Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Navin Fluorine International Limited (NSE: NAVINFLUOR) Q4 2026 Earnings Call dated Apr. 29, 2026
Corporate Participants:
Nitin G. Kulkarni — Managing Director
Anish Ganatra — Chief Financial Officer
Analysts:
Rohit Nagraj — Analyst
Pooja Swami — Analyst
Sanjay Jain — Analyst
Unidentified Participant
Unidentified Participant
Presentation:
Rohit Nagraj — Analyst
Ladies and gentlemen, good day and welcome to the Naveen Florine 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 Swami from MUFG. Thank you. And over to you ma’.
Am. Please proceed.
Pooja Swami — Analyst
Thank you. Shailendra. Good evening everyone and welcome to Q4 and FY26 earning conference call of Naveen Florine International Limited. Today on the call we have with us Mr. Vishad Mafatlal, Chairman, Mr. Nitin Kulkarni, Managing Director and Mr. Anish Ganatara, 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 rework 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 two of the investor presentation of the company which is uploaded on stock exchanges and on the company’s website. This I hand over the call to Mr. Vishad Mukatlao for his opening remarks. Thank you. And over to you sir.
Operator
Good evening everyone and a warm welcome to Naveen Florian International Limited’s Quarter 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 Dawe, our Investment 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 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 8.6 rupees per equity share, 430% of the face value of rupees 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 Florine’s long term strategy. Our strong balance sheet continues to provide flexibility while our robust order book across vertical underscores the confidence our customers place in us. With proven capabilities and operational efficiencies, we believe that innovation led companies like us are best positioned 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 Chemos 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,
Nitin G. Kulkarni — Managing Director
Thank you Vishad 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 four FY26 revenue grew 20% year on year at rupees 393 crore driven by improved realization and volume growth. Our AHF plant was successfully commissioned and commercial supplies have commenced during the last quarter.
Our additional HF3 capacity expansion equivalent to 15,000 metric tons per annum of R32 remains on track for commissioning in quarter three FY27 the HPP 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 Q4FY26 Revenue grew 39% year on year at rupees 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 dredge MPP debottlenecking capex is progressing well and is and is targeted for Commissioning in Quarter 3 FY27. The CHEMOS project is on track and expected to be completed by end June early July. Importantly, specialty chemical growth is backed by order, visibility and a robust pipeline for FY27. Turning to CDMO business quarter four FY26 revenue grew by 61% year on year to rupees 186 crores. This growth was driven by balanced mix 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 Navin Fluorine’s integrated platforms. Our near term priorities are efficient execution of announced 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 development 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 remarks.
Anish Ganatra — Chief Financial Officer
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 with 321 crores with margins expanding to 34.2%. Operating PBT grew 118% year on year with 251 crores. Profit after tax stood at 213 crores reflecting a growth of 124% for the full year.
FY26 net operating revenues grew hopefully crores reflecting a growth of 41% supported by broad based momentum across specialty chemicals, CDMO and HPP. Operating EBITDA more than doubled to 1082 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 the last. In FY 2425, profit after tax stood at 664 crores as against 289 crores. Our net working capital base is 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 with versus our previous indicated guidance of 90 days. 90 days of sales. As of 31 March 2026, our net debt to equity stood at 0.01x negligible while both ROE and ROCE improved at 20% and 21% respectively. Thank you. And we can now open the floor for question and answers.
Rohit Nagraj — Analyst
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask the question may press Star and one on the Touchstone 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 from ICICI securities. Please go ahead.
Questions and Answers:
Sanjay Jain
Thank you. I got a few questions. Let me start with the Middle east situation right now. The full question there. First from the availability of raw material including but not limited to sulfur and methanol. Have you seen any challenge on the key raw material availability before? Contracts have not been written or suppliers have not been. How is the situation there? Because I think it remains very volatile and uncertain. And a related question is on the inflation of the raw material. We have been maintaining a 45 days inventory.
We sailed through probably a better March and April. But we should be hitting a level where inventory is now completely depleted. That means it necessitates the increased pricing to the contracts which we are working. And spot price is probably just much faster. But how should we think about the passing on inflation of the contracts like hfo, Agrochemical and cdmo. That’s number one. Number two on the refrigerant gas there is a notification which government has put up and now I think the plan can come up till 2027.
