Navin Fluorine International Limited (NAVINFLUOR) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Naveen Florin International Limited conference call hosted by MUFG. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your test on phone. I now hand the conference over to Ms. Pooja Swamy from MUFG. Thank you, and over to you, ma'am. Please proceed.

Thank you, Shailendra. Good evening, everyone, and welcome to Q4 and FY26 Earning Conference Call of Naveen Florian International Limited. Today on the call, we have with us Mr. Vishad Mofatlal, Chairman, Mr. Nitin Kulkarni, Managing Director, and Mr. Anish Ganatera, Chief Financial Officer. Before we proceed with the call, I would like to mention that this call will contain forward-looking statements about the company, which are completely based on beliefs, opinions, and expectations as of today. Actual results may differ materially. These statements are not the guarantee of our future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is given on page 2 of the investor presentation of the company, which is uploaded on Stock Exchanges and on the company's website. With this, I hand over the call to Mr. Vishad Mufatla for his opening remarks. Thank you, and over to you, sir.

Good evening, everyone, and a warm welcome to Naveen Florian International Limited's Quarto 4 and Full Year FY26 Earnings Call. I am joined today by our MD, Mr. Nitin Kulkarni, our CFO, Mr. Anish Ganatra, along with Ms. Payal D'Away, our Investor Relations Advisor from MUFG, in time. FY26 has been a resilient year for Naveen Florian. Marked by strong deliveries despite a challenging global environment and geopolitical uncertainties. By staying focused on our long-term priorities and leveraging capabilities, we remain committed to navigating these uncertainties with discipline and agility. I am pleased to report that the company has delivered six consecutive quarters of revenue and profitability growth. Reflecting the strength of our business ethos, consistent execution, and sustained demand across key segments. This momentum underscores management's focus on disciplined growth, market expansion, and long-term value creation for our stakeholders. I am glad to inform you that the Board in today's meeting has declared a final dividend of Rs.8.6 per equity share, 430% of the face value of Rs.2 per share. The growth in this fiscal is supported by contribution across the business verticals, led by structural demand drivers and constructive pricing environment. This diversification across products, customers, and geographies remains central to Naveen Florin's long-term strategy. Our strong balance sheet continues to provide flexibility, while our robust order book across verticals underscores the confidence our customers place in us. With proven capabilities and operational efficiencies, we believe that innovation-led companies like us Our best position to capture long-term growth. As we look ahead to the new financial year, we see commissioning and ramping up of additional HFC capacities of 32, MPP, and the upcoming Kemos project. These projects will transition from investment phase to revenue generation in this year. We will continue to focus on a balance of product and service play, with emphasis on niche chemistries, to drive differentiated growth and value creation. We will continue to deepen and broaden our customer relationships across geographies. We will maintain a strong balance sheet with continued focus on capital allocation to deliver long-term shareholder value. I would like to thank our customers for trusting us. Our employees whose dedication has made every achievement possible, our board for their continuous guidance, and our shareholders for believing in us. With this, I will now hand over the call to Nitin to take you through the operational and segment-wise performance in more detail. Thank you.

Thank you, Vishat Bhai, and good evening, everyone. Let me walk you through the segmental performance and key operational developments. I am pleased to share that we have reported a growth of more than 2x in EBITDA and PAT for the year. Across all three business verticals, our performance is a continuation of operating momentum and execution discipline. Starting with our HPP business, Quarter 4 FY26 revenue grew 20% year-on-year at Rs. 393 crores, driven by improved realization and volume growth. Our AHF plant was successfully commissioned, and commercial supplies have comments during the last quarter. Our additional HFC capacity expansion, equivalent to 15,000 metric tons per annum of R32, remains on track for commissioning in Q3 FY27. The HPV business continues to benefit from a constructive global demand supply environment, increasing adoption of low GWP refrigerants, and export opportunities. Moving to Specialty Chemicals Vertical, Q4 FY26 revenue grew 39% year-on-year at Rs.360 crores, reflecting strong execution in both existing and new molecules. We continue to see scale-up in ongoing products supported by customer confidence and long-term contracts. Our Daesh MPB de-bottlenecking CAPEX is progressing well and is targeted for commissioning in Q3 FY27. The KMOS project is on track and expected to be completed by 8th June, early July. Importantly, specialty chemical growth is backed by order visibility and a robust pipeline for FY27. Turning to CDMO business, Quarter 4 FY26 revenue grew by 61% year-on-year to Rs. 186 crores. This growth was driven by balance mixed of early, late-stage, and commercial molecules across therapeutic areas such as oncology, respiratory, cardiovascular, neurology, and animal health. To sum up, FY26 has reinforced our belief in the strength of Naveen Florin's integrated platforms. Our near-term priorities are efficient execution of unhoused capex and improving return ratios while scaling growth. Before concluding, I would like to take a minute to address the current geopolitical environment. We are closely monitoring and navigating the developments with agility, particularly given implications on energy prices, logistics, and supply chain disruptions. With that, I would like to hand over the call to Anish for his business.

