ROSSARI - ROSSARI BIOTECH LIMITED Share Price

In the earnings conference call held on April 28, 2026, management provided an optimistic outlook for FY27, aiming for revenue growth of at least 15%, aligned with the performance of FY26. They emphasized their commitment to maintaining EBITDA margins in the range of 12% to 13%, while recognizing potential enhancements from new high-margin segments like pharmaceuticals.

Key forward-looking points included:

1. Revenue Growth: Management anticipates similar growth to FY26, expecting to benefit from the full-year impact of new capacities. They also highlighted opportunities for improvement should global conditions normalize.

2. Segment Performance: All three business segments"”HPPC (up 18%), Textiles (up 20%), and AHN (up 14%)"”contributed to growth in Q4 FY26, alongside a notable increase in exports by 11% YoY.

3. Investment in R&D: A new R&D facility in Navi Mumbai was established to foster innovation, with a focus on scalable solutions, including biosurfactants.

4. Capacity Expansion: The company added ethoxylation capacity at Dahej, bringing total capacity to 66,000 metric tons per annum, aimed at improving supply reliability.

5. Pressure on Margins: The management noted raw material price increases of 25-30% in March impacting margins, but they have initiated price adjustments to maintain profitability.

6. Strategic Asset Sales: Plans were discussed for divesting non-core assets to enhance cash flow and reduce debt, with targets to decrease long-term debt from approximately Rs.200 crore and potentially move towards debt-free status in the next 18 months.

7. Focus Areas: Future growth drivers include pharmaceuticals, oil & gas, and personal care, with expectations for stronger EBITDA margins as these segments scale.

Overall, FY26 was described as a year of strong execution, with management confident in the strategic steps taken to build a resilient business capable of achieving accelerated growth over the next 2 to 3 years.

Major Questions and Answers from the Earnings Transcript:

1. Question: What is the expectation shareholders should have for FY27 considering the Iran war and increase in raw materials? What kind of growth are we looking at top line and what should be the consolidated operating margins?

   Answer: We expect to maintain at least a similar growth trajectory as last year, targeting a minimum growth similar to FY26. If conditions improve, growth may be better. Our new capacities will be fully operational, and we're hopeful for positive developments from the market, supporting our growth plans.

2. Question: What about the EBITDA margins for FY27?

   Answer: We anticipate EBITDA margins to remain in the range of 12% to 13%. We are entering higher-margin segments like pharma, which should enhance margins in the second half of the year. Currently, margins are expected to stabilize around the ongoing levels.

3. Question: Can you give us some idea about segment-wise margins broadly like HPPC and textile specialty chemicals?

   Answer: We generally don't disclose specific segment margins. However, the three business segments broadly align with company-level margins. Each may vary slightly, but our gross margins for textiles are decent, with AHN yielding higher margins and HPPC being more mixed.

4. Question: Who are our closest competitors in each of these divisions?

   Answer: In Animal Health Nutrition, our competitors include Kemin and Cargill. In textiles, we face competition from Archroma and Croda, while in Home Care, global majors like BASF and Dow are key players. We also contend with both international and domestic players across markets.

5. Question: After the expected CAPEX, what will be the peak revenue potential of the company?

   Answer: At peak utilization, we expect to achieve an asset turnover of 3-4 times, potentially resulting in a significant increase in revenue.

6. Question: Any plans for a share buyback given we are trading below 10x EBITDA?

   Answer: Currently, there are no plans for a share buyback.

7. Question: How is the raw material sourcing situation, particularly concerning crude-related materials?

   Answer: Our raw material supply remains stable, relying mainly on domestic sources for Ethylene Oxide. Prices have risen, but we are effectively passing these increases onto customers without major challenges, except some resistance in the textile segment.

8. Question: What is the current CAPEX plan for FY27, and what is the current debt profile?

   Answer: Our CAPEX for FY27 is estimated between Rs. 50 crore to Rs. 75 crore, focusing on essential expansions. Current debt sits around Rs. 200 crore, including long-term and working capital, and we plan to reduce it over the next 18 months.

9. Question: What segment should drive our growth forward?

   Answer: Growth will stem from expanding in various segments, including pharma and oil and gas, alongside our core agro and textile sectors. We expect double-digit growth to persist driven by new capacities and market penetration strategies.

10. Question: When do you expect breakeven for the institutional business?

    Answer: We anticipate breakeven or possibly profitability in FY27, strengthened by the divestment of lower-margin businesses impacting our current EBITDA losses.