on the pricing mode.

Specific to us.

Speaker 4: And sir, this is not a gross spread, what we understand that market demand is also soft. Comparatively, is there also higher supply which is coming from Russia? We knew like earlier the share was lower. Now it has doubled up. So because of higher imports coupled with lower demand, is this the reason to blame for lower spread?

Raj Gupta, CFO, PCBL Chemical Limited: We don’t see structural change in the demand supply scenario. But last five, six months, the markets and the industry has been facing a lot of headwinds. Everything came together kind of. This US tariff, which were initially introduced at a lower level then increased, then GST rate cut announcement, which also kind of resulted into some deferment of auto purchases. Russian imports have been happening since last one year.

So overall, levels have not gone up. So India still is importing almost about eight to 10,000 tons a month, which is not much, honestly. But but, of course, I mean, these imports are happening at a at a lower price, so which is kind of creating pressure on the spot prices. But we don’t see anything which is kind of destabilized our plan going forward. We have our own, you know, strategy to deal with all these headwinds.

But, of course, I mean, it takes some time to respond to the situations, but we remain very optimistic about our performance in the ensuing quarters. You want add anything there?

Speaker 4: Got it. Sir, earlier like in earlier calls, we used to highlight that from our commodity carbon black space only, we have some specialty products also over there. That will also help to improve EBITDA by INR one per kg. I believe, sir, like for the last one year, we were highlighting this point. So is that thing taking place right now?

Or you see like that will be slow from year on?

Raj Gupta, CFO, PCBL Chemical Limited: Going up. Our specialty volumes are going up. Even this quarter, if you look at our volume, they have gone up. Quarter on quarter, we have a 9% increase. Even year on year also, we have increased.

And on a full half year basis, you will see that there is an increase. This year, based on our capacity, we can reach maybe about 72,000, 73,000 tons, and we are on track to achieve that volume. So the product mix is changing for better, but, of course, the current situation is not a usual one, and therefore, the impact on the margin.

Speaker 4: Okay. Okay. Sir, on the platform, in your initial presentation, you highlighted, so there will be a visible EBITDA improvement. You mentioned, like, I believe, sir, for the last few quarters, we are at the similar EBITDA in our platform, and we are clocking around INR 20 per kg on EBITDA. You see like most of the negatives like earlier we used to mention about higher cost and lower product mix, all these things are there in the current spreads and EBITDA.

And you see how much jump, if you can quantify, like for FY ’twenty six and for FY ’twenty seven?

Raj Gupta, CFO, PCBL Chemical Limited: Sure. Sorry.

Pankaj Kedia, Executive Director, Investor Relations, PCBL Chemical Limited: Yes, Suraj, go ahead.

Raj Gupta, CFO, PCBL Chemical Limited: Yes, please go ahead.

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: Okay. So our business is divided into four major market segments and also right now it’s aligned pretty well geographically, okay. So India business, which is basically we call it Accom from India is manufactured in India and mostly supplied in Europe, to some extent in U. S. So I would say, for example, AcquaForm India businesses, 20% of the revenue come from U.

S. So that is the only business which is impacted due to tariffs. Now if you see at the global level, that business becomes only 9% of the impact, okay? So the tariff situation on India product is impacted for sure. Some of the products, for example, also, so the impact is there still limited, okay?

On the other side, the benefit to us due to tariff is because we have a manufacturing location for oil and gas for a plant in U. S. In Houston and most of the customers also in U. S. In Permian Basin.

We have a benefit over Chinese and any of the suppliers. Now right now, our India business is clearly showing clear improvement, already visible improvement, but the overall numbers are still looking same to you at an EBITDA level because our U. S. Business right now is going through a low end of cycle because of the oil prices are staying between $62 to $65 which is possibly one of the lowest. Usually, the sweet spot for oil prices is between $75 to $80 and the better it goes, the better efficiency products are needed.

So right now we are facing headwinds due to the type of business in our U. S. Manufactured business, while India manufactured business is seeing quite a growth and overall it is still offsetting it. That’s why we are seeing looking at the normal. If I take a number for example, the India business alone EBITDA grew at INR28 crores in Q1 and INR33 crores in Q2.