Thank you, Nitin. Good evening, all, and I welcome you all to the earnings call. Moving on to the financial performance of the company in Q4 and FY26, let me begin with the financial highlights for the quarter ended March 31st. Consolidated revenues stood at 938 crores, registering a 34% year-on-year growth. Operating EBITDA increased 80% year-on-year to 321 crores with margins expanding to 34.2%. Operating PBT grew 118% year-on-year to 251 crores. Profit after tax stood at 213 crores, reflecting a growth of 124%. For the full year FY26, net operating revenues grew to 3,314 crores, reflecting a growth of 41%, supported by broad-based momentum across specialty chemicals, CDMO, and HPG. Operating EBITDA more than doubled to 1,082 crores, with margins at 32.6%, an expansion of 992 basis points, reflecting a favorable mix in operating leverage. Operating PVT grew 142% year-on-year to 815 crores as against 336 crores in FY25. Profit after tax stood at 664 crores as against 289 crores. Our net working capital days have improved to 74 days versus 90 days, reflecting a stronger operational efficiency and better conversion cycle. Going forward, the net working capital is expected to be in the range of 75 to 80 days versus our previous indicative guidance of 90 days of sales. As of 31st March 2026, our net debt to equity stood at 0.01x, negligible, while both ROE and ROSI improved at 20% and 21% respectively. Thank you, and we can now open the floor for questions and answers.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their test phone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sanjay Chan from ICICI Securities. Please go ahead.

Thank you. I have a few questions. Let me start with the material situation right now. I have two questions. First, from the availability of raw materials, including but not limited to sulfur and methanol. Have we faced any challenge of the key raw material availability before contracts have not been returned or suppliers have not been promised? How is the situation there? Because I think it remains very volatile and uncertain. And a related question is on the inflation of the... So, 45 days' inventory will be sailed through possibly a better March and April, but we should be hitting a level where inventory is now completely depleted. That means it's necessarily increased rising to the contracts which we are working, and spot prices probably adjust much faster, but how do we think about the passing on inflation of the contracts like HFO, agrochemical, and CDMO? Number two, on the refrigerant gas, there is a notification which the government has put up, and now I think the plan can come up until 2027, and there could be a situation where the competition was not earlier, looking as significantly at the capacity. In 2027, probably we are in the capacity now in excess of 1,25,000 in India. That situation is very different than what we were earlier hoping for CY26. Now, how does it change the scenario for pricing? Because in our presentation, we are talking of a revenue potential from new R32 from a tune of 600 to 825 crore. So, at our lower end, we are looking at a price which is 400 crore. Probably half of the price for red sheet is trading at. So, why do you think you are looking at 400 as a bottom pricing? Okay. Number three probably is the margin. We appreciate that you have been calling out margin, some benefit coming up in currency, but can you help us with the number? What is the margin benefit which has come in purely from the currency? These are my initial questions. Thank you.

Sorry, Sanjeev. Can you repeat your last question on margin?

So, we have been calling out benefit because of the currency depreciation, which has adding to the margin of 34%. Now, what is the margin benefit purely coming from the foreign?

Okay, so you've got a couple of questions. Thanks again. Starting from your comment on the mid-ease situation and the availability of raw material, again, as we all know, the situation continues to remain volatile. As we mentioned before, our focus is on ensuring that we remain vigilant to this, focus the efforts of the management with a lot of discipline, and at the same time, maintain agility in how we respond. So to be honest, this in some ways feels like the COVID-19, where you had a call every day morning with the leadership

and you would sort of look at what's happening in the market and how you sort of mitigate any events.

So far, we have not seen any disruption. We have seen inflation go through, but fortunately, we've also been able to pass on a lot of these back to the customers. There could be some lag effect, but other than that, we are pretty confident of passing on the price increases

off to the finished product.

