Earnings Call Transcript - XNSE:VINATIORGA 2026-11-05

Operator

Ladies and gentlemen, good day and welcome to Winner Key Organics Q2 FY2027 Earnings Conference Call hosted by Nuama Wealth Management. 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 and then zero on your touchstone phone. Please note that this conference is being recorded. Also note that this conference call is scheduled for 30 minutes. I now hand the conference over to Mr. Archit Joshi from Nuama Wealth Management Limited. Thank you and over to you, sir.

Archit Joshi, Head of Investor Relations

Thank you, Sagar. Good afternoon, everybody. Wishing everybody a very happy Diwali. At Noama Institutional Equities, we are pleased to host the 2QR 527 earnings conference call of Winati Organics Limited. We are joined by Mrs. Winati Sarat-Sutreja, Managing Director, Mr. Gulshan Sakuja, CFO, and Mr. Rajitse Churiwala, DGM, Corporate Finance. Without further ado, I would like to hand over the call to Mr. Gulshan Sakuja for his opening remarks and then we can take the questions and answers. Thank you and welcome, sir.

Gulshan Sakuja, CFO

Thanks. Good afternoon, friends, and thank you for joining us for the Q2F527 results conference call. I will begin with an overview of our financial performance for the quarter and half year ended 30th September 2026. On a standalone basis, on YOY basis in Q2F527, net income, including other income, increased by 21% from 562CR in Q2. F526 to 707 CR. However, EBITDA declined by 27% from 195 CR in Q2 F526 to 142 CR. Profit after tax also declined by 33% from 129 CR to 87 CR. On Q&Q basis, in Q2 F527, net income including other income declined by 4% from 707 CR in Q1 F527 to 681 CR. For H1, net income including other income increased by 25% from 1112 CR to 1387 CR. However, EBITDA declined by 10% from 368 crores in H1 FY26 to 333 crores in H1 FY27, while 5-8 declined by 15% from 242 CR to 210 CR. On a consolidated basis, Y1Y basis in Q2 F527, net income including other income increased by 23%, rising from 566 CR in Q2 F526 to 693 CR. However, EBITDA declined by 24% from 183 CR in Q2 F526 to 138 Croods. On Q1Q basis, in Q2FY27, net income including other income declined by 2% from 704 CR in Q1FY27 to 693 CR. For H1, net income including other income increased by 25% from 1115 crores to 1398 CR. However, EBITDA declined by 9% from 350 CR in H1 F526 to 318 CR in H1 F527, while PAT declined by 15% from 219 crores to 187 crores. Now, moving to the operational performance, our business is facing challenges on account of prevailing market conditions, especially the ongoing war in the Middle East, which has led to an increase in the raw metal prices, energy prices, as well as the logistics cost. Even though the increase in raw metal prices has largely been passed on to our customers, the logistics and energy costs could not be passed thoroughly. This led to an increase in the top line, but adversely impacted our bottom line. The logistic rates have started cooling in Q3, and we expect further reduction in Q4, which will positively impact the Q3 and Q4 profitability. Moving to our maker protect categories, demand for ATBS did not pick up as anticipated during the bringing of F5, going to the de-stocking by customers, which impacted our ability to meet half-year target. We expect volume recovery in X2. The butylphenol segment delivered stable performance, and we anticipate better performance in H2 supported by improving demand conditions. Our antioxidant business delivered strong performance in H1 despite a challenging market environment. We expect this segment to maintain momentum in H2 supported by market expansion. IB reported strong performance during H1, and we expect the performance to continue in H2. IBB delivered strong performance in H1 in terms of volume as well as pricing. We expect similar performance in H2. Overall, we expect to end F5-2027 with 20-25% improvement in top-line over the previous year owing to the improvement in volumes as well as pricing. Under VOPL, few projects require process re-engineering, which is under process. After completion, we expect VOPL to contribute meaningfully to the top-line and the bottom-line of the consolidated entity. Turning to the capital expenditure, our investment strategy remains closely aligned with our long-term growth objective. In view of this, we have announced a CapEx plan of 500 CR to develop and commercialize new specialty chemicals with application of fragrances, personal care, water treatment solution, oil field, and others, with scope for further expansion into adjacent product segment based on the market growth and opportunities. This capex will be entirely funded through internal rules and is expected to commercialize in two years. In addition to this, we are also planning for an additional capex of 500 CR. We are currently working on a land acquisition for the same and will be able to provide more clarity in next couple of months. This additional capex too will be funded through internal rules. Thank you. I now welcome your questions for the Q&A session. Overdue.

