Excel Industries reported a decline in revenue for the second quarter, primarily due to subdued demand in the agrochemical segment. However, the company has announced a significant new contract manufacturing agreement, signaling efforts to diversify its revenue streams.

Q2 Financial Highlights

Excel Industries experienced a revenue decline in Q2, with the following key figures:

The company attributed the revenue decline to subdued demand in the agrochemical segment, impacted by an extended monsoon season and low demand for certain key products. Exports contributed 17.70% of the total revenue for the quarter.

H1 Performance

For the first half, Excel Industries reported:

• Net operating revenue: ₹580.00 crores (9% increase year-over-year)
• EBITDA: ₹72.00 crores (down from ₹88.00 crores in H1 of the previous year)
• Profit after tax: ₹52.00 crores (20% decrease year-over-year)

New Contract Manufacturing Agreement

Excel Industries announced a significant development in its contract manufacturing business:

• Signed a binding term sheet with a reputed Indian specialty chemicals company
• Five-year contract for manufacturing and supply of a specialty chemical
• Estimated investment: ₹40.00 crores for setting up a new dedicated production line
• Expected annual revenue: ₹35.00-40.00 crores (excluding raw material costs)
• EBITDA accretive arrangement
• Commissioning expected by June 2026

This agreement marks a strategic step towards strengthening Excel's position in contract manufacturing and reducing dependence on the agrochemical sector.

Business Outlook

• Full-year EBITDA margin guidance maintained at 13-15%
• Q3 expected to remain lean due to typical agrochemical sector trends
• Normalization of demand anticipated in Q4, subject to inventory clearance
• Current capacity utilization stands at 70-75% across all manufacturing sites

Strategic Focus

Excel Industries remains committed to building a resilient and future-ready organization by:

1. Leveraging core strengths in specialty chemicals
2. Focusing on robust process R&D and integrated manufacturing
3. Maintaining long-standing customer relationships
4. Prioritizing environment, health, safety, and sustainability

The company's new R&D center is on track to become operational in Q3, reflecting its ongoing commitment to innovation and product development.

As Excel Industries navigates through the current market challenges, its strategic initiatives in contract manufacturing and R&D investments are expected to drive long-term growth and reduce dependence on the cyclical agrochemical sector.

Excel Industries Limited has reported a decline in revenue for Q2FY26, citing prolonged monsoon and weak demand in key products. However, the company has secured a significant contract manufacturing agreement, potentially diversifying its revenue streams.

Financial Performance

For the quarter ended September 30, 2025 (Q2FY26), Excel Industries reported:

• Revenue of ₹270.00 crores, down from ₹309.50 crores in Q1FY26
• H1FY26 revenue stood at ₹580.00 crores

The company attributed the revenue decline to:

• Prolonged monsoon affecting agro demand
• Weak offtake in key products

Despite the challenges, Excel Industries maintained its export performance:

• Exports accounted for 17.70% of total revenue in Q2FY26
• For H1FY26, exports contributed 20.30% of total revenue

Profitability

The company's profitability was impacted by the lower demand:

• EBITDA margins were 11.10% for Q2FY26 and 12.50% for H1FY26
• PAT (Profit After Tax) margin stood at 6.90% for Q2FY26 and 9.00% for H1FY26

New Contract Manufacturing Agreement

In a strategic move to diversify its revenue sources, Excel Industries announced:

• A 5-year contract manufacturing agreement with a leading Indian specialty chemicals company
• The deal is valued at ₹35.00-40.00 crores per annum
• This agreement aims to reduce the company's dependence on the agrochemicals sector

Operational Highlights

Excel Industries has also made progress in its operational capabilities:

• Initiated a capacity expansion for one of its biocides
• The new capacity came on stream in October 2025

Market Position

Despite the challenging quarter, the company stated that it continues to:

• Maintain market share in key products
• Focus on diversification of its product portfolio

While the revenue decline presents short-term challenges, Excel Industries' new contract manufacturing agreement and capacity expansion efforts suggest a proactive approach to navigating market fluctuations and diversifying its business model. The company's ability to maintain export performance and market share in key products during a difficult quarter may indicate resilience in its core operations.