Strong revenue growth, margin miss vs. aspiration

Delivered 98.7 Cr (987M), confirms 18% YoY vs Q1 FY26 83.6 Cr

Delivered 35.0 Cr (350M), confirms 86.8% YoY growth (87% rounded)

Delivered OPM 38.1%, EBITDA 38.7 Cr at 39.1% margin vs 40% aspiration = 90bps miss

Mgmt confirmed current prices lower than H1 FY26 levels, above 200-day DMA, in middle of long-term trend

Core gases revenue 97.3 Cr (+20% YoY), margin 38%, but cause-and-effect not quantified in results

Power efficiency gains from new plants and renewable PPA claimed, but 39% margin vs 40% aspiration suggests limited margin expansion

Management explicitly reiterated 40%+ EBITDA margin as longer-term aspiration (not raised), but clarified not a quarterly guarantee; quarter delivered 39%.

From prior call's upside visibility, to this call's 'volatile, below H1 FY26 but structurally upward' with 3–4 year cycle; hedging on impact.

North + West Central merchant plants now under construction (₹250 Cr FY27, ₹200 Cr FY28); prior calls outlined, now in execution.

Multiple inquiries above 600 TPD (some for 1000+ TPD) now active; Jay Balaji East India plant confirmed live Q2; broader than prior visibility.

No advance contracts; survey target customers 1–3 months pre-commissioning; assume 18–24 month ramp to 80–90% utilization; focus on greenfield demand growth in region.

Q4 had one-offs; structurally, argon prices have upward 10-year trend; expect 40%+ margins as capacity expands, not price-dependent; acknowledge quarterly volatility.

Argon had limited impact Q1; main driver is new efficient capacity and cost control; long-term demand-supply in favor of manufacturers; accepting quarterly volatility; targeting 40%+ longer-term, not quarterly.

North India merchant (not operational yet) and West Central merchant plants; combined ~450–500 TPD; construction underway.

No specific percentage; Q3 was low point; recovered in H2 FY26 and further Q1; current prices still below H1 FY26 but above 200-day DMA; in middle of long-term uptrend.

West plant is ASU merchant (liquefied O2, N2, Ar); evaluating specialty gas add-on but not confirmed; lower margin than ASU manufacturing.

Electronic gases mostly imported, warehoused, supplied; lower EBITDA margin (trading business) vs. ASU manufacturing; investment in containers, debulking, safety required but lower than ASU.

Typically 18 months build + 18–24 months ramp + 3 years payback = ~5 years to stable cash generation.

Hard to target; merchant under management control, on-site contract-driven; Q1 on-site ₹14 Cr (~20% revenue), bulk ₹70 Cr (~80%), but on-site capacity higher; seek balanced growth.

Large plants only on-site; multiple inquiries above 600 TPD active; will execute if won; largest plant will be contract-determined.

Under commissioning; revenue expected Q2 FY27.

Unlikely; customers typically use one ASU for longer-term capacity; on-site order pipeline (steel + non-steel) remains very strong; multiple inquiries active.

Steel largest single industry (~33% revenue), but non-steel is ~67%; active across chemicals, pharma, engineering, defense, solar; diversified.

Near-term drivers: East India on-site Q2, Uluberia 2 utilization, Kurnool ramp; North India merchant plant (220 TPD) construction ongoing for FY27–28.

Contingent on new merchant plant ramps (450–500 TPD North + West combined) and on-site inquiry pipeline execution; inquiry volume 'very robust.'

Reaffirmed this call; clarified as longer-term target, not quarterly guarantee. Q1 delivered 39% (90bps miss). Management attributes to argon pricing volatility and one-off Q4 items, not structural.

Renewable PPA signed; more under negotiation. Depends on power commodity prices, argon pricing recovery, and execution on cost levers.

Allocated to North India (~220 TPD) and West Central (~230 TPD) merchant plants under construction. Phased deployment through FY27–28.

Balanced merchant/on-site mix; on-site inquiries (multiple, 600+ TPD) being evaluated; merchant locations deepening pan-India presence.

Argon prices below H1 FY26 levels; quarterly swings 20–30% possible; margins highly sensitive. Structural uptrend supports long-term but near-term volatility real.

Macro environment 'requires caution'; geopolitical uncertainty, energy price movement, currency fluctuations noted. Power is key input; cost management dependent on renewable PPAs and commodity prices.

Kurnool and Uluberia 2 ramping; assume 18–24 month to 80–90% utilization. Delays or lower-than-expected uptake would pressure revenue and margin trajectory.

Multiple on-site inquiries (600+, some 1000+ TPD) active; described as 'very strong' but no committed orders disclosed. Conversion risk and timeline uncertain.

North India and West Central India merchant plants entering competitive markets with existing suppliers. No advance contracts; rely on greenfield demand and location advantage.