So a very clear visible improvement in the India business. So we are when we are saying that overall improvement would be visible in the coming quarters because we know it is a cyclical business and it has to change in the coming quarters.

Speaker 4: Got it. Sir, just a follow-up on this, sir, at what the crude oil price level they would start getting operating leverage?

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: Yes. So it’s not always directly assets linked, but this is very clear that the crude oil price, so we talk about Brent and WTI, WTI is about $4 lower. So WTI today is about $62 to $65 or $62.9 last night. So the moment it start improving, the efficiency products, because we make efficiency products mostly, which are basically scale inhibitors, corrosion inhibitors and H2S scavengers. They are used more and more and especially the high end of the ones that require more when the efficiencies are needed more.

And that linked with oil prices, but not a linear, would say, comparison which we can make. But we definitely see the improvement when the oil prices goes up.

Speaker 4: And then one last question, with Icythine chloride, you had mentioned in your earlier remarks, so this expansion figure is included in our numbers like we have stated to double from 1.4 to some three lakh tonnes. So this debottlenecking is included in that figure?

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: Yes, that is included. But it’s not yes, it’s just a debottlenecking. It is not completely expansion projects. But yes, that is included. You’re right.

Speaker 4: Got it. Thank you, sir. Thank you. That’s it from

Raj Gupta, CFO, PCBL Chemical Limited: me. Sure.

Conference Moderator, ICIC Securities Limited: Thank you, sir. Our next question is from the line of Sanjay Jain. Please go ahead.

Sanjay Jain, Analyst/Moderator, ICIC Securities: Yes, good evening. Thanks for taking my questions. First on the Carbon Black side, again, the spread appears to be quite subdued. Think this quarter we did EBITDA per kg, is under INR15, one of the lowest in so many quarters. And there has been general commentary that globally there is a slowdown in auto.

Even some of your peers have called up that in their earnings call previously. Do you think this situation is temporary in nature or at least FY ’26 appears to be what some tube than what we thought and that that that should be a fair assumption?

Kaushik Roy, Managing Director, PCBL Chemical Limited: Well, at this point of time, there are a lot of uncertainties in the market as you know. One is, of course, US tariff and specific to India, it is also about GST. And beyond that, even the global economy, if you look at, you talk about The USA, you talk about Europe, or you talk about Asia, including India and China. Other than India, in the first quarter, we had shown a good number, 7.8% GDP growth, economic growth. Most of the places, the fundamentals are little soft and consequently, the growth is not very strong at this point of time.

The projections are also little softer at this point of time. But having said that, we feel that we have kind of reached a level from where it will start improving. It will start improving. How fast the recovery can happen, that is something possibly time will fail, but a lot of actions have been taken internally to manage or or sell through this difficult headwind or the headwind strong headwind to what we’re facing at this point of time, more focusing on the operational excellence. So that is one initiative.

So that should take care of the challenges what we are facing, but the things do take time. I’m sure all of you will appreciate. But on the other side, since our with our our filling and we are quite clear about it that going forward, things will improve. And therefore, our expansion plans are all in place. The CapEx are all in place as we explained a while back that 90,000 tons of Tamil Nadu is coming on stream within within next few weeks time.

Similarly, in in in Mundra and Palijk, both the places, specialty lines are coming up. Nano based pilot plant is on. So so so overall in nutshell, our our thinking and our outlook is very positive. And we should be able to overcome. I mean, it is a global phenomenon at this point of time.

So I’m sure it’s a matter of time things will get sorted within USA and and US is the potential market for us going forward. So we should be able to recover fast. I mean, we are all ready with all our all our arms and ammunitions in place. We are making sure that we are fully geared up. The moment opportunity comes, we should be able to capture that opportunity.

So that’s our that’s that’s the overall outlook and the in a way, you can see the positive thinking from our side. Some headwinds are there, but we should be seeing better times going forward and not too far off. It’s just around the corner possibly.

Sanjay Jain, Analyst/Moderator, ICIC Securities: Got it. One one additional question. Last quarter, we spoke elaborate about one of the competition that is in the capacity in the Western world. And now, again, you spoke to both almost $78,000,000,000 of investment that is going in a new tire manufacturing. Mhmm.