So we don't see a material risk, save for what may happen tomorrow, I don't know. But as we talk now, we don't see a material risk coming from there. On your question on inflation and inventory depletion, we are maintaining healthy level of stocks.

So far, we have not had a situation where we have not been able to get materials.

Yes, the pricing has gone up, and that is kind of universally known, but we have not had a situation where we have had to shut anything down for want of raw materials or anything like that. And customer demand has remained robust during this period.

There is no demand disruption because of inflation is what we are telling us. It's just a restocking demand that is creating an inflation.

So, in fact, I mean, both the situation, there may be further restocking demand that will come up, because there will be some

pent-up thing that will open up, one situation improves.

But currently, we are not seeing any destruction of demand in our numbers as we speak now as well, right? Now, your point on refrigerant gas notification, you know, 27 as the... for bringing any new capacities. I mean, that notification still doesn't change the position. And you should remember that quota is only going to be available as aligned with the Kigali protocol, which is 24, 25, 26-ampage production, and 65% of your GWB equivalent or HCFCs of 2009 and 2010, right? So that doesn't change. And, you know, while we can bring in capacity, I think the key question is, you know, is the quota available or not to anyone? Margie, in terms of this, sorry. Sorry, did you ask?

No, no, just one relative question on gas. Is it clear from the government side that the R22 quota, which company had, only that company will be eligible for gold and redistribute the R22 quota on a pro-rata basis?

Do we have such clarity? So, I think, Sanjesh, I mean, again, our understanding of the Ligali rules, our understanding of how this is meant to play out, clearly indicates that you must have a right to win in this, you know. So, your right to win comes from the quota that you have. And that's exactly what we've always been saying, and which is why we put our capacity to consume our quota fully. Very good. Your margin on the number specification, I mean, I know you said there is a currency tailwind, and there is a currency tailwind. If you analyze the currency tailwind with the inflation figure that you know, you will find that a lot of this is a wash between currency and inflation. And what we are now seeing in terms of the growth of the EBITDA, I think it's about 990 basis points from FY to FY, you will see 70% of that for Naveen is coming from, our capacity is coming on the ground, our volumes going up, and 30% is coming from affirmative actions on pricing that we've taken. You know, this sort of... You know, I mean, I was reading something, but this basically implies that Naveen's sort of operating leverage is meeting its capacity. That's essentially what's happening now. Thank you very much.

Anish, my two questions. One, an agrochemical application, the commentary is pretty weak on the innovation. Are we seeing that playbook for us in FY27? And second, can help us with TDMO late-stage contact, how many are we working? One, we know it's commercial with the European blind. But we have supplied two clients, if I remember, one in the Europe and one in the English, on the commercial. Can we throw some light on the stage contract we have in our pipeline, and how should we see them becoming commercial for us?

Yeah. So on agrochemical, again, you know, I mean, if you look at the global scenario, there is a slow sort of reset happening, you know, using some indication of volume recovery. Pricing is always going to be lagging that, you know, that I think all of us understand. And Naveen sort of, you know, as we said before, our strategy was to work on newer molecules, etc. from a longer term point of view. If you look at FY26, We have done in all, I believe, close to about 13 new molecules during the year, and that, along with the demand sort of resurfacing, gives us enough confidence to say that, you know, as we look into FY27, we have visibility almost up to about 80% of our capacity utilisation. So I think we are well covered for FY27, and as we move into 27, we will get further clarity on how this is reshaping into 28 and beyond. In terms of CDMO, late-stage, early-stage, I mean, we have a healthy balance of mix. I mean, if I was to tell you in terms of number of molecules, I think we are working close to about 50-55 molecules, half of them being in late-stage commercial and half of them being in early-stage. So there's a very healthy balance portfolio there. As we look into, you know, coming into our FY27 number that we've always said of 100 million, you know, this number that we've delivered this year of 541 crores is again a solid sort of journey to kind of get to where we want to get to by FY27. And like I said before, we've been inching closer to it. With this quarter, we've further inched closer to that number. So, you know, there is very good confidence that we will... There is a lot of work happening on the commercial molecules as well, and we've indicated broadly the therapeutic areas that we talked about on the slide. If you see, it's oncology, if I remember, neurology, cardiovascular. Yes, we have.

Mr. Sanjay, we requested to ask two questions for participants. Thank you. So you can rejoin the queue.

Yeah, thank you.

Thank you. We have next question from Nosad Chaudhary from Aditya Vila, Richard Fund. Please go ahead.