And there could be a situation where the competition was not earlier. Looking at significantly at the capacity in 27. Probably we are running a capacity now in excess of 1 lakh 50,000 in India. That situation is very different than what we were earlier looking for CY26. Now how does it change the scenario for prices? Because in our presentation we are talking of a revenue potential from new R32 of 600 to 825 crore. So at a lower end we are looking at a price which is 400 crore probably half of the price.
What is trading the volumes? Why do you think you’re looking at 400 as a bottom pricing? Number three is probably in 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. These are my initial questions. Thank you.
Anish Ganatra
Sorry Sanjay, can you repeat your last question on margin?
Sanjay Jain
So we have been calling out the benefit because of the currency depreciation which has adding to the margin of 34%. Now what is that margin benefit purely coming from the Forex.
Anish Ganatra
Okay, so you got a couple of questions. Thanks again starting from your comment on the MIDI 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 sort of 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 area where you had a, you know, call everyday 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 customer. There could be some magnificent. But other than that we are pretty confident of passing on the price increases of the finished product. Yes. So we don’t see a material list 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’ve not been able to get materials. Yes, the pricing has gone up and that is kind of universally known. But we’ve not had a situation where we’ve had to shut anything down for want of raw materials or anything like that. And customer demand has remained robust during this period. Yeah, there is no demand
Sanjay Jain
Disruption because of inflation is what we are telling us. It’s just a restocking demand, anticipating an inflation.
Anish Ganatra
So in fact I mean both the situation there may be further restocking demand that will come up because there will be some something that was overnight warming situation improves. But currently we’re not seeing any destruction of demand as in our numbers as we speak now as well right now your point on refrigerant gas notification demand 27 will be as if for bringing any new capacities. I mean that notification still doesn’t change the position on the quota There. And you should remember that the quota is only going to be available as aligned with the Kigali protocol which is 24, 25, 26 assets, production and 65% of your GWB of 2009 and 10.
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 porta available or not to anybody bringing in both capacities? Sorry, no, no, just
Sanjay Jain
One. One, one One related question on best Gas. Is it clear from the government side that the R22 which company had only that company will be eligible or redistribute the R22 quota on a pro data basis?
Anish Ganatra
Do we have the clarifies? So I think Sanjay, I mean again our understanding of the 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.
Sanjay Jain
Very
Anish Ganatra
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 figures 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 marine 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 is 10 eventually was happening out here.
Sanjay Jain
Very clear. Two related questions. Yes, 2. Question 1 in agrochemical application the city weak from the innovation. Are we seeing that playboat for us in FY27 and second can help us with TDM or late stage contract. How many are we working? Well we know it’s commercial with the European plywood but we have supplied two plants if I remember one in the Europe and one in the US on the commercial. Can you throw some light on stage contract we have in our pipeline and how should we see them becoming commercial for us?
Anish Ganatra
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 see some indication of volume recovery. Pricing is always going to be lagging that I think all of us understand. And Naveen, sort of 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 utilization.
So I think we are well covered for FY27. And as we move into 2027 we’ll get further clarity on how this is reshaping into 2020 in terms of admol yield. 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 stages. So there’s a very healthy balanced portfolio there. As we look into coming into our FY20 number that we’ve always said is 100 million, you know, this number that we 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 have been inching closer to it with this quarter. We further inch closer to that number. So you know, there is very good confidence that we will push for hitting the number and we’ll see where we get to at the end of the year. There is a lot of work happening on these commercial molecules as well. And we’ve indicated broadly the therapeutic areas that we talked about on the slide. If you see it, oncology, if I remember, neurology, cardiovascular, animal health. So you know, in all of these areas we are playing in, in, in sort of a good balance frankly.
So, so very confident on the CDM of road stage. You know,
Rohit Nagraj
Two questions per participants. Thank you. So you can rejoin the queue.
Sanjay Jain
Yeah, thank you.
Rohit Nagraj
Thank you.
Unidentified Participant
Thank you.
Rohit Nagraj
We have next question from NASA Chaudhary from Aditya, Richard from please go ahead.
Unidentified Participant
Yeah, hi. Thank you for the opportunity. Now first on the option coding, the project goes well, what kind of, what type of Capex it can trigger and by when we can, you know, have some visibility that it should go in the favor of.
Anish Ganatra
Okay, okay. So chemos, 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, this is a, 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 3 capex that will be rolled on the back of that understanding. We mature to talk what it will be today. But I think it’s fair to assume that we are the only manufacturing site for chemos given the nature of the product, that it is essential to support the AI growth that we are seeing around us and the unique benefits of the product.