So this this, in a way, is good for us. Are we in are we in of these CapEx, which is coming in terms of supply agreements, long term supply supply agreement, which we are trying to complete the post capacity and by what timeline you’re expecting these capacities to be operational?

Kaushik Roy, Managing Director, PCBL Chemical Limited: Yeah. You’re absolutely right. You know, some of the not so viable production lines are under under under under going under going under closure in near future. I’m not taking the name, but you’re fully aware of. Some of them are based out of US.

Some of them are based out of Europe and and also South Africa, in Africa and South Africa. So which is kind of advantage for us, of course. And since the efficiency level of manufacturing is pretty high with the Asian manufacturers particularly, and we are adding capacity, we are already in discussion with some of the global players for our next year contract, which is just another two, three months away. So that discussion has already started. So now, you know, this capital situation will take time.

You know, 90,000 tons is like a plant. It is almost like a plant equivalent to a medium size of plant. It will not happen overnight, but gradually, the consumption will go the the production will go up in line with buying from the customers. We have started discussion of that, and trials will start now as soon as the lines come on stream, which is end of this month and commissioning early next month. We’ll start the trial, and thereafter, is more about discussion with the customers, tying up the volume and quickly scale up.

And our endeavor is to utilize capacity as far as possible in the next financial year itself. Should be more than 50%, I guess, in next financial year. And by exit, we should be by exit of next financial year, we should be touching the run rate to achieve full 100% utilization. That is the level of confidence we have.

Sanjay Jain, Analyst/Moderator, ICIC Securities: Got it. One one last question on the superconductor grade what we spoke earlier. When should we see a

Kaushik Roy, Managing Director, PCBL Chemical Limited: We are not able to hear you, actually. Some problem, I think, with the line. Can you can you hear me now? Hello? No.

No.

Conference Moderator, ICIC Securities Limited: Sir, we can hear you. Mister Sanjay Jain,

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: I Yeah. I can hear you. Can you hear me?

Sanjay Jain, Analyst/Moderator, ICIC Securities: Let’s do one thing. You go on with the call, next caller. Let me come back in the queue.

Conference Moderator, ICIC Securities Limited: Sure, sir. The next question is from the line of Radha from BNK Securities. Sir,

Radha, Analyst, BNK Securities: for Acquireum based products, what percentage of The U. S. Market is being catered by China directly or indirectly? And now if there are 100% tariffs on China, how much volume growth as well as any margin expansion that you’re expecting due to this?

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: Yes. Thank you. I’ll answer this question. So U. S.

Market, as I said, is divided into for us, into two major parts. One is oil and gas. Oil and gas is where we manufacture locally and we supply locally, all right? So we basically do not compete with a lot of Chinese products there. We rather use them a lot for our buying raw materials, okay, for the oil and gas market.

A lot of production happens in oil and gas, but lot of imports also come. So it’s a combination. So we get some benefit when we are competing with them and the duty becomes very high. But at the same time, if the raw material for us get expensive also because of the duty in China, then also we could get impacted. So it’s kind of an offset impact.

While our other business, which is home care business, there we are going to see a lot of benefit coming to us, although we are supplying from India. But right now, at this moment, and we know that it is uncertain, it is changing every day. As of now, the duty structure in China on these products has become 100% effective last week, okay. If that continues, we are going to see a significant benefit. Now how much to quantify it is that we are looking at all the pluses and minuses.

For example, we are seeing some demand drivers also in our favor with smart appliances for the home care industry coming and the phasing out of the EDTA mostly in the phospholipid side of the business for the home care. So net net, overall, we are looking at currently we are at an average of INR50 crores of an EBITDA every quarter. We look forward to end our this financial year with the INR75 crores of EBITDA overall in the global business for a twelve month basis. So that’s an exit we are looking at today with comparing all the pluses and minuses coming towards in the business. Is that 70 crores

Radha, Analyst, BNK Securities: sir. Just to confirm, 75 crores of EBITDA, you want to enter on a quarterly basis by this year end?

