Chemicals (Q3FY26 Results Preview): Subdued growth; weak exports

Revenue for our coverage universe is likely to change by +2.2% QoQ. EBITDA is expected to change by +3.7% QoQ. Exports to MNC agrochemical and pharmaceuticals increased sequentially. Price of MMA remains range-bound while offtake is in line with Q2. Acetonitrile import prices declined by ~10% QoQ as Chinese suppliers reduced prices post ADD by Indian government on Chinese imports. CSTL commercialized the hydroquinone and catechol plant, with samples being sent to customers. HALS exports increased as CSTL added new HALS and is now offering a basket of products. A moderate drag in the offtake of oleochemicals while price of palm oil remained range-bound. Prices of ATBS and IBB were broadly in line with Q2. In the European market, pigment and coating business continued to be sluggish, while low-priced pigment from China and India increased competitive rivalry. We expect robust performance by Navin Fluorine, Aarti Industries, Aether Industries, Acutaas Chemicals, and SRF and weak performance by Fine Organics and Galaxy Surfactants.

• Navin Fluorine: The chemical business, comprising anhydrous hydrogen fluoride (AHF), fluorospecialty chemicals, and contract development and manufacturing organization (CDMO) services has increased by 50% QoQ, driven by offtake from Fermion and major agro intermediates. Exports of refrigerant gas declined during the quarter being a cyclically weak quarter while prices of R32 remained firm sequentially. Moderate increase in offtake of Honeywell business maintaining YTD run rate. Revenue to change by +40/+12.2% YoY/QoQ to INR 8.5bn. EBITDA margin shall change by +840/+24.4 bps YoY/QoQ to 32.7%.
• Aarti Industry: Offake from MMA remains in line with Q2FY26. MMA prices remain in line with Q2FY26. Revenue is expected to change by +18.7/+4% YoY/QoQ to INR21. 84bn. EBTIDA margins expected to change by+104/- 20.7bps YoY/QoQ to 13.7%.
• Vinati Organics: We expect moderate increase in offtake of the ATBS while prices should remain in line with Q2. Revenue is expected to change by +13.5/+7.6% YoY/QoQ to INR 5.9bn. EBITDA margin shall change by +381/+60.4 bps YoY/QoQ to 31.1%.
• Clean Science and Technology: CSTL has started samples of hydroquinone, butanol, and catechol to the customers. We expect the HALS export to rise 33% QoQ. Revenue is expected to change by -10.1/-11.1% YoY/QoQ to INR 2.164bn. EBITDA margin shall change by -761/-32 bps YoY/QoQ to 35.3%.
• SRF: Export of specialty chemicals will remain in line with Q2FY26 while there was a moderate decline in export revenue from refgas business. R32 realization remains in line with Q2FY26. Revenue is expected to change by +6.6/+2.2% YoY/QoQ to INR 37.20bn. EBITDA margin shall change by +329.68/-8.8 bps YoY/QoQ to 22%.
• Sudarshan Chemicals: Revenue is expected to change by +264/2% YoY/QoQ to INR 24.31bn. EBITDA margin shall decrease by -549/81.8bps YoY/QoQ to 6.4%.
• Aether Industries: Revenue is expected to change by +29.7/+3.6% YoY/QoQ to INR 2.85bn. Revenue growth is led by increase in utilization of the Baker Hughes plant. EBITDA margin will remain broadly in line with Q2 at 29.8%.
• Fine Organic: Revenue is expected to change by +2/-12% YoY/QoQ to INR 5.25bn. EBITDA margin shall change by 310/-23 bps YoY/QoQ to 22.4%.
• Alkyl Amines: Revenue shall change by +0.9/-3.8% QoQ to INR 3.74bn. EBTIDA margin would change by -67/+48.7 bps YoY/QoQ to 18.5%.
• Galaxy Surfactants: Revenue shall change by +26.3/-0.8% YoY/QoQ to INR 13.15bn. Raw material prices will remain range-bound in Q2FY26. EBITDA margin could change -179/+1.3 bps YoY/QoQ to 8.3%.
• Deepak Nitrite: Isopropyl alcohol (IPA) and acetone prices decreased by ~8% QoQ while phenol prices remain in line with Q2FY26. Revenue shall change by +2.6/+2.6% YoY/QoQ to INR 19.52bn. EBITDA margin would change by +255.8/+67.2bps YoY/QoQ to 11.4%.
• Acutaas Chemicals: Revenue shall change by +26.9/+13.9% YoY/QoQ to INR 3.49bn. EBITDA margin will change by +247/-370.6 bps YoY/QoQ to 27.4%.
• Neogen Chemicals: Revenue shall change by +9.3/+5.5% YoY/QoQ to INR 2.2bn. EBITDA margin will change by -137/+147bps YoY/QoQ to 15.8%.
• NOCIL: Revenue shall change by +4/+3.2% YoY/QoQ to INR 3.31bn. EBITDA margin will change by +168/+271bps YoY/QoQ to 9.2%.
• Balaji Amines: Revenue shall change by +11.5 YoY to INR 3.48bn. EBITDA margin will change by +475/+124bps YoY/QoQ to 19.4%.

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Source: HDFC Securities Institutional Equities

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