Operator

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and then 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. Your first question comes from the line of Rohit Nagraj with 361 Capital. Please go ahead.

Rohit Nagraj, Analyst — 361 Capital

Thanks for the opportunity. So just one question on the 500 crores new CAPEX. So you can just elaborate in terms of which chemistry platforms are we working on, whether it is aligned to the current chemistries forward integration or so, and whether these products are tested in our pilot facility so that it goes into commercial without any keeping problems. Thank you.

Winati Sarat-Sutreja, Other

Yes, thank you for this question. These products are related to our existing products. There is some sort of integration, some sort of adjacencies, whether backward, forward, or horizontal. We have been testing these products over the last one year, so we are quite confident of implementing it, and hence we have announced it.

Rohit Nagraj, Analyst — 361 Capital

Sure. And just one clarification, the project will come after two years. What is the kind of revenue scale-up that we are looking at and the margin profile for these products? Thank you.

Winati Sarat-Sutreja, Other

Yeah, so usually the active turnover one can expect in this one is to one or maybe slightly higher, maybe 1.2, 1.1 and a half, since they are, you know, related to our chemistries. But ROI or, you know, on this expense, it can be in the range of 15 to 20 percent.

Rohit Nagraj, Analyst — 361 Capital

Sure. Thanks a lot. All the best, and Diwali wishes to the entire team. Thank you.

Operator

Thank you. The next question comes from the line of Nilesh Kuge with HDFC Securities, please.

Nilesh Kuge, Analyst — HDFC Securities Limited

Yeah, hi. Yeah, thanks. Just first question on the sales mix. Can you tell us the sales mix product-wise for this quarter, and if possible for H1, FY27?

Gulshan Sakuja, CFO

If I come to the product mix, if I say this ATBS, that has contributed approximately 27-28% to the top line. And if I talk about IBP, it is in the range of 12 to 15%, but I also know in the range of 16 to 20%, and AO again, it's in the range of 15 to around 17% overall.

Nilesh Kuge, Analyst — HDFC Securities Limited

Okay. Okay. Thanks. And you mentioned that because of de-stocking, ATBS demand was not as per your expectation for H1. But can you tell us what kind of demand growth in ATBS you expect for this year?

Winati Sarat-Sutreja, Other

Yeah, in fact, we are seeing a meaningful improvement in volume, with Q3 itself looking strong with an uptick in demand for ATBS. So, we definitely are going to see some recovery through the second half.

Nilesh Kuge, Analyst — HDFC Securities Limited

Okay. Usually, what we have observed that when there is a good oil and gas prices in international market, we see significant improvement in our demand. So, why this is not there? Any reason?

Winati Sarat-Sutreja, Other

You will see in second half. You will see in second half.

Nilesh Kuge, Analyst — HDFC Securities Limited

Okay. And on the viral organics, when do we expect MEHQ and other products commissioning?

Winati Sarat-Sutreja, Other

So, when we have actually started manufacturing MEHQ at a lower, you know, volume, which we are self-consuming to make BHA, the expansion of MEHQ, you know, the de-bottlenecking is taking slightly longer than expected, so we can offer it commercially, but we expect starting April commercial sales.

Abhijay Takkela, Analyst — KIE

Okay, okay.

Nilesh Kuge, Analyst — HDFC Securities Limited

And it will take another two years to ramp up to optimum utilization? Any guidance on that?

Winati Sarat-Sutreja, Other

I think one year because now we've already started customer evaluations and, you know, we are already getting our products tested and qualified. So once that is over and simultaneously our plant will start, it should be another one year, I think.

Nilesh Kuge, Analyst — HDFC Securities Limited

Yeah, and just last question, in opening remarks, sir mentioned that 20% YY growth in top line, but on the operating profit level, can you guide us? Earlier, your guidance was in the range of 25 to 30%. So, looking at the current situation and H1 result, can you guide us on the margin?

Winati Sarat-Sutreja, Other

Yeah, I think we will end the year maybe around 24% EBITDA margin. Is that correct, Mr. Ghoshan? Yes, ma'am. Yeah, 24, 25%.

Nilesh Kuge, Analyst — HDFC Securities Limited

Okay. Thanks, ma'am. Thanks a lot. That's all from my side.