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: By this year end. That’s correct. So that’s where our exit is planned at this moment.

Radha, Analyst, BNK Securities: Okay. Great, sir. So second question is on NanoSilicon. With regards to NanoSilicon, the company is investing crores in a rapidly evolving technology and targeting a substantial INR12 crores EBITDA by 02/1950. So can you please highlight any customer approvals or feedbacks that have been received in the initial stages as of now?

Kaushik Roy, Managing Director, PCBL Chemical Limited: Hello?

Speaker 4: Yes.

Pankaj Kedia, Executive Director, Investor Relations, PCBL Chemical Limited: Salla, can you repeat your query?

Radha, Analyst, BNK Securities: Yes. I wanted to understand if there are any customer approvals or feedbacks received with in terms of nano silicon.

Pankaj Kedia, Executive Director, Investor Relations, PCBL Chemical Limited: Sala, we are waiting for the pilot plant of ours to get commissioned. And once the pilot plant is commissioned, we will be sending the approval grade material to a lot of customers. And then we hope that in the next six to nine months, post sending of the approval grade material, we’ll be able to get product approvals. The interest level on this product remains high. And so sometime by the second half of next year, we look forward for a lot of positive news around this.

Kaushik Roy, Managing Director, PCBL Chemical Limited: And in addition to that, based on our lab samples, we have already started producing this material in our lab. So we have kind of approached some of the global names. I cannot take those names for obvious reasons. But there’s a lot of excitement with this product. They have shown a lot of interest.

And as mister Punku just now mentioned, now as we are moving from lab to pilot, once the pilot is ready, which should be by FY 2726. Sorry. FY ’26, another two, three months time. Thereafter, we’ll start submitting the sample, and then the engagement will be much deeper. And we are pretty confident that we’ll get a very positive response from most of them.

Radha, Analyst, BNK Securities: Okay, sir. Thanks, and I’ll do it.

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: Yeah.

Kaushik Roy, Managing Director, PCBL Chemical Limited: Good luck.

Conference Moderator, ICIC Securities Limited: Thank you, sir. Our next question is from the line of Dhruvind Gadakia from SKP Securities. Please go ahead.

Krishan Parwani, Analyst, GM Finance: I just wanted to confirm that given the current situations that are going on overall in the market, for Carbon Black as well as for Aqua Farm for the next two years, what are our expectations with respect to sales realization per ton, EBITDA per ton?

Raj Gupta, CFO, PCBL Chemical Limited: Well, it will also depend on the the level of crude and raw material prices. At a steady level, we believe that whatever drop we had to absorb because of the current market condition, I think we can get back to there in couple of years’ time. So our EBITDA, which used to be around, say, 20. For the first half, it has come down to about INR 16,000. So that lost a margin of INR4000.

We are fairly confident of recovering once the market stabilizes.

Krishan Parwani, Analyst, GM Finance: Okay. That is for Carbon Black and AquaFarm in particular?

Raj Gupta, CFO, PCBL Chemical Limited: Suresh, would you please answer that question?

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: Yes. Raj, I think the principle remains the same. In that sense, a lot of our business actually depends on how the crude oil moves. So net sales realization will definitely also a part of that. It doesn’t mean that it improves the EBITDA level.

So I mean, of course, I mean, is one of the metric which we used. But at the same time, I would say that we’ll be focusing more on how much per ton we are going to make as profits, and that’s what we are currently mostly refining because the product mix also changes significantly. The average selling price that was less important, right? It’s about $115 per kilo. I mean, if I just go by that, then we’ll be looking at improving it to more than $200 actually with the product mix which we’re planning, yes.

Krishan Parwani, Analyst, GM Finance: Okay, sir. Thank you so much.

Conference Moderator, ICIC Securities Limited: Thank you, sir. Our next question is from the line of Krishan Parwani from GM Finance. Please go ahead.

Krishan Parwani, Analyst, GM Finance: Hi, sir. Thank you for taking my question. So I actually joined the call late, so I’m not sure whether you have answered any of these. So just first on the carbon tax side, there’s been a sharp decline in per kg EBITDA. So do you already respond to that?