Yeah, hi. Thank you for the opportunity. First of all, Chemo's Option Coding Project, assuming it goes well. What kind of, what size of capex it can, you know, trigger, and by when we can, you know, have some visibility that it should go in the favor of what.

Okay. Okay, so Chemours, I mean, again, you know, we've already said the project is on track for commissioning end of June, early July. And as I stated previously, you know, this is the initial capacities to accelerate adoption in the market. As we move to that, over the next sort of 18 months, we get a better understanding of what that market size looks like. And accordingly, there will be a capex that will be rolled on the back of that understanding. We make sure to talk what it will be today. But I think, you know, it's fair to assume that, you know, we are the only manufacturing site for Kemos, given the nature of the product, that it is essential to support the AI growth that we are seeing around us, you know, and the unique benefits of the product. It should be a reasonable one.

Second, on the pricing side, especially on the Fermion and other portfolios as well, so apart from the rest, which all portfolios are you seeing? Price uptake and what is your near-term outlook there, and when is the price revision expected in the Permian portfolio?

I don't know what's driving that question, Naushad, but, I mean, for me, on Opportunity is quite publicly known because it is published both by Orion as well as Bayer and would encourage you to have a look at it, actually. But the last I remember, it's about $5 billion peak sales in 28 or 29. And like we said, you know, we are very firm believers of the projections that Permian has shared with us, and there is solid growth momentum to come on that as we look into the future. Pricing and all, I don't know where the question is coming from. If you have a particular point on pricing, I would request you to elaborate on it.

See, it's been two years to this contract, and we have scaled it up. I was just thinking, should we keep working on the initial pricing, which you would have, you know, contracted, or would there be any point where the price revision would trigger because your scale and volume is going up in this particular budget?

I will leave you to your judgment. These are commercial things we deal with, but it's not something we can talk on any sort of forum outside the Sumcum.

Thank you so much. Thank you.

Next question is from the line of Rohit Nagraj from 361 Capital. Please go ahead.

Thanks for the opportunity and congrats on the strong set of numbers. First question, unfortunately, on the pricing part, given that there is a raw material price inflation and some of our contracts for HFO as well as for CDMO would be calendar year contracts. So will there be a price rejigged or passed on immediately or will it be a transitory phase that for a couple of months will be charging the previous price and then maybe a couple of months later the newer price incorporating the higher raw material cost?

Thanks, Rohit. I mean, Rohit, see the pricing and RM price inflation, etc., you know, these different contracts cover it in different ways from a commercial standpoint. Obviously, we have both a product play and a service play. In service play, typically, you have pass-through mechanisms, so this will fall into that pass-through mechanism. Now, how and what we are doing to accelerate that recovery is something that is being worked upon, discussed, but, you know, it's not a surprise to both us and our customers about the price, right? So there is a good reception to that. The second question on, what was your second thing? You said transitory months or something around...

The second question is slightly on R32 in terms of broader structure in the domestic market. So what is our understanding in terms of the current consumption of R32? And given that in your capacity, even if we don't consider the ones who don't have UTA, and we are adding there is another player, Who has got quota and they will be adding. How this incremental volume, which is coming into play, will be placed and will it, and unfortunately we're asking the same question again in terms of pricing, will there be any impact given that these additional capacities will come on stage?

So, R32, again, I think we've gone through this several times, but, you know, you have to look at the overall GWP cuts that are happening in the world and the blend play that R32 is uniquely positioned to be in, you know, and that drives the pricing conversation. I mean, if I remember correctly, China prices currently are close to about $9, yeah? So there is a significant sort of reason why they are stronger and getting stronger as we speak, okay? So one has to read into those dynamics. The point about, I think it was Sanjesh who had asked, and maybe I didn't address it at that point in time, but, you know, there was a question on the power range that we've given, $600 to $875. Frankly, as part of our investment approach that we take to the board, we always present a downside case too. So, we've only translated that in full transparency to how we've reported to the market. It's a downside case that we always do more as a math rather than our belief, and our belief is really driven by the demand-supply dynamics, which again, I've said this before also, that the first R32 capacity came in when prices were sub-$2, and if the economics stood then, they will stand now.

Just one clarification on the numbers front. Our employee benefit expenses have been up only 4% on a wire-wire basis, and there has been a significant scale-up in terms of operations. So, will it be normalized during FY27, maybe inflation adjusted, plus the newer capacity coming on stream, which earlier probably were capitalized in the KPIs first? Thank you.

