Oriental Aromatics Limited , a key player in the fine chemicals sector, has released its financial results for the second quarter, revealing a mixed performance with revenue growth but a significant decline in profitability.

Revenue Growth

The company reported a consolidated revenue of 2.70 billion rupees for Q2, marking an increase from 2.40 billion rupees in the same quarter of the previous year. This 12.5% year-over-year growth in revenue indicates a robust demand for the company's products.

Profitability Challenges

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

• Net Profit: The consolidated net profit saw a sharp decline, falling to 7.00 million rupees from 148.00 million rupees year-over-year, representing a 95.3% decrease.
• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) dropped to 173.00 million rupees from 286.00 million rupees in the corresponding quarter last year.
• EBITDA Margin: The EBITDA margin compressed significantly to 6.36% from 12.09% in the previous year's quarter.

Financial Position

The company's financial position as of September 30 shows:

Cash Flow and Operations

Oriental Aromatics reported negative cash flow from operating activities, with a net outflow of 30.42 crore rupees for the half-year ended September 30. This contrasts with a positive cash flow of 14.71 crore rupees in the same period last year, indicating potential working capital challenges.

Segment Performance

The company continues to operate in a single reportable segment, 'Fine Chemicals', as per the requirements of IND AS 108.

Subsidiary Performance

The company's wholly-owned subsidiary, Oriental Aromatics & Sons Limited, which commenced commercial production on November 12, 2024, at its greenfield manufacturing facility in Mahad, Maharashtra, has contributed to the consolidated results. The subsidiary reported losses (net of deferred tax credit) of 6.02 crore rupees for the quarter ended September 30.

Investors and stakeholders may be watching closely to see how Oriental Aromatics addresses the profitability challenges while maintaining its revenue growth in the coming quarters. The company's ability to improve its EBITDA margin and bottom line could be crucial for its financial health and market performance.

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.