Why is that?

Raj Gupta, CFO, PCBL Chemical Limited: Yes. Listen. We we kind of responded to that. Two, three things. One, we had to bear the burn of US tariffs.

And just to give you a sense, in Carbon Black business, annually, we were doing about 350 odd crores of business there. In our case, the effective tariff rate is 20%. It’s though it is 50, but we get some exemption, but it is still 20% and which makes it kind of a 70 crore rupees a year kind of an impacted EBITDA level. Now part of that hit our numbers this quarter. So operating expenses to that extent are higher.

So so that’s one. The second is, if you look at crude, it came down steeply in in last quarter from about $72 $73 in the previous quarter to about $63.64 dollars in July June September July September quarter. Now when that happens, then some of the operators who can buy oil from spot and sell in the spot market, they price their product differently. And we have to compete with them, especially considering that the market conditions currently are soft. I mean, the GST deferment also had some impact in pushing the auto sales towards last part of the quarter.

And consequently, I mean, was kind of oversupplied and which further created the pricing pressure. So all of these conditions kind of, you know, hit us in one quarter, and therefore, the impact on the margins.

Krishan Parwani, Analyst, GM Finance: Okay. Great. Thank you for that elaborate answer. Just on that particular inventory losses, if I may, I mean, if I call it that, how much of an impact do you think it would have made on your per kg bill? Let’s say, it is ex of other income INR $14.13.5.

So ex of that inventory losses, would you have been around INR 15, INR 15.5? Just the

Raj Gupta, CFO, PCBL Chemical Limited: I would not I Christian, I would not call it inventory losses because it was not a write down that we had today. But it is only that it gave opportunity to some of the producers to buy lower priced oil, produce and sell at market at lower rate. And we wanted to keep our capacity utilization high, and consequently, we had to compete with them in the spot market. So Yeah. It was more of that.

But if you look at our volumes, volumes have gone up. I mean, despite all the challenges, all the headwinds that we were facing, we could still keep our capacity utilization at almost full level. I mean, we were at about 99% in this quarter.

Krishan Parwani, Analyst, GM Finance: Got it. And just a clarification on that front because I think you mentioned about U. S. Tariffs. And as I see, your exports sequentially has declined to about 62 KtPA compared to 65, 6,300.

So and how much of a volume is to you, guys? Because as far as my understanding is probably not more than 5% to 10% of the overall carbon black sales. Or is it higher?

Raj Gupta, CFO, PCBL Chemical Limited: No. No. It was 5% only. We were doing about 30,000 tonnes. Last year, did 30,000 tonnes and that was the run rate.

But of course, I mean, we see U. S. As a large market, large opportunity for us. U. S.

Imports about 200,000 tonnes a year. And once the tariff settles to some lower level, we obviously would be doing more volumes there. But again, for this 30,000 tonnes, it converts into almost INR $3.50 crore of sales of revenue.

Krishan Parwani, Analyst, GM Finance: Got it. And second question is on the Equiform. I think I did hear that there is a tariff impact also there in the Equiform. But when do you think you can get to a INR70, INR80 crores EBITDA run rate, I think, which we had initially planned or hoped that FY 2026 will see somehow like a 78 gigaude EBITDA under it. So are we still on track to achieve that?

Suresh Kalra, CEO, AquaPharm Chemical, PCBL Chemical Limited: Yes. Thank you. So as I said earlier, we are kind of hovering around 50 crores of EBITDA. And with all the initiatives which I discussed without repeating them, we are looking forward to reach at the end of this year, financial year, with an exit of 75 crores of EBITDA. So while we maintain our current set of business, that new product lines which we have introduced and looking at the positive demand drivers which are coming from Europe and looking at the additional business which we are going to generate from Saudi side, I think with that pipeline, it seems right now very confident for us to reach an exit rate of over 75%, which is something which we promised to you earlier.

So not changing. Just as I said, again, The U. Change in the cyclicality of the business and the tariff situation uncertainty slightly delayed our plans. Something which we would have achieved in quarter three, now possibly would be assuming in quarter four. It’s only changed.