So I think when we started the year or some point in last year, and I think it was again a lot of the analysts asking us the question that our employee cost was I think 12-13% of sales, and we took some affirmative actions to bring it down. So what you see in the numbers is they look almost plattish. But those reflect, you know, typical increments, they both reflect typical sort of new joiners coming in, and those also reflect the affirmative actions taken by management to optimize, right? So that's a combination of all. I think we're done with the optimization where we are. So going forward, you will see the increase, largely. You will see the normal increase coming, yeah? The normal increase. But I think, you know, if you have to put your model in, I would model it in the range of between 7.5, 8.5, 9 percent, not more than that. We're very firm on maintaining it in that threshold.

Perfect, perfect. Thanks a lot, and all the rest.

Thank you. Participants are requested to ask two questions for participants. We have next question from Vivek Rajamani from Morgan Stanley. Please go ahead, sir.

Hi, sir. Thank you for the presentation, and congratulations. I'm a strong finish. I just wanted to get a sense with respect to the customer conversations that you're having. Do you get a sense that you could move to increased restocking on a more sustainable basis? With customers potentially building up more buffers versus the just-in-time sentiment that we've gotten used to for the last couple of years, and just with respect to agrochemicals, given the dislocations that we've seen in fertilizers, and obviously we don't know how the situation would resolve itself, do you see any risk of that flowing into, you know, potential updates for some of the ACM products? Thank you.

So, Vivek, our portfolio on ACKM is mainly export-driven, right? And as you know, in the export-driven, you start getting solid visibility before the end of the calendar year. And that visibility translates into orders, which then translates into deliveries. We are not seeing any distraction on that front. To be honest, everybody will be managing their supply chain disruption, how they do it, and if not, something that they would share with us in our customer interactions. But we've definitely not seen any demand destruction as yet, in terms of, you know, if that's your question or if that's where you were going with it.

Sure, sir. No, it's actually going the other way where you could see more restocking potentially with what's happening, not specifically on demand destruction.

No, so as I said, see the ag market, you know, and we've always maintained this, that fundamentally that market has structurally put demand in the long term. In the near term, it's going through a reset, and it's going through a reset in a slow manner. So you are seeing some volume increases, and prices are kind of still sort of subdued. But my understanding and my expectation is that as we go through the year, you will see prices are even lesser than volume increase. So, it's going to look like flattish in terms of price rises, but, you know, that's where we are, to be honest. Beyond that, I don't think I have much to add.

Thank you.

Thank you.

The next question is from the line of Angkor Periwal from Texas Capital. Please go ahead.

Yeah, sir. Thanks for the opportunity and congratulations on the consistent and good set of numbers there. Third question on the CDM movement, just sort of trying to understand the growth output better. So, one, have we expanded our capabilities on the CDM side versus, let's say, if it ends 10 months back, or is it largely the same? And in the related part here, how has the revenue mix changed between the late-stage molecules and the early-stage molecules for us?

So, capability... Expanded, certainly the case. If you mean capability through acquisition of new technology, etc., no, not yet. You know, we have definitely expanded our capability because every therapeutic area that we stated out there is an area where we are actively working on molecules, some in commercial stage, some in healthy stages. I mean, to be honest, when you're looking for a revenue mix between early and late stage, you should look at more at the number of molecules, because commercial molecules will tend to have a larger footprint in terms of the value. So, like I said, therefore, you know, we have got about 50-50 percent and close to about 55-60 molecules that we are actively working as we speak.

Sure, okay, because the molecule number has been largely consistent. If I look at last two, three years, around that 65-hour number, so this is what I was referring to from a heavy-duty and proper perspective.

No, so the molecules on commercial side, you're right, because it takes long time to sort of go through the cycles as you're aware of. The early stages of campaign reveal largely and they keep moving. But, you know, our sort of endeavor is to, you know, kind of hold it at a good balance and that's why you probably see the numbers like that.

Sure, Anish, no worries. And I just second more of a bookkeeping. Two clarification there. One...

Sir, we will request two questions for participants. Please rejoin the question.

Okay, no worries. Thanks. Ankur, finish off, yeah. Let him finish off, no? Maybe next time we... The next one can be...

I think he has run the queue. Okay, no worries. I will... Mr. We have next question from Jason Soames from IDBI Capital. Please go ahead.

Yeah, thanks, sir, for taking my question.

Sir, just wanted to know, I mean, you have grown really phenomenally well in the specialty chemical segment as well as the HPV segment as well for this year, growth in excess of 35% and 45%.