Operator

Thank you. Next question comes from Noshad Chaudhary with Aditya Birla Mutual Funds. Please go ahead.

Noshad Chaudhary, Analyst — Aditya Birla Mutual Fund

Hi. Thank you for the opportunity. On the CapEx announcement, and if I heard it correctly, apart from the press release of 500 crore rupees of its speciality CapEx, You touched upon additional 500 crore rupees of investment for which we are scouting for land. If I heard it correctly, what exactly would these projects be and by when we can expect more clarity on this piece of acquisition?

Winati Sarat-Sutreja, Other

Yeah, I think it was mentioned in the opening remarks that you will get more clarity on this investment over the next six months when both the land acquisition as well as the pilot trials are completed.

Noshad Chaudhary, Analyst — Aditya Birla Mutual Fund

And economics of this project would be similar?

Winati Sarat-Sutreja, Other

Similar, similar, similar. 15-20% ROI, asset turnover, maybe slightly higher, one and a half times.

Noshad Chaudhary, Analyst — Aditya Birla Mutual Fund

And if I look at your gross block addition in the last four years, on a base of 1,000, we have added 1,500 in the last four years, and then the blocks are also coming in, the additional 1,000 crore rupees of plan we have. So what, you know, gives us confidence in terms of getting the ROI of 15-20% from these assets, and how If you can, you know, elaborate a bit more, how are you thinking about these investments versus getting a desired ROI?

Winati Sarat-Sutreja, Other

Yeah, so, you know, these investments are in products that are related to our existing products. We have actually been spending a lot of time and effort in the pilot trials, in the R&D this time. We feel fairly confident. We have also learned from our mistakes of the past. Regarding project executions, we are better positioned now as to which agencies we need to hire and which agencies we need to give the assignment to. So, hence, we feel fairly confident and hence it has taken us so long to announce this. And we are still not announcing, you know, fully announcing the next 500, you know. It may not happen also. So, we'll wait for six months before we confirm that one.

Noshad Chaudhary, Analyst — Aditya Birla Mutual Fund

So, does that mean the new project commissioning and scale-up would be much smoother versus what we have experienced in different stages?

Winati Sarat-Sutreja, Other

Well, we hope so, and we plan to do that. This time, we are going with a little more, you know, how do I say, a little more confident supply of technology and process engineers.

Noshad Chaudhary, Analyst — Aditya Birla Mutual Fund

Understood. And are we behind in terms of the stabilization of VOPL, and by when we can expect the ramp-up of this plan?

Winati Sarat-Sutreja, Other

Yeah, ramp-up will start in April.

Noshad Chaudhary, Analyst — Aditya Birla Mutual Fund

And how much time will it take to get to the design?

Winati Sarat-Sutreja, Other

One year. One year, one year.

Noshad Chaudhary, Analyst — Aditya Birla Mutual Fund

Okay. And the technical and thieving issues which we had, are we behind of all those problems or do we still have to...

Winati Sarat-Sutreja, Other

Yeah, now our product is qualified. We are using it to make DHA. We are also commercially making the other products, but it will just take another four months to, you know, reach optimum capacity.

Noshad Chaudhary, Analyst — Aditya Birla Mutual Fund

Okay. Okay. All right, ma'am. Thank you. All the rest.

Operator

Thank you. The next question comes from the line of Abhijay Takkela with KIE. Please go ahead.

Abhijay Takkela, Analyst — KIE

Yeah, good afternoon, and thank you for taking my questions. The first one was just to clarify that the sales mix shared on the call a little bit earlier was for the first half of the year, or was it for the second quarter?

Gulshan Sakuja, CFO

It was for the first half. First half.

Abhijay Takkela, Analyst — KIE

Okay, thank you for that. EBITDA margin guidance for FY27, you mentioned 24%, but for FY28, should we expect that we should get back closer to the 26-27% we normally aspire to?

Gulshan Sakuja, CFO

You can say the worst is now behind us, and as far as the product of ATBS, MAM just said in the third and fourth quarter and next year would be of a better volume along with the prices. So we are expecting means 25-26% of EBITDA margin next financial year also.

Abhijay Takkela, Analyst — KIE

Yeah. Sorry, just to clarify, you said 26% or 25 to 26. 25 to 26. Okay. And just the last thing from my side, regarding these new products, the 500 crore capex you've announced already, what exactly is the competitive landscape like for these products? Are there local producers in India of these or are you going to be the first one? And is it all import substitution or, you know, is it also an export opportunity that you're targeting?