And on the earlier, when I said about the net realization, I think also I want to clarify pretty much, there will a lot of things that will change in the product mix in the future, but I don’t see any significant change in the net realization in the coming quarters. We are looking at a lot of new product development in the next year and two years from which I already discussed that we have our innovation center, we are putting a workshop style approach. With that, we are going add going to a lot of new end of products with very high realization. But in this coming two quarters, I see a lot of improvement from our EBITDA perspective. At the end of quarter four, as I said, I’ll be taking, we’ll be close to INR 1.75 crores.

Krishan Parwani, Analyst, GM Finance: Got it. Got it. And one last clarification, if I may, or rather a question, small question, Satish. So with the kind of EBITDA decline and net debt not going anywhere, do you want to rethink your dividend policy? I mean, you want to conserve that INR200 crores, INR300 crores cash, whatever that you have?

That’s my last question.

Pankaj Kedia, Executive Director, Investor Relations, PCBL Chemical Limited: Raj? Prashant, frankly speaking, in this quarter itself, we saw significant improvement in the working capital days. And we don’t see the current quarter’s performance as an indication of performance going ahead. The fact remains that we are running at over 99% capacity utilization on the Carbon Black business. And in a matter of going forward, you would see significant improvement in the performance.

So cash generation is likely to remain healthy. And that probably gives the confidence to the Board to maintain a strong dividend payout policy.

Krishan Parwani, Analyst, GM Finance: Okay, got it. Thank you so much for answering my question. Wish you and the entire PCVL team a very happy Diwali. Thank you.

Pankaj Kedia, Executive Director, Investor Relations, PCBL Chemical Limited: Thank you, Ashish.

Conference Moderator, ICIC Securities Limited: Thank you, sir. Our next question is from the line of Shashank Kanodia from ICIC Securities. Please go ahead.

Speaker 4: Yes. Good evening, team, thanks for the opportunity. Sir, firstly, wanted to check, is there anything to call out in the employee cost, employee expenses? Because it is a sharp 25% jump on Y on Y basis.

Raj Gupta, CFO, PCBL Chemical Limited: Sashant, our appraisal cycle is July to June. And, therefore, typically, in second quarter, employee expenses go up. Now I mean, if you compare year on year, it has also gone up because of some fresh hiring. We are building we are expanding both organically, and also we are investing in technology. And therefore, we will require more talent in the organization.

And some of this hiring has happened in last one year’s time, and consequently, the effect is visible in the employee cost.

Speaker 4: So, sir, should we assume this is a new run rate for us, quarterly run rate for us?

Raj Gupta, CFO, PCBL Chemical Limited: Yeah. It will be kind of quarterly run rate. There is some onetime also because some senior level employee joined during the period during the quarter, and there were some joining bonuses, etcetera, but that’s not much. That’s $2.03 crore. But more or less, this is indicative of the going forward run rate.

Speaker 4: Right. Secondly, sir, as you rightly mentioned in the first half, EBITDA per ton on the carbon pack business is INR 16,000 to attend. So given the fact that you mentioned that things being bottoming out, so for the full year basis, can we clock an annual run rate of INR 16,000 as EBITDA per ton for this fiscal year and then, you know, returning to a course of 20,000 plus kind of within ’27 onwards? Any take on that front?

Raj Gupta, CFO, PCBL Chemical Limited: We are though it is early in this quarter and the major issues like U. S. Tariffs and all, those are still undistalled. But what we are seeing is that crude has stabilized kind of around $60 $62 And the disadvantage that we faced last quarter because of steep decline in crude price is not likely to be there this quarter. Based on that, we have confidence that quarter three EBITDA per ton should be better than this quarter.

Speaker 4: Right. Sir, for a full year basis, can we do something like 16,000, or is it still early to take a call on that?

Raj Gupta, CFO, PCBL Chemical Limited: I I guess we should do better, Sasan, but, I mean, the situation globally, I mean, both in domestic market as well as in international market, a lot of things are happening one after another. If we if you assume a steady state kind of a scenario, if you assume that this U. S. Tariff situation is, like, going to be resolved with some some kind of rational tariffs, I think we can do much better.

