💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue from continuing operations grew 13% YoY to INR 201.30 Cr in FY25 from INR 178.24 Cr in FY24. However, total consolidated revenue including demerged entities fell 56.4% from INR 461.99 Cr in FY24 to INR 201.30 Cr in FY25 following the demerger of the Water and Construction Chemical businesses.

Geographic Revenue Split

Not disclosed in available documents; however, the group operates subsidiaries in Malaysia and Thailand, indicating international revenue streams alongside domestic Indian operations.

Profitability Margins

Operating profitability on continuing business improved to 6.75% in FY25 from 3.5% in FY24 due to better cost absorption. Reported PAT margin for FY25 stood at 8.72% compared to 6.27% (restated) in FY24, driven by a 57% increase in PAT to INR 17.56 Cr.

EBITDA Margin

Operating margins have historically ranged between 5-8% (FY20-FY23), peaking at 11.06% in 9MFY24. The current EBITDA margin of 6.75% reflects a recovery from the 3.5% low in FY24, though absolute EBITDA remains impacted by the reduced scale of operations post-demerger.

Capital Expenditure

The group has no major capex plans over the medium term as of March 2025. Historical capital work-in-progress was INR 7.51 Cr as of March 31, 2025, which reduced to INR 1.47 Cr by September 30, 2025, suggesting completion of minor projects.

Credit Rating & Borrowing

CRISIL downgraded the long-term rating to 'CRISIL BBB/Stable' from 'CRISIL BBB+/Negative' in 2025 due to the weakened business risk profile post-demerger. Interest coverage is exceptionally healthy, expected to be above 40 times in FY25.

⚙️ Operational Drivers

Raw Materials

Specific chemical names are not listed, but 'Cost of Materials Consumed' represents 57.7% of total revenue, amounting to INR 116.19 Cr in FY25.

Key Suppliers

Not disclosed in available documents; however, the company maintains long-term relationships with key suppliers to mitigate supply chain volatility.

Capacity Expansion

Current installed capacity is not specified in MT. The company focuses on 'asset-light' growth over the medium term with no major planned expansions, relying on existing facilities in Navi Mumbai and other locations.

Raw Material Costs

Raw material costs stood at INR 116.19 Cr in FY25, a 3.3% increase from INR 112.47 Cr in FY24. As a percentage of revenue, material costs decreased from 63.1% to 57.7%, contributing to the margin expansion.

Manufacturing Efficiency

The company maintains a 30-day raw material buffer. Efficiency is driven by the absorption of fixed costs over a higher revenue base in the continuing business, which improved margins by 325 basis points YoY.

📈 Strategic Growth

Expected Growth Rate

13%

Growth Strategy

Growth is targeted through the consolidation of the Material Technologies segment via the amalgamation of Phiroze Sethna Pvt Ltd and Gramos Chemicals India. The company aims for net cash accruals above INR 20 Cr (a ~33% increase from the current INR 15 Cr expectation) to trigger a credit rating upgrade.

Products & Services

Specialty chemicals including metal-treatment chemicals, industrial enzymes, animal health products, and surface-treatment chemicals.

Brand Portfolio

Chembond, Phiroze Sethna, Gramos Chemicals.

New Products/Services

The company is focusing on high-performance coatings and sealants following the merger of Phiroze Sethna and Gramos, though specific revenue contribution % for new launches is not disclosed.

Market Expansion

The group maintains a presence in Malaysia and Thailand through step-down subsidiaries to capture Southeast Asian demand for water and specialty chemicals.

Strategic Alliances

Joint ventures and subsidiaries include Chembond-Calvatis Industrial Hygiene Systems Limited and Chembond Biosciences Limited.

🌍 External Factors

Industry Trends

The specialty chemicals industry is evolving toward consolidation. Chembond is positioning itself by demerging non-core water/construction businesses to focus on material technologies and animal health, which offer different margin profiles.

Competitive Landscape

Intense competition from both large organized players and small unorganized units due to low gestation periods for new plants.

Competitive Moat

The primary moat is the 40+ years of promoter experience and established customer relationships. However, this moat is narrow due to low capital and technology requirements in the industry, allowing easy entry for new competitors.

Macro Economic Sensitivity

Highly sensitive to industrial production growth in India, particularly in sectors requiring metal and surface treatment.

Consumer Behavior

Industrial customers are increasingly seeking integrated 'material technology' solutions rather than standalone chemical products, prompting the company's recent structural reorganization.

Geopolitical Risks

Exposure to Southeast Asian markets (Malaysia, Thailand) subjects the group to regional regulatory and economic shifts.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to NCLT regulations regarding the 2025 scheme of demerger and amalgamation, and standard chemical manufacturing safety and environmental norms.

Taxation Policy Impact

The group continues with the existing tax structure under the Income Tax Act, 1961. Income tax assets (net) stood at INR 4.57 Cr as of September 2025.

Legal Contingencies

The demerger and amalgamation scheme received NCLT approval in April 2025 and was pending ROC filing as of the latest credit report.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the ability to scale the 'continuing' business to offset the 56% revenue loss from demerged operations. Operating margins falling below 5% is identified as a key downward rating trigger.

Geographic Concentration Risk

Significant concentration in India, with secondary exposure to Malaysia and Thailand.

Third Party Dependencies

Moderate dependency on raw material suppliers; however, 'easy availability' of materials reduces the risk of single-source failure.

Technology Obsolescence Risk

Low risk due to the nature of specialty chemicals, but the company is implementing an ESOP 2025 plan to retain technical talent.

Credit & Counterparty Risk

Receivables stood at INR 49.60 Cr as of September 2025. The group maintains an ECL (Expected Credit Loss) provision on debtors, which was reduced by INR 0.20 Cr in H1 FY26, indicating stable collection quality.