It should be a reasonable one.
Unidentified Participant
Second, on the pricing side, can you speak
Anish Ganatra
A bit louder if you don’t mind.
Unidentified Participant
Second, on the pricing side especially on the Fermion and other portfolio as well. So apart from ref, which all portfolios you’re seeing price uptake and what is your near term outlook there and what is the when is the price revision expected in this Fermion portfolio?
Anish Ganatra
I don’t know what’s driving that question Nashad, but I mean Fermion 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 and like we said, you know we are very firm delivered of the projections that Fermion 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.
Unidentified Participant
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 price 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 project.
Anish Ganatra
I will leave you to your judgment. The commercial thing we deal with it but it’s not something we can talk on any sort of forum outside for something.
Unidentified Participant
Thank you so much.
Rohit Nagraj
Thank you. Next question is from the line of Rohit Nagraj from 361 Capital. Please go ahead.
Sanjay Jain
Thanks for the opportunity and congrats on strong set of numbers. First question unfortunately on the pricing part given that there is a
Rohit Nagraj
Raw material price inflation and some of our contracts for HFO as well as for CDMO would be calendar year contract 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
Sanjay Jain
Charging the previous price and then maybe a couple of months later the newer price incorporating the higher raw material cost. Thank you.
Anish Ganatra
Thanks Rohit. I mean Rohit could be 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 customers about the price rises.
So there is a good reception to that. The second question on what is the second thing you said transitory month is something around.
Sanjay Jain
I
Anish Ganatra
Think I answered that. Right.
Sanjay Jain
Right. Okay. Yeah.
Rohit Nagraj
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 the newer capacities, even if we don’t consider the ones who don’t have quota and we are adding there is another player who has got quota and they will be adding how this incremental volumes which is coming into play will be placed and will it unfortunately asking the same question again in terms of pricing, will there be any impact given that these additional capacities will come on.
Anish Ganatra
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 and that drives the Kaizen cost 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 than and getting stronger as we speak. Okay. So one has to read into those dynamics. The point about, I think it was Sanjay who had asked and maybe I didn’t address it at that point in time but you know there was a question on the far range that you given 600 to 875.
Frankly, as part of our investment approach that we take to the board, we always present the downside case too. So we’ve only translated that in full transparency to how we report it to the market. It’s a downside case that we always do more as a map 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 up $2. And if the economics stood, then there is stigma.
Rohit Nagraj
Just one clarification on the numbers front. Our employee benefit expenses have been up only 4% on a Y basis and there has been a significant scale up in terms of operations. So will it be normalized during FY27? Maybe inflation at this point plus the newer capacity coming on stream which earlier probably were capitalized in the capex first. Thank you.
Anish Ganatra
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, but those reflect, you know, typical increments. They would 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, you will see 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, 8.59%, not more than that in that threshold.
Sanjay Jain
Perfect, perfect. Thanks a lot and
Anish Ganatra
Thank
Rohit Nagraj
You. Participants are requested to ask two questions. For participants we have next question from Vivek Rajmani from Morgan Stanley. Please go ahead sir.
Sanjay Jain
Hi sir. Thank you for the presentation and congratulations on the strong finish. Just wanted to get a sense with respect to the customer conversations that you’re having. Do you get a sense that you could make the increased restocking on a more sustainable basis with customers potentially building up more buffers? What is 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 potential offsets for some of the ATChem products?
Thank you.
Anish Ganatra
So Vivek, see our portfolio on at CAM 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’re not seeing any disruption on that front. I mean, to be honest, everybody will be managing the supply chain disruption. How they do it. Frankly, it’s 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 that’s where you are going with it.
Sanjay Jain
Sure, sir. No, it’s actually going the other way where you could see more restocking potentially with what’s happened. Not specifically on demand destruction.
Anish Ganatra
No. So as I said, see the ag market, you know, and we’ve always maintained this, that fundamentally that’s market has structured good demand in the long term. In the near term it’s going through a reset and it’s going to 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 price rises lesser than volume increase. So it’s going to look like flattish in terms of prices.
But you know, that’s where we are to be honest. Beyond that, I don’t think I have much to add. Thank
Rohit Nagraj
You. The next question is from the line of Ankur Perival from Texas Capital. Please go ahead.