Speaker 4: Right. And, sir, usually, we maintain our target, like, you know, being a 20,000 rupees base case and EBITDA per ton to improve around INR 1 to 2 per kg every year taking us to INR 25 to a kg by FY twenty ten and thirty. So does that really alter that game plan? Or is it still very much possible for us to really traverse that journey?

Raj Gupta, CFO, PCBL Chemical Limited: No. Long term guidance remains same, and we remain on track. All the initiatives that we discussed with you all, those have already been initiated internally, and we are pretty confident that we’ll deliver those numbers. But those numbers, again, I mean, we were at INR 20,000, the market conditions were different. We did not expect so many disruptions.

So this, again, 16,000 is not a normal margin profile of the business. This is due to that. And we, therefore, expect the company to come back to the previous run rate level once we have some solution to these issues. And with all the changes that those are happening at the product mix level, operating leverage and then yield improvement, etcetera, operational efficiency and all, we expect us to be on track for that INR29000, INR30000 sorry, INR24000, INR25000 EBITDA per tonne.

Speaker 4: Right. So just a small feedback, it has taken a long personally written for last seven, eight years since it’s taken a long time explaining to the investment community the enhanced strength of the business in a noncommodized nature. But this kind of performance really, you know, really not match up with the, you know, initial commentary and the things. You know, just a small question, if you can be a little more realistically, if you can give us guidance to the community in future. That’s that’s only feedback from my side.

Raj Gupta, CFO, PCBL Chemical Limited: Actually, Sasank, when we give guidance, those are based on some basic assumptions. Right? Like, external situations remaining stable. And, of course, I mean, today is not a normal situation. If you compare our current year’s performance with, say, three, four years back performance, even in good markets, we used to deliver about 12,000, 13,000 kind of EBITDA.

And now even with so many headwinds, we are still able to deliver some INR 16 thousand kind of EBITDA. So definitely, is improvement in our operating efficiencies, in our size of business, in our product mix. So those changes are visible. And we pretty confident that the numbers that we have communicated to you all, we will deliver them. Long term guidance, we are on track.

We are pretty confident. But short term disruption, it takes us some time to respond to the headwinds. But we are confident of our capability as an organization and as a team. And God willing, a couple of quarters, we’ll again show improvement, start showing improvement.

Speaker 4: Thank you so much and wish all the best.

Conference Moderator, ICIC Securities Limited: Thank you, sir. Thank you, sir. Our next question is from the line of Mr. Kumar Soumya. Please go ahead.

Sanjay Jain, Analyst/Moderator, ICIC Securities: Hi, sir. Good evening. Sir, just one question from my side. This quarter, we had an organic growth on the domestic front. So how sticky is that?

And how do you see the domestic volumes coming out in the rest of the business?

Raj Gupta, CFO, PCBL Chemical Limited: See, market was soft during the quarter and we of course, focus was there on to utilize our capacity, but then we also had to compete with some of the spot players and which is reflecting in our margins. It will take some time for us to reroute our materials to the targeted markets. We’ll have to move more volumes out of domestic market because if we continue to sell more here, it will further impact the pricing and the margins. So I would not call it a very steady state or steady numbers. Of course, we’ll ensure that our capacities are utilized to full, but it will take us couple of quarters before we can find the right market mix market and customer mix.

Sanjay Jain, Analyst/Moderator, ICIC Securities: Got it. And sir, my second question, the point that you highlighted the effective tariff that you have is 20%. Is that because you’re sourcing raw material from US?

Raj Gupta, CFO, PCBL Chemical Limited: Yes. Are importing raw material So we are importing raw material from U. S. And 50% of the price at which we sell in our material in U. S.

Consists of inputs from U. S. So raw material part of that is about 60%. And therefore, that portion becomes exempt from tariffs. So it is only the balance 40% which gets tariffed at 50%.

Got it sir. Thank you. Yes. Thank you.

Conference Moderator, ICIC Securities Limited: Thank you so much. That was the last question. On behalf of PCBL Chemical Limited and by ICIC Securities Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.

Krishan Parwani, Analyst, GM Finance: Thank you.

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