Now, just wanted to know from this higher base, when you look into the next year, FI27, regarding, I know you gave a lot of color on the ACCHEM side as well.

Just wanted to know, can we kind of clock in high double-digit revenue growth for both these segments going ahead in FY27?

So, Jason, I think I have given, apart from just not giving you the specific number, but let me sort of reiterate the growth blocks going into FY27. You can see the new sort of capexes coming on stream, you know, the de-bottlenecking, and we've again given you the bar for that and the timeline for that. We've given you R32 and the timeline for that. You know, you start putting all this together, and obviously we've talked about the ChemOS project as well. You know, CBMP4 was commissioned. Thank you. Double digit, but I'm happy to clarify if it is not separately.

Sure. Thanks for that, sir. And just one question. I wanted to understand with the Middle East crisis going on, any impact you saw in terms of rest gas volumes from that region, for that region?

So, Middle East, frankly, our export footprint is very little. We are working on numbers. Any of that comes, it will be an upside. But, you know, the demand across the globe is pretty robust.

Thanks a lot for answering my questions, sir. Thank you.

Thank you. The next question is from the line of Subriti Patil from my side, Pinted Private Limited. Please go ahead.

Good evening to the team. I have two questions.

My first question to Mr. Partha is a forward-looking one.

How are you positioning napkin fluorine to capture the evolving demand in specialty fluorochemicals and the CDMO space? While mitigating risk from global regulatory changes, and raw material volatility, and what strategic levers will differentiate the company from its peers in the coming quarter. That's my first question, and that's my second question after this. Thank you.

Sorry, who did you direct your question to?

Mr. Roy.

We don't have any, Roy. You'll have to wait forever. No, let me answer that anyway. Let me answer that. So it's Anish here. So it's Anish here. So on the Atchem front, see, again, we have a service play, right? And in the service play, we work with global innovators. So, frankly, their regulatory risks of the intermediates we supply to them are managed by them. We are working on some new innovator molecules, which are part of the strategic pipeline of these global innovators. So, I would suspect there is not any sort of issue over there, man. Sorry, did I lose you? I was just kidding.

Sir, he is right now off the queue.

Okay.

Okay, we have next question from Arun Prasad from Aventus Park. Please go ahead.

Good evening, Anish, Tawai, and Natanji. A couple of questions. First, you spoke about demand. You are not seeing any kind of a disruption, but I'm sure you would agree that there are two parts to this. One is one set of customers who would be restocking, and second set of customers, maybe they may be a little bit going slow, and maybe they didn't want to wait and watch. So, your read on the demand situation, is it more because that some of these customers are restocking and probably the issues with respect to demand on the higher prices, will it come with a lack? Is that the right way to look at our business at this point of time?

So, K.O., the way I would look at it, I mean, if I look at 28 and the order visibility we've talked about coming to 80% utilization, that's, sorry, Arun, sorry, Arun, yeah. So what I was saying was, if you look at the visibility we've talked about on FY28 in the agro-speciality, I mean, frankly, the capacity utilization at 18% is probably as best as one would go in an MPP environment, you know, and then doing 13 new molecules last year and sort of working that through in the coming year. We don't see what we are saying, some de-stalking, some not de-stalking, all, I mean, frankly, the way it manifests for us is in the order visibility and in the order books, and that continues to be solid.

Of course, I'm sure for your pharma category would be relatively insulated.

No, I'm talking of agro. I'm talking of agro. I'm talking of agro. Pharma, again, I frankly, you guys will know far more than I do because for me, our numbers are out there. And, you know, so you will see the growth they are seeing annually, year on year, as well as the peak projections, as well as the further labor extensions that they are working on.

Anish, outside Pharma and Agro, which categories you would say that, you know, at a risk because higher prices eventually lead to the demand destruction at a later stage? Not long term, but at least one or two quarters, there will be a demand destruction. So, can you call out some categories that, you know, this from your study?

I think, again, this is an economic question of theory, but, you know, there are several articles one can read at, but, you know, at 150 sustained dollar oil prices, I think there is a concern that the global demand may slow. But today, we are not seeing that. We can't factor that. What we are doing today is making sure that we are resilient. We are working hard at what we can do. We maintain our discipline. And frankly, in this environment, we maintain significant agility as well to respond to situations as they arise. Right? That's what we can do. And that actually will prepare us in the best possible way to whatever is thrown at us. That's our focus.