Sanjay Jain
Yeah, hi sir, thanks for the opportunity and congratulations on consistent in this set of numbers there first question on the CDM movement. Just sort of, you know, trying to understand the growth outlook better. So one, have we expanded our capabilities on the CDM side versus let’s say maybe 10 months back or is it largely the same? And in the related part here, how has the res changed between the late stage molecules and the early stage molecules or
Anish Ganatra
So capability expanded? Certainly the case if you mean capability through acquisition of new technology, etc. No, not yet. 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 early 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 we have got about 50, 50% and close to about 55, 60 molecules that we are actively working as we speak on.
Sanjay Jain
Sure. Okay. Because this molecule number has been largely consistent. I look at last two, three years around SAC, 65 word numbers. So this is what I was referring to from a revenue number perspective.
Anish Ganatra
No, so the molecules on commercial side, you’re right, because it takes long time to sort of go through the cycles as you are aware of the early stages is campaign driven largely and they keep moving. But you know, our sort of endeavor is to kind of hold it at a good balance and that’s why we probably obviously the numbers like that. Sure. And I just second more of a bookkeeping few clarifications here.
Rohit Nagraj
We will request two questions for participants. Please rejoin the question.
Anish Ganatra
Okay, thanks. I’m going finish off. Yeah, let him finish off. Maybe next time we. The next one can be. I think
Rohit Nagraj
He has joined you.
Anish Ganatra
Okay, I
Rohit Nagraj
Will. We have next question from Jason Sones from IDBI Capital. Please go ahead.
Sanjay Jain
Yeah, thanks sir for taking my question. Sir, just wanted to know, I mean
Rohit Nagraj
You have grown really phenomenally well in the specialty chemical segment as well as the HDB segment as well for this year, growth in excess of 35 and 45%. Now just wanted to know from this higher base when we look into the next year FY27 regarding uni, I know you gave a lot of color on the ATIAN 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.
Anish Ganatra
So Jason, I think I’ve given apart from just not giving you the specific number, but let me sort of reiterate the growth blocks going into FY 2020. You know, if you look at we’ve said the HF plant has already been commissioned, it was commissioned in February. So you should see the revenues for that ticking into FY28. You should see the revenues for nectar that we talked about the dedicated fluorochemical plant. And we’d always said that our endeavor would be to be around 50%, 60% capacity optimization.
This way that would go to about 70, 75% in the coming years. You would see the new sort of CAPEX coming on stream, you know, the debottlenecking. And we’ve again given you the power for that and the timeline for that. We’ve given you R32 and the timeline for that. And again you can model your numbers from what you have as an available data from the market. You know, you start putting all this together and obviously we’ve talked about the Chemos project as well. You know, CBMP4 was commissioned last quarter again and you would see that December if I’m not mistaken.
And you will see the revenue sort of kicking in this year to again from that point of view, fermion growth is very solid. So again you can factor in those numbers too. So you will have enough to see the trajectory of the growth. And I would be surprised if it’s not double digit but I’m happy to clarify if it is not separately.
Rohit Nagraj
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 fresh gas volumes on from that region for that reason.
Anish Ganatra
So Middle east, frankly our export footprint is very little. You know, mainly the Argentine gases and those having gone in March and they are still in the schedule but not yet gone in yet. To be honest, we are working on numbers for Q1 excluding the middle east movement at all. So if any of that comes in will be an upside. But you know, the demand across the globe is pretty robust. And also no logistics issues in that.
Rohit Nagraj
Sure. Thanks a lot for answering my question. Thank you. Thank you. The next question is from the line of secretary from my side printed private limited. Please go ahead.
Sanjay Jain
Good evening to the team. I have two questions. My first question to Mr. Parker is a forward looking one. How are you positioning living sodium 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 and what strategic levers will differentiate the company from its peers in the coming quarters? My first question, I’ll ask my second question after this. Thank you.
Anish Ganatra
Sorry, who did you direct your question to?
Sanjay Jain
Mr. Roy?
Anish Ganatra
You don’t have any ROI. 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 actium 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 a management we are working on some new innovation 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.
Sorry, did I lose you? I was just kidding.
Rohit Nagraj
So he is right now off the queue.
Anish Ganatra
Okay.
Rohit Nagraj
Okay, we have next question from Arun Prasad from a vendor Spark. Please go ahead.
