TANFAC Industries Limited reported mixed financial results for the third quarter of FY26, with net profit declining significantly despite maintaining stable revenue levels. The Chennai-based chemical manufacturer announced these results following a Board meeting held on January 21, 2026.

Financial Performance Overview

The company's financial performance for Q3FY26 showed contrasting trends in revenue and profitability metrics:

The most notable aspect of the results was the sharp decline in net profit to ₹1,557.41 crores in Q3FY26, compared to ₹3,480.39 crores in the same quarter of the previous year. This represents a substantial decrease of 55.23%, highlighting significant pressure on the company's bottom line.

Expense Analysis and Cost Pressures

The decline in profitability can be attributed to increased operational expenses across multiple categories. Total expenses rose to ₹15,324.69 crores in Q3FY26 from ₹13,191.67 crores in Q3FY25, representing a 16.17% increase.

Raw material costs emerged as the primary cost driver, increasing by 10.26% to ₹10,949.50 crores. Employee benefit expenses also rose significantly by 19.84% to ₹657.79 crores, partly due to the implementation of New Labour Codes which resulted in an incremental liability of ₹45.50 lakhs.

Nine-Month Performance Trends

The nine-month performance presented a more balanced picture, with revenue showing strong growth while profitability remained under pressure:

For the nine months ended December 31, 2025, revenue from operations grew substantially by 34.53% to ₹51,799.57 crores, demonstrating strong business momentum. However, net profit declined by 20.33% to ₹5,210.55 crores, reflecting the impact of higher operational costs throughout the period.

Strategic Expansion and Capital Plans

The Board of Directors approved several significant strategic initiatives during their January 9, 2026 meeting:

The company plans to establish a 20,000 MTPA downstream fluorinated chemicals plant at its existing manufacturing location with an estimated investment of ₹495 crores. This expansion will be funded through a combination of debt and equity, with the latter raised via Qualified Institutional Placements (QIP) of up to ₹500 crores.

Earnings Per Share and Dividend Information

Earnings per share for Q3FY26 stood at ₹15.61, significantly lower than ₹34.89 in Q3FY25. The company maintained its paid-up equity share capital at ₹997.50 crores with a face value of ₹10 per share. The Board had previously recommended a final dividend of ₹9.00 per equity share for FY25, which was approved by shareholders and distributed.

Regulatory Compliance and Future Outlook

The company operates primarily in the chemicals segment in India and has maintained compliance with all regulatory requirements. The implementation of New Labour Codes from November 21, 2025, has been factored into the current results, with the company continuing to monitor developments for future adjustments. The planned expansion into fluorinated chemicals represents a strategic move to diversify the product portfolio and capture growth opportunities in specialized chemical segments.

Tanfac Industries has secured a major breakthrough in its international business operations by signing a comprehensive long-term supply agreement with a Japanese customer for fluorinated chemicals. This strategic deal represents a significant milestone for the chemical manufacturer, providing substantial revenue visibility and strengthening its global market position.

Contract Details and Financial Impact

The seven-year supply agreement encompasses substantial financial commitments and operational requirements that will shape the company's future growth trajectory.

The agreement provides long-term revenue visibility backed by agreed-upon volumes and represents 37.50% of the recently announced fluorinated chemical plant capacity. This deal significantly strengthens the company's domestic and export portfolio while improving earnings predictability and solidifying its position as a dependable supplier in the global fluorinated chemicals market.

Management Perspective

Mr. Afzal Malkani, Managing Director, emphasized the strategic importance of this contract: "This contract represents a significant step in deepening our engagement with global customers and reflects the confidence placed in our manufacturing capabilities and quality standards. The long-term structure of the agreement provides revenue stability and aligns with our strategy of expanding a value-added downstream fluorinated chemicals portfolio and building durable relationships with global customers."

Corporate Actions and Expansion Plans

The contract announcement coincides with significant corporate developments approved during the Board Meeting on January 9, 2026.

Stock Split Approval

The Board of Directors considered and approved the subdivision of equity shares, subject to shareholder and statutory regulatory approval.

The proposed stock split aims to increase liquidity of equity shares and attract small investors by making the company's equity shares more affordable for investment.

Manufacturing Facility Expansion

The board approved construction of a new downstream fluorinated chemicals manufacturing facility at the existing Cuddalore manufacturing location.

Company Background

Tanfac Industries Limited operates as a joint sector company with Anupam Rasayan India Limited and Tamil Nadu Industrial Development Corporation as promoters. The company commenced commercial manufacturing in March 1985 and operates manufacturing facilities in SIPCOT Industrial Estate in Cuddalore, specializing in hydrofluoric acid and its derivatives. The company maintains accreditation under ISO 9001, ISO 14001, and OHSAS 18001 standards, adhering to globally recognized safety measures.