CAMLINFINE - Camlin Fine

📊 NSE: CAMLINFINE 🏢 Chemicals 📅 Last Updated: 12/13/2025 20:39

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 10.7% YoY in H1FY26 to INR 883.38 Cr. In Q2FY26, the Blends segment grew 78.4% YoY (from INR 44.5 Cr to INR 79.4 Cr), while Specialty Ingredients grew 9.1% YoY to INR 461.4 Cr. Aroma (Vanillin) volumes increased 40% QoQ, though net realization remained subdued due to global tariff situations.

Geographic Revenue Split

Q2FY26 revenue contribution: CFS India 53% (INR 244.0 Cr), CFS Mexico 26.1% (INR 120.1 Cr), CFS North America 15.1% (INR 69.4 Cr), CFS Brazil 8.7% (INR 40.0 Cr), CFS Vitafor 8.7% (INR 40.2 Cr), and CFS Europe 2.8% (INR 12.9 Cr).

Profitability Margins

Gross margins declined by approximately 200 bps YoY due to pricing pressure. PAT margin for Q2FY26 stood at -1.31% (Loss of INR 6.0 Cr) compared to 10.17% (Profit of INR 42.46 Cr) in Q2FY25, primarily impacted by lower realizations in the Straights business and costs associated with discontinued operations.

EBITDA Margin

Adjusted EBITDA margin for Q2FY26 was 7.27% (INR 33.41 Cr), a significant decline from 12.34% (INR 51.49 Cr) in Q2FY25. The margin compression is attributed to TBHQ and BHA prices falling from $8.5-$9.0 to $7.0, while fixed production costs remained stable.

Capital Expenditure

Capital Work-In-Progress (CWIP) stood at INR 14.65 Cr as of September 2025, up from INR 9.73 Cr in March 2025. The company is investing in the conversion of its Vanillin plant and technical upgrades to support the 4,000-ton production target for next year.

Credit Rating & Borrowing

Total borrowings as of September 2025 were INR 641.73 Cr (INR 290.07 Cr non-current and INR 351.66 Cr current). Finance costs for H1FY26 were INR 34.74 Cr, representing a 30% decrease from INR 49.59 Cr in H1FY25 due to debt management.

⚙️ Operational Drivers

Raw Materials

Key raw materials include precursors for TBHQ, BHA, and Vanillin. Raw material consumption accounted for 53.7% of total revenue in Q2FY26 (INR 246.72 Cr).

Import Sources

Not explicitly disclosed in available documents, though the company operates manufacturing hubs in India, Mexico, and Europe, suggesting localized sourcing in these regions.

Capacity Expansion

The Vanillin plant is currently running at 50% capacity utilization. The company plans to scale production to 100% to achieve a target of 4,000 tons in FY27, which is expected to reduce per-unit costs by $1.0-$1.5.

Raw Material Costs

Raw material costs as a percentage of revenue increased to 53.7% in Q2FY26 from 51.7% in Q2FY25. This 200 bps increase is driven by the inability to pass on costs as finished goods prices (TBHQ/BHA) dropped by 18-22%.

Manufacturing Efficiency

Vanillin manufacturing efficiency is currently hampered by 50% utilization. Moving to 100% utilization is projected to capture a $4.0 margin per kg on incremental sales, as all fixed costs are already absorbed at current levels.

Logistics & Distribution

Other expenses, including logistics and marketing, rose to INR 119.41 Cr in Q2FY26 (26% of revenue) from INR 102.07 Cr YoY, driven by the expansion of the Blends marketing team.

📈 Strategic Growth

Expected Growth Rate

18-20%

Growth Strategy

Growth will be driven by a 20% CAGR in the Blends business through an expanded global marketing team and the acquisition of Vinpai in France (78.68% stake). Additionally, Vanillin volumes are targeted to reach 4,000 tons next year as anti-dumping duties in Europe and de-stocking in the US conclude.

Products & Services

Antioxidants (TBHQ, BHA), Aroma chemicals (Vanillin, Ethyl Vanillin), and customized shelf-life extension Blends for food, pet food, and animal nutrition.

Brand Portfolio

CFS, Vitafor (acquired June 2024), and Vinpai (acquisition in progress).

New Products/Services

Integration of Vinpai's product portfolio is expected to contribute to the 20% growth target in the Blends vertical starting Q3FY26.

Market Expansion

Expansion into the French and broader European markets via the Vinpai acquisition and strengthening of the North American marketing team.

Strategic Alliances

Acquisition of 78.68% of Vinpai (France) for Euro 3.60 per share, with a simplified cash tender offer (OPAS) planned for the remaining 10-21% stake.

🌍 External Factors

Industry Trends

The industry is shifting toward customized antioxidant blends rather than straight ingredients. Camlin is positioning itself by acquiring Vitafor and Vinpai to move up the value chain into specialized food solutions.

Competitive Landscape

Facing heightened competition from local Indian manufacturers in the Straights business (TBHQ, BHA), leading to a price war that reduced realizations by ~$2 per kg.

Competitive Moat

Moat is built on vertical integration (producing precursors for Vanillin) and a global distribution network. However, this is currently challenged by low-cost local competitors in the TBHQ/BHA segments.

Macro Economic Sensitivity

High sensitivity to global inflation, particularly in the US, which has led to 'sluggishness' in the high-margin Blends business.

Consumer Behavior

Shift toward clean-label and sustainable food ingredients, driving the company's 20% growth focus on the Blends segment.

Geopolitical Risks

Anti-dumping duties in Europe on Vanillin have disrupted normal trade flows, though they are expected to benefit the company once local channel stocks are cleared by Q1FY27.

⚖️ Regulatory & Governance

Industry Regulations

Subject to French Stock Market Authority (AMF) regulations for the Vinpai acquisition and SEBI LODR for Indian operations. European anti-dumping duties on Vanillin are a key regulatory driver of current pricing strategy.

Environmental Compliance

The company tracks R&D and Capex specifically for environmental impact, as noted in the FY25 MDA report.

Taxation Policy Impact

Effective tax rate is volatile due to losses in discontinued operations; Q2FY26 saw a tax expense of INR 5.91 Cr despite a marginal PBT loss.

Legal Contingencies

Liquidation proceedings are underway for the China subsidiary. No specific values for pending court cases were disclosed in the provided transcripts.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timeline for Vanillin price recovery; if realizations stay below $12/kg, the plant's return to 100% capacity may not yield the projected 20% margin improvement.