Sanjay Jain
Good evening Anish Sai and Nitinji. Couple of questions. First is you spoke about demand. You are not seeing any kind of a description. But I’m sure you that there are two parts to this. One is one set of customers would be restocking and second set of customers maybe they may be little bit going slow and maybe during the wait and watch. So you are read on the demand situation. Is it more because that some of these customers are restocking and probably the Issues with respect to the demand on the higher prices, will it come with a lag?
Is that the right way to look at our business at this point of time?
Anish Ganatra
So 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 so Arun. Sorry, yeah, so what I was saying was if you look at the, you know, visibility we’ve Talked about on FY28 in the address specialty, I mean frankly being 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 destocking, some not destocking, 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.
Sanjay Jain
Of course I’m sure for your pharma category would be relatively insulated.
Anish Ganatra
I’m talking about pharma again. I frankly you guys will know far more than I do because for me 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 lithium extensions that they’re working on. So
Sanjay Jain
Outside pharma and agro, which categories you would say that at 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. Can you call out some categories? I know this from your problem.
Anish Ganatra
This is economics question of things, but there are several articles, one can read that. But 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 ability 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.
Sanjay Jain
No, no, I understand Anish Bhai. What I’m asking is what categories you should be looking out for Outside the category, outside the pharma and lab groups. Because as an outsider we do not have much insight. You know what’s happening on.
Anish Ganatra
It’s very simple. At $150 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 economics 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.
Sanjay Jain
And on the Forex benefits you spoke earlier, there are two costs associated for you. One is the dollar denominated cost and another is a rupee based cost. So is it fair to assume when the contracts goes for the renewal customers would not be, would be, would be negotiating only to the extent your rupee cost will not be repriced to the same exist.
Anish Ganatra
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. Right. So there are several. Some nuances to it and it’s not a subject. I think we can cover your course.
Sanjay Jain
One final question. HPP segment sequentially there is a revenue decline. One would expect that with the AHF plant sailing up under better. HCP segment. QQ declines sequentially not.
Anish Ganatra
Oh yeah, that is okay. Okay. That you’re talking of QQ3 to Q4. Right. So you know, these are, these are things in terms of, you know every, every of these plans have plan shutdown. Right. And we have taken a plan shut down in our. 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 obviously as you know, and I have said this before, that we had no shipments in the Middle east which was close to about 15 days.
To the
Sanjay Jain
Any quantification possible.
Rohit Nagraj
I will request you to restrict two questions per participant. Sir, please rejoin the queue. Thank you. We have next question from P. Marc Princial Life Insurance Ltd. Please go ahead. Mr. K.
Sanjay Jain
Yes. Sorry, am I audible? Yeah. Yes you
Rohit Nagraj
Are.
Sanjay Jain
Okay, got two questions on the HPP side. So first the Honeywell contract. I mean we have always talked about 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 levers do we have in the HPP? That is first question.
Anish Ganatra
Okay, so before on the growth levers in hpp, I’m sure you should certainly count the growth coming in from HF plant, which is a pretty big question in terms of your question on. I mean, you know that HFO has applications primarily in the construction area, but also ancillary applications in the resident cooling space too. And whatever we are doing on demand today, it is at an 80% capacity, as I told you before. So there is room to expand within that same capacity by another 20%. I mean, that’s nothing new that I’m saying today, but it’s been something we’ve always been telling you guys.
What was the other question? You have something on 32.
Sanjay Jain
So basically the question was growth levers ahead of new plants. You mentioned Honeywell, additional 20% and AHF, right?
Anish Ganatra
No, I didn’t say ahead of 32 plant. I said there is opportunity to grow that at some point whenever that demand comes through. Today we are at 80% size. Before that, you should certainly count in the HF capacity and the growth and 32 will come in on time, as we said that before.
Sanjay Jain
Okay. Okay. And second question on the segment two. I mean, specialty chemicals there for this project, Nectar, I think there are some change in the product from the client. So now under the new scope, what is. What is the visibility we have for merchant sales, which I mean outside the contracted volumes.
Anish Ganatra
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’re not really concerned about utilization. Yes, it has been. We would have liked to have a full utilization by end of FY28, which would be the two years, but I think we are realistically talking about 75 to 80% is where we will get to by end of FY.
Okay. And just lastly,
Rohit Nagraj
I’m really sorry, sir. Please restrict your question to questions for participants.
Anish Ganatra
Noted. Thank you.
Rohit Nagraj
Okay, thank you. Please rejoin the queue. We have next question from Mr. Abhijit Ailia from Kotec Securities. Please proceed.
