Oriental Aromatics Limited (OAL) has reported a 4.5% year-on-year growth in operating revenue for the first quarter, reaching INR 226.00 crores. However, the company faced margin pressures, with EBITDA margins at 8.03%, down from 10.29% in the corresponding quarter of the previous year.

Key Financial Highlights

• Operating revenue: INR 226.00 crores (4.5% YoY growth, 10.9% QoQ decline)
• EBITDA: INR 18.00 crores (compared to INR 22.00 crores in the same quarter last year)
• EBITDA margin: 8.03% (down from 10.29% YoY, up from 7.62% QoQ)
• Net profit after tax: INR 0.50 crores

Operational Performance

OAL achieved a 10% year-on-year increase in production volume and a 4% growth in group sales volume. This growth was primarily driven by enhanced output from the company's hydrogenation plant and initial sales contribution from the Mahad facility.

Segment-wise Performance

Camphor and Terpenes

• The company has secured adequate feedstock ahead of the festive production cycle.
• OAL maintains value-based pricing in premium religious and household formulated camphor, as well as powdered camphor and terpene chemicals.

Fragrance Division

• Strong demand from global customers continues.
• The company is focusing on winning fragrances optimized for premiumization and performance.

Specialty Aroma Ingredients

• Incremental output from the hydrogenation facility and growing acceptance of Evermoss by global customers are encouraging signs.

Mahad Facility Update

• Currently running at 20-30% capacity
• Revenue contribution of INR 38.00 lakhs in the quarter
• The company expects stronger performance in the coming quarters as the facility ramps up

Management Commentary

Shyamal Bodani, Executive Director, stated, "Delivering this performance in a traditionally slow quarter for camphor and select aroma chemicals reinforces the strength of our diversified portfolio and our unwavering customer focus."

Parag Satoskar, Chief Executive Officer, commented on the Mahad facility, saying, "We are pretty encouraged by the feedback we are getting from the samples and the commercial shipments that are being sent to customers and that are also being used internally by our fragrance division."

Outlook

• The company maintains its EBITDA guidance of 8-10% for the fiscal year.
• Management expects stronger performance in Q2 due to festive demand.
• OAL is closely monitoring potential headwinds from 50% tariffs on certain Indian exports but emphasizes its diversified product mix as a natural cushion.

Oriental Aromatics Limited remains focused on optimizing its recent investments and leveraging its diversified portfolio to navigate through market challenges while positioning itself for growth in the coming quarters.

Oriental Aromatics , a leading manufacturer of aroma chemicals, camphor, fragrances, and flavours, has released its financial results for the first quarter, revealing a mixed performance with revenue growth but significant profitability challenges.

Revenue Growth and Volume Increase

The company reported a 4.5% year-on-year increase in revenue, reaching INR 2,255.00 crore for Q1. This growth was supported by a 10% increase in production and a 4% rise in sales volumes compared to the same quarter last year. The higher output from the company's hydrogenation plant contributed to the volume growth.

Profitability Under Pressure

Despite the revenue growth, Oriental Aromatics faced substantial profitability challenges:

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) declined by 18.5% to INR 181.00 crore.
• EBITDA margin contracted to 8.03% from 10.29% in the same quarter last year.
• Net profit saw a dramatic drop of 95.5% to INR 5.00 crore.
• Earnings per share (EPS) fell by 95.4% to INR 0.15.

Factors Affecting Performance

The company attributed the margin pressure to several factors:

1. Ramp-up of the new Mahad plant
2. Planned maintenance at the Bareilly facility
3. Temporary slowdown in specialty chemicals due to global geopolitical factors
4. Forex fluctuations impacting costs

Raw Material Stability and Future Outlook

Oriental Aromatics noted that raw material prices remained stable during the quarter. The management expressed optimism about margin recovery in the coming quarters as the Mahad plant reaches full capacity.

Segment Performance

The company's business is divided into several segments:

• Aroma Chemicals and Camphor
• Flavours and Fragrances

While specific segment-wise performance was not detailed, the company mentioned that there was a temporary slowdown in specialty chemicals due to global factors.

Geographical Sales Distribution

For the previous fiscal year, Oriental Aromatics reported a balanced geographical sales mix:

Financial Position

As of June 30, Oriental Aromatics had a market capitalization of approximately INR 12,834.00 crore. The company's share price closed at INR 381.35 on that date, with a 52-week high/low of INR 656.00/252.40.

Conclusion

While Oriental Aromatics demonstrated resilience with revenue growth and increased production volumes, the significant decline in profitability presents challenges. The company's focus on operational efficiencies and the expected ramp-up of its Mahad plant will be crucial factors to watch in the coming quarters as it aims to recover its margins and strengthen its position in the specialty aroma chemicals market.