CAMLINFINE - Camlin Fine Sciences Ltd Share Price

The management of Camlin Fine Sciences provides a cautiously optimistic outlook for the upcoming year. For FY 2027, total revenues are projected to be between INR 2,200 crores to INR 2,400 crores, with an anticipated EBITDA margin of 12% to 14%. The vanillin business is expected to see improved realizations and volumes, particularly following a campaign for 600 metric tons of ethyl vanillin, with 50% of that already booked in advance.

Key forward-looking points from management include:

1. Projected vanillin sales volume for FY 2027 is estimated at 2,200 to 2,400 metric tons in the U.S. market, indicating a strong recovery trajectory post-tariff adjustments.
2. Reaffirmation of guidance for FY 2027, despite challenges, shows confidence in achieving double-digit EBITDA margins.
3. Enhanced focus on the Blends business is noted, with expectations of growth stemming from recent investments in human capital. The Blends revenue is anticipated to increase upwards of INR 1,400 crores in FY 2027, from INR 1,050 crores including discontinued operations in the previous year.
4. A gain of approximately INR 100 crores from the liquidation of the CFS Europe subsidiary is noted, significantly reducing ongoing cash burn associated with discontinued operations.
5. There is awareness of ongoing supply chain challenges, particularly due to geopolitical tensions impacting logistics and raw material costs, expected to linger at least through the first half of FY 2027.
6. Continued monitoring of the raw material costs, especially diphenol which has risen from INR 85 to INR 150, affecting production decisions and costs.

Overall, management's statements reflect a commitment to stability and growth despite the geopolitical climate, with a strong focus on operational efficiency and strategic positioning in the market.

1. Question: "With respect to diphenol prices, which you said have increased drastically from INR85 to INR150. This is a raw material for production of what actually?"

   Answer: "Diphenol is the product we manufacture, which includes hydroquinone and catechol. The increase was in the cost of phenol, not directly diphenol. This affects our production costs, leading to higher expenses for hydroquinone and catechol."

2. Question: "Can you elaborate on the INR85 crores gain from discontinued operation?"

   Answer: "The gain arises from the liquidation of our CFS Europe subsidiary, involving derecognizing certain loans on liquidation. Due to losses in that operation, the credit after adjustment is less, but this gain primarily reflects the derecognition of those loans."

3. Question: "Can we expect our realization to move upwards given that the inventory has been liquidated and the U.S. tariff has reduced from 50% to 25%?"

   Answer: "Yes, we liquidated channel stocks of vanillin, and expect better realizations as tariffs have reduced. Previous realizations moved from sub-$11 to about $12.5. Anticipating improvement, the trend should continue as we sell more now."

4. Question: "What would be our EBITDA margin outlook given the impact of the Middle East crisis?"

   Answer: "The Middle East situation hurt us by about INR50 crores. Additionally, the Vinpai acquisition contributed a loss, leading us to believe EBITDA could've been INR30 crores higher without these issues. We maintain guidance for FY 2027 without changes."

5. Question: "Can you explain your debt levels at March 2026 and cash flow management plans for FY 2027?"

   Answer: "We started with INR620 crores of debt, added INR45 crores for working capital, and included INR30 crores for the Vinpai open offer. Total debt reached INR670 crores. We're exploring debt market support to manage liquidity and assist in growth."

6. Question: "How is vanillin sales performing this quarter?"

   Answer: "We sold around 320 tons of vanillin this quarter. While we projected more due to held back stock, we faced production restrictions, affecting volumes. Our channel still carries about 300 tons for Q1 sales."

7. Question: "What's the current tonnage of catechol inventory we have?"

   Answer: "We have approximately 3,000 tons of catechol in inventory. This should be sufficient for our vanillin production needs over the upcoming months."

8. Question: "Will the supply chain situation improve in Q1 of FY 2027?"

   Answer: "While logistics issues linger, with unpredictable shipping times, costs remain high post-war. We expect some recovery but anticipate continued challenges, impacting our operations through H1 FY 2027."

9. Question: "What are your projections for the vanillin business in the U.S. for FY 2027?"

   Answer: "We project vanillin sales in the U.S. between 2,200 to 2,400 metric tons this year. Demand appears strong, and we have a backlog of contracts that support these figures, indicating a positive trajectory."

10. Question: "How does the pricing scenario in the U.S. market affect your realization?"

    Answer: "Currently, realizations are around $13 due to competitive pressure. We believe that as we secure more market share, prices may increase, particularly if competitors adjust their strategies. Looking at $13.5 to $14 as realistic targets."