No, no, I understand. What I'm asking is... What categories we should be looking for outside the category, outside the pharma and tech growth? Because as an outsider, we do not have much insight into what's happening on them.

It's very simple. At $150, if there is demand destruction, you will see interest rates, inflation, everything go haywire. That will be a global scenario of slowdown. And I'm sure you're reading the world, you know, reports from the World Economic Forum, etc., etc. But, you know, that's not something I am planning on. That's not something in my gift to control. So as management, we are doing what is within our gift of influence, what is within our gift of control.

And on the forex benefits you spoke earlier, there are two costs associated for you. One is the dollar-denominated cost, and another is the rupee-based cost. So, is it fair to assume when the contracts goes for the renewal, customers would be negotiating only to the extent your rupee costs will not be repriced to the same extent?

Commercial negotiations are never linear. So, you know, you can't have one attribute and you relate that to another attribute. I mean, these are holistic contracts where you would look at everything, how a contract is structured, how you would sort of attend the risks of inflation. I mean, you know, if you want to do a rupee-based contract, well, then you will have to take inflation in your stride rate. So there are several cuts and nuances to it. Thank you.

So, one final bookkeeping question. HPP segment, sequentially, there is a revenue decline. One would expect that with the HF plant scaling up and a better revenue decline, at least.

Can you repeat, Arun, Arun, can you repeat, where did you see the decline? Just heard the word decline.

HPP segment QAQ decline, sir. Sequentially, not YOE.

Oh, yeah, yeah. That is, okay, okay. You're talking of Q3 to Q4, right? Yes, yes. So, you know, these are things in terms of, you know, every of these plants have plant shutdowns, right? And we had taken a plant shutdown in our Q4, and we also took an opportunistic exercise to recharge the catalyst in one of our plants. This is ahead of the heat season to maximize the value in quarter one of this year. So, that's just normal routine activity. Yeah, plus Middle East, as you know, and I've said this before, that we had no shipments in the Middle East, which was close to about 15.

Any quantification possible for us? Thank you, sir. I will request you to reflect two questions for participants, sir. Please rejoin the queue. Thank you. We have next question from Piyur Pandya from MySSA Potential Life Insurance Limited. Please go ahead.

Two questions on the HPP side. The Honeywell contract, I mean, we have always talked about, say, annual, some quantum. So, have we any scope for growth or expansion from current levels, both in Honeywell and in our current R32 plant? So, just wanted to understand before the new R32 plant, what growth levels do we have in the HPV?

Okay, so before, on the growth levers in HPP, I am sure you should certainly count the growth coming in from HF plant, which is a pretty big question. In terms of your question on Honeywell contract, I mean, you know that HFO has applications primarily in the construction area, but also ancillary applications in the refrigerant cooling space too, and whatever we are doing on demand today, it is at an 80%. and capacity, as I've told you before. So there is room to explain.

So, basically, the question of growth levels ahead of new plants, you mentioned Honeywell, additional 20%, and ASF, right?

Fortunately, to grow that at some point whenever that demand comes.

Second question on the... Speciality Chemicals, there for this project Nectar, I think there is some change in the product from the client. So, now, under the new scope, Thank you. Thank you. Thank you.

So, the contracted volumes are fully covered. The additional molecule actually gives better risk management to that plant. We have also made shipments outside of the contracted revenues for qualification. Those qualifications are under progress. Besides, there are also possible downstream applications of that product that we are working on. So, we are not duly concerned about utilization. Yes, it has been, we would have liked to have a full utilization by end of FY20. We're talking about 75 to 80 percent.

Okay. And just lastly, overall properties. Thank you, sir. Mr. Q-point.

I'm very sorry, sir. Please restrict your question. Two questions per question.

Noted.

Thank you. Okay. Thank you. Please rejoin the queue. We have next question from Mr. Vichit Akilia from Cotec Securities. Please proceed. Yeah, good evening.

Thank you so much for taking my questions. So, first question on the margins. So, the gross margins this quarter are stable on a sequential basis, 58% odd, even though the CDMO business has ramped up substantially on a sequential basis. So, just sort of trying to understand, you know, what the dynamics are there. I mean, if you would have expected, normally the margins would have expanded a little bit more.

No, so margin expansion, you know, in a diversified business is linked not just between business mixes, but also the portfolios that you play within the each vertical. So, speciality has different molecules, this has different, you know, molecules. So, there's both an intra-business play and an inter-business play, yeah? So, you should factor in both. It's sort of a combination of both that results in that number. So, it wouldn't be fair to just take one. It depends on what product we've done, this potter versus water.