Winati Sarat-Sutreja, Other

Well, for some of them, we will be the only producer in India, but for one segment, we will be the second producer or third maybe.

Abhijay Takkela, Analyst — KIE

Yeah, and is it all domestic sales only or exports as well?

Winati Sarat-Sutreja, Other

No, it is domestic and export both. Mostly export actually. I would say 65-70% is export.

Abhijay Takkela, Analyst — KIE

Right. In terms of realizations per kilogram, I mean, what sort of range would these products lie in on average?

Winati Sarat-Sutreja, Other

That's a very good question. I would say the average would be $3 per kg. There's a wide range starting from maybe 2 to 4.5, but you can average it at around 3.

Abhijay Takkela, Analyst — KIE

Okay, and we can sort of aim to maintain this similar EBITDA margin profile even with those products, 25% all.

Winati Sarat-Sutreja, Other

They are all slightly more specialty products, most of them, not all, but yeah.

Abhijay Takkela, Analyst — KIE

Right, and so just one last thing, what sort of market share would we be aspiring to in these segments at the global level? Would it be very large or will be a relatively smaller new entrant?

Winati Sarat-Sutreja, Other

It depends. As in, there are three major, you know, different product segments. I think in two of them, we will be fairly large. In one, there are other one, there are other product players also.

Abhijay Takkela, Analyst — KIE

Okay, got it. Thank you so much and wish you all the best.

Operator

Thank you. The next question comes from the line of Surya Narayan Patra with Philip Capital India Private Limited. Please go ahead.

Surya Narayan Patra, Analyst — Philip Capital India Private Limited

Thanks for the opportunity, ma'am. My first question is about the new product line that we are adding or new products that we are introducing. See, generally, if I see a historical business, because of our cost leadership globally, So, this business used to kind of maintain kind of a profit leadership, cost leadership, and volume leadership accordingly. So, now, recently, whatever the new project that we have talked about, let's say MEHQ, BHA, and all that, so that is a very, very competitive space, and China is a kind of a major play also there. And now we are talking about three more product areas as a kind of a new business, new product, new projects. So what are the kind of strengths that we are thinking about the new product pipeline? Whether it is Chinese competition is there for those products, or we are confident about our cost leadership. What strength, based on what strength that we are... Thinking about being this a new product or new projects going ahead.

Winati Sarat-Sutreja, Other

I think one, like I said, we are looking at, you know, adjacencies to which will give us some cost leadership. We are also confident of being the only Indian player in some of them. Like I said, some of them are also high margin products, meaning there are very few players. In that globally, and hence, we are getting into it because we have access to the technology.

Surya Narayan Patra, Analyst — Philip Capital India Private Limited

Okay. And also, if you can talk about the applications of these three new products.

Winati Sarat-Sutreja, Other

They are into various applications, starting from fragrances, personal care, water treatment, oil seal, as well as resins.

Surya Narayan Patra, Analyst — Philip Capital India Private Limited

Okay. My second question is about let's say the margin profile or the margin what we have reported for the quarter. This is looking like the lowest ever kind of margin performance what we have seen. Why so, ma'am, and what change that we have seen in this, so how different the scenario and environment or the kind of product mix that we have seen for this quarter that the margin profile has come down to such a low level, in the history that we would not have seen it?

Winati Sarat-Sutreja, Other

Gulshan ji, you want to answer this?

Gulshan Sakuja, CFO

And in this particular Q2 means there is a shift of this ATPS from second quarter to third quarter that has led to that reduction of margin to 21% in this quarter. This was the only reason. And second, as far as the increase in raw material cost is concerned, we are able to pass on through to our customers. Increase in logistics and our cost. That has not been fully passed on to the customers. And second, a shift of ATBS that sales from quarter 2 to quarter 3 and quarter 4. That has led only to the reduction of quarter 2 margin. Nothing more than that. Now the worst is behind us. We can say this thing only.

Surya Narayan Patra, Analyst — Philip Capital India Private Limited

Okay. Just one clarification about the product mix, what you have said for the first half. So what is the revenue mix from the Butelfin also?

Gulshan Sakuja, CFO

I just told that it's in a range of 15 to 17%.

