💰 Financial Performance

Revenue Growth by Segment

Chlor Alkali segment revenue for Q2FY26 was INR 43.66 Cr, a decrease of 1.82% YoY from INR 44.47 Cr. The OPVC segment revenue for Q2FY26 was INR 27.00 Cr, a significant decline of 21.81% YoY from INR 34.53 Cr. Overall standalone revenue for FY25 was INR 322.09 Cr, down 1.59% from INR 327.29 Cr in FY24.

Geographic Revenue Split

Not disclosed in available documents, though operations are concentrated in Puducherry (Chlor-Alkali), Sricity, Andhra Pradesh (OPVC), and Karaikal (Subsidiary).

Profitability Margins

Standalone PAT margin for FY25 was 4.72% (INR 15.22 Cr), down from 9.16% (INR 29.99 Cr) in FY24. The decline is attributed to lower ECU realizations in the chemical segment and higher finance costs which rose 429% YoY to INR 4.92 Cr.

EBITDA Margin

Standalone Operational EBITDA margin for FY25 was 16.54%, a decrease of 107 bps from 17.61% in FY24. For Q2FY26, the OPVC segment maintained a high EBITDA margin of 35.96%, while the Chlor Alkali segment reported a negative EBITDA margin of -2.91% due to pricing pressures.

Capital Expenditure

The company is investing INR 60 Cr in technology modernization for the Chlor-Alkali business to improve power efficiency by July 2025. Additionally, INR 107.16 Cr was utilized in investing activities during FY25, primarily for capacity enhancements.

Credit Rating & Borrowing

CARE Ratings assigned a 'CARE A-; Stable' rating for long-term bank facilities (INR 69.50 Cr) and 'CARE A2+' for short-term facilities (INR 50.00 Cr). Borrowing costs are impacted by a 429% increase in finance costs to INR 4.92 Cr in FY25 due to increased debt for expansion.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Salt and Power for Chlor-Alkali and PVC Resin for the OPVC segment. Power is a critical cost driver, with the company targeting 45% renewable energy sourcing to mitigate costs.

Capacity Expansion

The company is expanding OPVC pipe presence across new geographies with benefits expected from Q4FY26. A new subsidiary, Chemfab Hiitech Piping Limited, was incorporated in October 2025 to further expand the piping business.

Raw Material Costs

Not disclosed as a specific percentage of revenue, but the company noted that falling caustic soda prices (ECU realizations) since Q4FY23 have adversely impacted the margin spread against raw material inputs.

Manufacturing Efficiency

The company is focusing on 'cutting-edge green technologies' and technology modernization to improve power efficiency in the Puducherry division by July 2025.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

Growth will be driven by reaching a Total Operating Income (TOI) target of over INR 500 Cr through the expansion of the OPVC segment and the commencement of the Karaikal subsidiary's projects. The strategy includes geographic expansion of OPVC pipes, technology modernization to lower Chlor-Alkali production costs, and the incorporation of Chemfab Hiitech Piping Limited for specialized piping products.

Products & Services

Caustic Soda Lye, Chlorine, Hydrogen, Hydrochloric Acid, Sodium Hypochlorite, and OPVC (Oriented Polyvinyl Chloride) pipes and fittings.

Brand Portfolio

CHEMFAB

New Products/Services

Expansion into high-quality OPVC pipes of all sizes and varieties through the newly incorporated subsidiary Chemfab Hiitech Piping Limited (October 2025).

Market Expansion

Expanding OPVC pipe presence into new geographies with visible results expected by Q4FY26.

🌍 External Factors

Industry Trends

The Chlor-Alkali industry is facing a downturn in caustic soda prices since Q4FY23. Conversely, the OPVC pipe industry is growing due to government infrastructure projects and the adoption of PVC-O over traditional materials.

Competitive Landscape

The company competes in the fragmented caustic soda market and the growing plastic pipes market, specifically targeting the high-performance OPVC niche.

Competitive Moat

The company's moat is built on its diversified product profile (Chemicals + OPVC) and a strong relationship with government EPC contractors. The shift to renewable energy (45%) provides a sustainable cost advantage in a power-intensive industry.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending, particularly the Jal Jeevan Mission, which drives 70-80% of the OPVC order book.

Consumer Behavior

Increased adoption of PVC-O pipes by state government boards for infrastructure projects due to superior technical properties.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to SEBI (Prohibition of Insider Trading) Regulations, with the company recently amending its Code of Conduct in October 2025. Manufacturing is subject to chemical industry safety and environmental norms.

Environmental Compliance

The company is implementing 'Green Technologies' and increasing renewable energy sourcing to 45% to comply with environmental goals and reduce costs.

Taxation Policy Impact

The effective tax expense for FY25 was INR 6.63 Cr on a consolidated basis.

Legal Contingencies

The auditors reported no qualifications or adverse remarks in the CARO reports for the Parent or its subsidiary for the period ended March 31, 2025.

⚠️ Risk Analysis

Key Uncertainties

The primary risk is a sustained drop in ECU realizations which could significantly reduce cash accruals. Inordinate delays in executing the INR 60 Cr modernization project or Karaikal projects also pose risks.

Geographic Concentration Risk

Manufacturing is concentrated in Puducherry and Andhra Pradesh, making it sensitive to regional industrial policies and power tariffs.

Third Party Dependencies

High dependency on power utilities and EPC contractors for the majority of the OPVC segment's revenue (70-80%).

Technology Obsolescence Risk

The company is mitigating technology risk by investing INR 60 Cr in modernization to replace older, less efficient production technologies.

Credit & Counterparty Risk

Provision for Expected Credit Loss (Net) was reduced by INR 71.35 Lakhs in FY25, suggesting stable receivables quality, though bad receivables of INR 78.27 Lakhs were written off.