Sanjay Jain
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. If we could expect it. Normally the margins have expanded a little bit more.
Anish Ganatra
No. So margin expansion in a diversified business is linked not just between business mixes, but also the portfolios that you play within each vertical. So speciality has different molecules which are different, you know, 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 equation and jump to that conclusion. It would depend on what product we’ve done this quarter versus what we did last quarter.
And like I said before, there were 13 molecules we did in FY26 in the Specialty business. Three of them were done quarter four.
Sanjay Jain
Okay, 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? That is 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.
Anish Ganatra
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%. Yeah. Which we’ve always said. Yeah. So that we will hold for the whole year. This is not a quarter number. And we always maintain that you should look at the margin from a full year perspective. 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.
Now that first quarter, now that has moved to clearly in the 400 mark. And in the coming year with the new R32 capacities, HF capacity, 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 reach new geographies, new customers. You know, a lot of it will change as you grow the business in the pace at which we are going.
Rohit Nagraj
Thank you. Thank
Pooja Swami
You so much.
Rohit Nagraj
And the next question is from Ajit Jose from Noama Institutional Equities. Please proceed.
Sanjay Jain
Hi, sir. Thank you for the opportunity. So, two questions from me. First one wanted to get a bit more understanding on the Nectar project. Believe that 50% was towards 1 of our marquee customers and the balance 50 was something that we are still trying to figure out in terms of how to dispense 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 139crores if I calculate correctly. What could be the attribution to that? These would be my two questions. Thank you.
Anish Ganatra
Okay, sure. So on Nectar you know that apart from the multi customers and 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 lower than what we would have liked it to be. So therefore we are talking of the 75% this year and then the balance next year. We’ve also talked about the fact that just said that before to the previous respondent that we would be looking at, you know, sort of downstream applications in the product given whatever.
If your question is more around the pricing of that product etc. To the Chinese market etc. We are confident that even at that time we would make reasonable margins that would not be deteriorated to our overall margin profile. Yeah, contract liabilities. Now as you know, contract liabilities actually reflects the money that we receive from our customers towards the capital contribution both on Chemos project and the Marquis project for the additional molecules. So therefore you see the increase that you see primarily.
Sanjay Jain
That’s great. Thanks a lot.
Rohit Nagraj
Thank you. The next question question is from the line of dara Ganatra from ValueQuest. Please proceed.
Unidentified Participant
Thank you for taking my question. So I would like to understand more on the carry on contract since now the CGMP4 is commissioned from this quarter onwards. From Q4 onwards, greater manufacturing that was already done in your Devas facility. Now move to and in the other block of CDN or do you have visibility for more volumes to offtake in the next year? So both will be utilized.
Anish Ganatra
So the Permian block was a dedicated block. So obviously what we are currently doing elsewhere will go into dedicated block because that’s why we built in the dedicated block. But that answers your first question. The second question, do we have visibility to more volumes? Yes, of course we do have the ability to more volumes and that will trigger off the decision in terms of where do we place them etc and when those volumes come into play.
Unidentified Participant
Okay. So there could be a possibility of a cgmt5 as well if you have more visibility for the contract.
Anish Ganatra
Yeah, there will be a phase two and obviously we are working with other molecules too. So you know, we’ve got space for 5, 6 and 7, I believe.
Unidentified Participant
Okay.
Anish Ganatra
Yeah, so they’re scalable. If we need to do it and there is a business, we will do this.
Unidentified Participant
So. And can you mention the quantum of CDMO contribution that is coming from fab on for the full year of FY26?
Anish Ganatra
Can I mention the
Unidentified Participant
Quantum of penn year contribution?
Anish Ganatra
No. No. So Dara, we don’t commercially talk about these values. It’s kind of quiet on those. Like I said, you all have the benchmarks, you know, you know, whatever, 2, 3% of the sale value, etc. In terms of be intermediate. That all you know. Right. And eventually that also, you know. So you have enough what you need to know,
Unidentified Participant
Sir. Thank you.
Rohit Nagraj
Thank you. Ladies and gentlemen. Due to time constraints this will be last question. We now hand over the line to Mr. Anish Kata for closing comments. Over to you, sir.
Anish Ganatra
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 the same outcome as well. Thank you again and have a good evening all.
Rohit Nagraj
Thank you. On behalf of Naveen Florian International limited that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.