HALS momentum masked by margin compression; pricing gridlock unresolved

₹299.4 Cr (Q2) delivered; confirmed vs prior periods via HALS ramp

H1 achieved 67% of full prior FY volume in 6 months; Q2 HALS ~₹66 Cr (22% of ₹299 Cr) is 2x YoY

PAT +0.5% YoY on 22% revenue growth; margin % compressed (30.8% OPM). Absolute EBITDA ₹92 Cr stable but on % basis declined

₹55.7 Cr reported, but only +0.5% YoY growth rate signals no real improvement

Management stated this figure for stand-alone base business; no cross-check in consolidated numbers

Prior guidance: November 2026. Current: Jan-Feb 2027 (Q4 start). Trials completed but 2-month slip; management cited 'tricky product' needing customer stabilization.

Prior: ₹250-300 Cr for FY27 (30-35% of company). Current: H1 ~22% (₹123 Cr H1 on ₹559 Cr), annualizes ~₹250-260 Cr. On track but no acceleration vs prior call.

Previously planned production. Now indefinitely on hold due to Chinese producer pricing undercutting Clean's cost; signals competitive weakness in cost-sensitive segments.

Unable to pass price increase due to Chinese pricing; percentage came down but volume growth maintained absolute EBITDA.

Sequentially entirely volume-led; annually largely realization-led.

At 30-35% capacity utilization; currently mostly captive use; small sales have picked up in Europe and India.

Ethoxylation facility already started (precursor for HALS); next intermediate currently bought from China will be in-house next quarter.

November or December, we'll start shipping to Europe.

Realized Chinese prices uncompetitive; kept product on hold for moment.

Very bullish on light stabilizer segment; will debottleneck and add capacity; trying HALS adjacencies catering to same customers; products coming next few quarters.

We continuously try to increase prices; when severe pushback, know price is right; don't want to lose market share; competition has to raise eventually too.

More or less yes.

Expect 55-60% in coming quarters; almost 50% increase.

With macro and crude oil prices, very difficult to determine; would like to pass.

Hoping Q4 (Jan-Feb) for commercial production; first year target 20-25% utilization; tricky product, needs stabilization, samples, validation; too preliminary.

Not very significant but important for import-free status; 5-7% improvement in margins for HALS segment.

Currently 11,500 tons; with NOR collaboration will add incremental capacity in advanced grades only; target 12,500 tons.

New grade of antioxidant; started supplying small quantities; making ~500 tons but still early; no capex, manufactured in current assets.

H1 ~22% of ₹559 Cr = ₹123 Cr; annualized ~₹250-260 Cr; achievable if H2 mix stays 22-28%.

Multi-year target; no annual breakdown; dependent on customer ramp and product maturity.

In-house KSM starting Q3; benefit visible from Q4 FY27 / Q1 FY28 onwards.

MD explicitly deferred ('very difficult to determine'); raw material inflation unabated; China pricing unresolved.

H1 capex ₹150 Cr; ₹900 Cr invested in CFCL to date; new project CAPEX TBD.

Phenol, acetone, methanol 50-100% higher YoY due to Middle East crude-linked feedstock and coal/freight. Chinese prices 10-15% lower (phenol ₹1,300 vs India ₹1,550). Raw material cost 43.3% vs 40% prior quarter. Unable to pass through to customers due to Chinese competition.

PC2 (advanced HALS grade) timeline pushed from November 2026 to Jan-Feb 2027 (Q4). MD explicitly called it 'tricky product' requiring sample stabilization, customer validation, ongoing de-risking. First-year utilization target only 20-25% vs current 30-35%, signaling slow ramp.

Target is 55-60% HALS utilization (50% jump from current 30-40%) over next 2-3 quarters. No quantified order backlog disclosed. Dependent on advanced grades (currently 40% of mix) picking up and new customer wins sustaining. Concentrated customer exposure possible but unquantified.

Barbituric acid project (previously planned) kept indefinitely on hold due to Chinese producer pricing undercutting Clean's cost structure. Signals structural weakness in commoditized, cost-sensitive space where Chinese have structural advantage.

EBITDA margin trajectory explicitly deferred by MD due to macro uncertainty. Phenol, acetone, methanol all crude-linked; Middle East crisis cited as driver of Q2 inflation. No hedging mentioned. Currency exposure on export revenues (73% of stand-alone base) unquantified.