Surya Narayan Patra, Analyst — Philip Capital India Private Limited

So that you talk about AO, right?

Gulshan Sakuja, CFO

See, it's in same range. AO, I talked about 50 to 17% for Butelfin also in the same range, I told you. It's around 70 to 18% in the start of the conference call. Okay.

Surya Narayan Patra, Analyst — Philip Capital India Private Limited

Okay. And just last one point from my side, again reiterating the point of MEHQ. So how do you see this? See, in fact, this space, the entire chemistry. Value chain of this space is facing a significant competition, larger capacities, larger volumes that what we are witnessing also getting added in China. So, given that background, what expectations that you are still building out of this product? See, we are supposed to kind of see about 100 crore kind of a revenue out of MHQBHA kind of a value chain this year itself. Now we are kind of delaying to next year. So what is the challenge? It is whether it is a kind of a competition or it is a kind of issue at the manufacturing level or what? That we are trying to sorting out.

Winati Sarat-Sutreja, Other

I think this year we'll cross 100 crores in VOPI for this FY.

Gulshan Sakuja, CFO

26, 27, it will be in the range of around 75 to 100 here, not more than that. It will not cost 100 here in this financial year.

Winati Sarat-Sutreja, Other

Okay, but that is mostly because of our problems, our production.

Gulshan Sakuja, CFO

It is internal because we are working on that re-engineering process, and that is going to take some time, and this will get streamlined by April or May of next financial year. We can say by April of next financial year.

Winati Sarat-Sutreja, Other

And VOPL has products, we have five products, right? It has MEHQ, Gwacol, Anazole, 4-methoxyacetophenone, and also isoamylene-based products, tertiary amyl alcohol, as well as PTAP, which has just started. So the revenue from those will start coming from January, or rather December.

Surya Narayan Patra, Analyst — Philip Capital India Private Limited

Okay. Chawman, yeah, thank you. Thank you for answering all the questions. See you all the best.

Operator

Thank you. The next question comes from the line of Prasad Badmere with Union Mutual Fund. Please go.

Prasad Badmere, Analyst — Union Mutual Fund

Hello. I'm audible. Yeah, yeah. So, ma'am, my first question is on the chemistry that could be expected in this 500 crore capex. Are these different to what we are entering, we are into currently, or is it just a forward integration of the chemistry that are there in our current business?

Winati Sarat-Sutreja, Other

We are related to our products. One could say most of the processes we are familiar with. However, these are dedicated plants. There will be some different technology, different processes also involved, but nothing that is very different from what Genity Organics does. There will also be synergy with our existing product segments in terms of the end use. Some of them serve similar customers, and hence, we are focusing on these, and this is how we have shortlisted these products.

Prasad Badmere, Analyst — Union Mutual Fund

Okay, ma'am. And my second question was on the MHQ side. So, considering the competitive landscape that is there in terms of MHQ market, how are we looking to scale up this product over next two to three years?

Winati Sarat-Sutreja, Other

I think MEHQ still has a strong demand because it is used ultimately as an inhibitor in polymers. And overall, you know, these polymer applications are growing. I think what you're talking about is a temporary downturn. It is still a high margin product if you look at the growth margins on MEHQ itself. Having said that, our whole plan, you know, out of 3,000 crores or 4,000 crores that we will be at in the next two to three years, MEHC is just 100 crores of it.

Prasad Badmere, Analyst — Union Mutual Fund

Thank you, ma'am. Thank you.

Operator

Thank you. Ladies and gentlemen, we take this as our last question for today. I now hand the conference over to Vinati, ma'am, for closing comments. Over to you, ma'am.

Winati Sarat-Sutreja, Other

Thank you, everyone, for participating. And, you know, in spite of this quarter, how it has turned out, we believe it is important to look at the underlying performance and the opportunities ahead. We are seeing encouraging, like mentioned, we are seeing encouraging volume trends. Several of our businesses continue to perform well, whether it is IDB, isobutylene, butylphenols, as well as antioxidants. Hence, we are investing in new specialty chemical opportunities that can expand our platform and further grow it. Our focus remains on profitable growth, discipline, capital allocation, and long-term value creation. Thank you.

Gulshan Sakuja, CFO

Thank you.

Operator

Thank you. Ladies and gentlemen, on behalf of Vinati Organics, that concludes this conference. Thank you, everyone, for joining us on Human Hour. Let's connect your life.