Thank you. And the other one was just with regard to the margin guidance for FY27 in the context of this inflationary environment. So is 30% still a good benchmark to work with? So that was one. And just the other quick thing from my side, the HPP vertical seems to have shifted markedly towards India in the past two quarters in terms of sales. So what might be driving that? Thank you so much.

So, to answer your first question on the margin guidance, I mean, we've always maintained that we will endeavor to do 30%, given what we know today of the business circumstances, plus minus 1 to 2%, which we've always said, yeah. So, that we will hold for the whole year. This is not a quarter number, and we've always maintained that you should look at the margins from a full year perspective. Yeah. Your question on HPP sales shifted to India. Actually, HPP has had a bigger shift, and that one needs to understand that it was a business that we were doing in the range of about 250, 300 per quarter. Now, that has moved to clearly in the 400 mark. And in the coming years, the new R32 capacities, HF capacities, that will further go up in terms of contribution. As you increase your profile in this fashion, your customer base is going to change. So you should look at the increase in India. Obviously, we've done R32 contracts in India. Obviously, we've done global reach. If you look at the export data, you will see that we've reached new geographies, new customers. A lot of it will change as you grow the business in the pace at which we are growing.

Thank you. And the next question is from Archie Josie from Noama Institutional Equities. Please proceed.

Hi, sir. Thank you for the opportunity. So, two questions from me. First one, I wanted to get a bit more understanding on the Nectar project. I believe that 50% was towards one of our marquee customers, and the balance 50% was something that we're still trying to figure out in terms of how to despise those volumes. I believe that the first 50% should definitely be in line with our expectations. But given whatever we are seeing in the global agri industry, would you have any understanding on how we should be placing the balance 50% of that plant? That would be number one. And second one would be we have recorded about 211 crores of contract liabilities on the balance sheet, including current and non-current ones, which have increased from about 159 crores, if I calculate correctly. What could be the attribution to that? These would be my two questions. Thank you. Okay, sure.

So on Nectar, you know that apart from the marquee customers, there are two to three other customers, right? So we are going through qualification campaigns. We are not figuring out. We are actually working on a plan, and that plan is to get the qualification done and then the sales. We think it is slower than what we would have liked it to be. So therefore, we are talking of the 75% power this year and then the balance next year. We've also talked about the fact that, and I just said that before to the previous respondent, that we would be looking at downstream applications of the product. Given whatever, if your question is more around the pricing of that product, etc., we are confident that even at that price we would make reasonable margins that would not be deteriorated to our overall margin profile. Contract liabilities. Now, as you know, contract liabilities actually reflects the monies that we've received from our customers towards the capital contribution, both on ChemOS project and the marquee project for the additional molecules. So, therefore, you see the increase that you see, primarily.

Sure, sir. That's great. Thanks a lot, Dr. Akbar.

Thank you. The next question is from the line of Dharag Natra from ValueQuest. Please proceed.

Thank you for taking my question. So, I would like to understand more on the fermion contract, since now the CGMP4 is commissioned from this quarter onwards, from Q4 onwards. Will the manufacturing that was already done in your Devas facility now move to, I mean, the other block of CGMP4, or do you have visibility for more volumes to offtake in the next year, so both will be utilized?

So, the Permihon block was a dedicated block. So, obviously, what we are currently doing elsewhere will go into dedication. Thank you.

There could be a possibility of a CGNT5 as well, if you have more visibility for the contract.

Yeah, there will be a phase 2, and obviously we are working with other molecules too. So, we've got space for 5, 6, and 7, I believe. to do it and there is a business case.

And can you mention the quantum of CDMO contribution that is coming from Febillion for the full year of FY26?

Can I mention the?

Quantum of Febillion contribution.

10? Sorry. Febillion contribution. No, no. So, Sudara, we don't commercially talk about these values. We have kind of quiet on those. And like I've said, you do. Thank you. That's all you know, right? And eventually it will be...

Sure, sir. Thank you. Thank you. Ladies and gentlemen, due to time constraints, this will be the last question. We now hand over the line to Mr. Anish Kunatra for closing comments. Over to you, sir.

All right. Thanks a lot, everybody, for taking the time to interact with us today. Very useful session from our perspective, certainly, and hope you have. Thank you again, and have a good evening.

Thank you. On behalf of Naveen Floride International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.