PCBL Chemical reported a mixed performance in Q2 FY26, with strong volume growth offset by margin pressures due to global headwinds and domestic market challenges. The company achieved a 5% quarter-on-quarter increase in carbon black sales volume, reaching 161,728 metric tons with a capacity utilization of 99%.

Financial Highlights

• Consolidated revenue: Rs. 2,164.00 crores
• Consolidated EBITDA: Rs. 278.00 crores
• EBITDA per ton: Approximately Rs. 16,000.00 (down from previous levels of Rs. 20,000.00)

Key Factors Affecting Performance

• US tariffs: Effective 20% rate on exports, impacting about 5% of total volume
• Crude oil price volatility
• GST-related purchase deferrals in the auto sector

Segment Performance

Power Generation

• Record levels achieved: 223 MUs
• External sales: 138 MUs

Aquapharm Chemical Performance

• Revenue: Rs. 395.00 crores (9% topline growth)
• EBITDA: Rs. 48.00 crores

Strategic Initiatives and Outlook

1. Debt Reduction: Reduced gross debt by over Rs. 300.00 crores since March 2025
2. Working Capital Improvement: Improved cycle by 12 days, releasing Rs. 240.00 crores of cash
3. Expansion Projects:
   • 90,000 MTPA rubber line in Tamil Nadu under commissioning
   • Specialty black lines in Gujarat and Mundra progressing

PCBL Chemical's Managing Director, Kaushik Roy, expressed optimism about future recovery: "We believe that this phase has largely bottomed out and expect a steady recovery in profitability in coming quarters."

The company is focusing on operational excellence to navigate current challenges while maintaining its long-term growth strategy. Management expects EBITDA per ton to improve from the current Rs. 16,000.00 level, potentially returning to previous levels of Rs. 20,000.00 as market conditions stabilize.

Aquapharm Chemical, a subsidiary of PCBL Chemical, is targeting an exit rate of Rs. 75.00 crores EBITDA by year-end, driven by new product lines and expanding market reach.

Despite short-term headwinds, PCBL Chemical remains committed to its expansion plans and long-term growth objectives, positioning itself to capitalize on market recovery and emerging opportunities in specialty chemicals and advanced materials.

PCBL Chemical Limited , a leading chemical manufacturer, has reported mixed results for the second quarter, with growth in sales volume but a decline in net profit. The company has also announced significant capacity expansion plans.

Financial Performance Highlights

PCBL Chemical's consolidated revenue for Q2 stood at ₹21.64 billion, showing a marginal increase from the previous year. However, the company's net profit dropped by 50% to ₹615.00 million, compared to ₹1,230.00 million in the same quarter of the previous year.

The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) decreased to ₹2.78 billion from ₹3.63 billion in the corresponding quarter last year, marking a 23.42% decline. Consequently, the EBITDA margin compressed to 12.85% from 16.80%, a reduction of 395 basis points.

Operational Performance

• Carbon Black sales volume increased 5% quarter-on-quarter to 161,728 MT
• Specialty Black sales volume grew 9% QoQ to 17,505 MT
• Power generation increased 7% year-on-year to 223 MU
• The subsidiary Aquapharm Chemical generated revenue of ₹3.95 billion with EBITDA of ₹0.48 billion

Financial Management

• Working capital cycle improved by 12 days in H1, releasing around ₹2.40 billion of cash
• Gross debt reduction of over ₹3.00 billion since March

Expansion Plans

PCBL Chemical has announced ambitious expansion plans:

• A specialty black line for super-conductive grades is expected to start commercial production from November
• A 20,000 MTPA specialty blacks line commissioning is likely to be preponed to March
• The company targets a 50% capacity addition over the next 5 years across all product segments

Interim Dividend Declaration

Despite the profit decline, PCBL Chemical's Board of Directors has declared an interim dividend of 600%, which translates to ₹6 per equity share of face value ₹1 each. The record date for this dividend has been set as Monday, October 27.

Outlook

The growth in sales volumes for both Carbon Black and Specialty Black products, along with the announced capacity expansion plans, indicates that PCBL Chemical is positioning itself for future growth. However, the significant drop in profitability despite stable revenues may raise concerns about cost management and operational efficiency.

Investors and analysts will likely focus on how the company plans to address the profitability squeeze while executing its expansion strategy. The ability to improve margins while growing capacity will be crucial for PCBL Chemical's future performance.

The company's efforts to improve its working capital cycle and reduce debt are positive signs, potentially providing more financial flexibility as it pursues its growth plans.