Ladies and gentlemen, good day and welcome to the Finolex Industries Limited Q3 FY 2026 Earnings Conference Call hosted by ICICI Securities Limited. 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. And now hand the conference over to Mr. Arun Baid from ICICI Securities. Thank you, and over to you, sir. Thank you, Shivam. Good afternoon, ladies and gentlemen. On behalf of ICICI Securities, I welcome you all to the Q3 FY 2026 post his remarks, the floor will be open for Q&A. Over to you, Mr. Agarwal. Thank you, Arun. Ladies and gentlemen, good afternoon. Welcome to our investors' conference call for quarter three of FY 2026 and also for the nine months ending financial year 2026 earnings release. We thank you for your continued support and interest in the Finolex Industries. Coming over to some of the numbers for the quarter, we see a little dip in our volume numbers for the quarter and also correspondingly for the nine months ended for the current financial year, mainly on account of the monsoon season. However, our operating performance has seen a notable improvement during the same period, largely supported by softening of the raw material prices and also the operational efficiencies, which we have been pushing through the organization over the last period of time. Let me also take you through some of the performance indicators for the quarter. Q3 FY 2026, so the numbers are like for this quarter. The volume decreased by about 14% to 73,500 metric tons, against 85,767 metric tons in quarter three of last year. Our income from operations was at INR 898 crores for this quarter, which is a 10% decrease against INR 1,001 crores of Q3 FY 2025. However, happy to note that EBITDA improved to INR 123 crores, against EBITDA of INR 83 crores in Q3 of previous year. Correspondingly, PAT also has improved to INR 110 crores, against PAT of INR 71 crores in Q3 of previous year. For the nine months ended December 2025, overall, our volume is lower by about 6% to 230,965 metric tons, against 245,729 metric tons for the nine months ending of the previous financial year, that is, financial year 2025. Our income from operations was at INR 2,800 crores, down about 6%, which is in line with the volume, against INR 2,970 crores for the nine months ending FY 2025. EBITDA improved to INR 347 crores, and this is an increase of about 15% against INR 302 crores for the nine months ending FY 2025. Profit after tax also improved to INR 926 compared to I mean, from the operations I'm talking about, but all in all, profit stood at INR 326 compared to INR 628 crores, which included last year exceptional gain of INR 407 crores for the nine months ending FY 2025. So operationally, we have improved significantly in our profitability. We continue to have a very strong balance sheet with a net cash surplus of around INR 2,430 crores as on 31st December 2025. I think with this, we leave the floor to question and answers, and together with me is Mr. Chandan Verma, our CFO, to answer the questions. Good afternoon, all participants. A very warm welcome from Finolex Industries. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press * and 1 on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press * and 2. 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 comes from the line of Devyansh Thakur from Fintrust Capital. Please go ahead. I say congratulations on a great set of numbers. So what we have been seeing for the past few months has been that everyone is saying that PVC prices should bottom out. So can you provide us some guidance on how the market has been behaving and when is it going to stabilize? Thank you, sir. Yeah. I mean, all the commodities market have been affected by what is going on with respect to the geopolitical developments, yeah? And also so that has an impact not only on the polymer prices but also on other commodities as well. So from that standpoint, we had our own share of volatility in the raw material prices and also on the prices of PVC. During the quarter, we saw that the price is going very, very low. I think we have never seen these kind of prices in the recent past, yeah? The PVC prices have gone down to as low as in the range of $600, depending on the region where it was coming from. However, the situation has improved a little bit, yeah? And we look into this quarter a little more positively. Hope that helps. Okay, sir. Sir, can you yes, sir. That answers my question. Sir, can you also provide us with a visibility on what prices can we see going ahead or something like that? Nobody knows what is going to happen, but prices in the month of December have started improving towards the end of December. As I said, last quarter, we saw prices going as low as $650. We see some 8%-9% improvement in that. They are more like $650-$660 range currently, yeah? Okay. Thank you so much, sir, and all the best. Thank you. Thank you. The next question comes from the line of Utkarsh Nopany from Anand Rathi. Please go ahead. Yeah. Hi. Good evening, sir. So my first question is again on the PVC resin side. So just wanted to know from you, given large PVC resin surplus capacity is there in China, so do you see any possibility of the resin prices going back to the historical range of around $850-$900 per ton over the next 12-18-month period, sir? Yes. Not only in China, but globally, there is a capacity question. We also see in the recent past capacity adjustments. Some of the Western companies announcing shutdowns of their plants. We see this kind of a trend in China also. But I think China also, there are two different technologies which operate, okay? Not everywhere, everything could be used. We also heard the news that there is going to be a different tax structure or the incentive for exports in China. So that is also going to have an impact on the PVC resin prices for exports from China, okay? So we will see how does it play out, but outlook is that probably PVC has bottomed out. Okay. And sir, yesterday in the budget, when we looked at the document, we saw that the government has reduced the import duty from 10% to 7.5% for chapter number 3904. And the PVC resin falls under chapter number 3904. So just wanted to confirm whether the import duty on PVC resin has gone down from 10% to 7.5%. Utkarsh, we have also seen this announcement, but we are waiting for the fine print to come out. Still, see, that is speculative stage. Let the fine print come out, then we'll be able to conclude whether actually we are getting impacted by the reduction in the PVC prices or not. We are waiting for further detail in this regard. Okay. And Finolex, sorry. See, the PVC resin prices on a YoY basis, in rupee terms, it has corrected by double-digit rate. But our pipe realization has improved quite a lot on a YoY basis for the past two consecutive quarters, which is not the change of prices. So just only because of the change in the product mix, or is it because of some other factor? I think it is a combination of different factors. One thing is that during this quarter, we had a higher share of non-agri segment, okay? So that also helped us to keep the prices a little bit on the higher side, so realization is also better. Second thing is we have been also careful on our pricing side, yeah? And I think, as you know, that we have always been saying that we are looking at also profitable growth, and this is what is the impact what we see. Okay. On the margin side, the margin for the PVC Resin producer or the plastic pipe company has been coming under pressure, but for us, it has actually improved over the past could possible reason for that, sir, in a falling resin price environment? So Utkarsh, if you know that we are the company which is having advantage of backward integrated plant for the PVC resin. Now, of a total consumption of, let's say, 100 in a year, in a given period of time, roughly, we get a share of 65%-70% from the in-house manufacturing of the resin. Now, if the in-house manufacturing resin, we have cost advantages in comparison to the other producers who are purchasing the PVC resin directly from the market. For this, having a backward integrated plant and in-house manufacturing of resin, we are having certain cost advantages. That is getting reflected in our margin. No, sir. What I meant to say is that as per your presentation only, if we see the PVC-EDC delta or the PVC-VCM delta has gone down sharply in this December quarter on both Q-o-Q and YoY basis, okay? So how come our margin has improved, sir? That's my question, sir. Yes. So So see, if you see the PVC-EDC delta, that is also more or less an indicative number which gives a direction in which the market moves on, number one. Number two, if you see the margin, so let me just explain. The margin consists of two parts. One is the improvement in the realization. Second, in the cost efficiency. So if you add both together, both has added in a favorable direction for us. That has resulted in the overall increase in the margin, EBITDA performance. So there is a two-way benefit. One is the improvement in the net realization that we are having. And number two, though there is a decline in the PVC-EDC delta, but that's actually not got converted while we actually negotiate in the market, and that advantage we are also having. In a way, both the way we have an advantage from the sales realization side as well and as well as cost side, both. These two have resulted in the overall improvement in the EBITDA for the quarter and YTD as well. Okay, sir. Lastly, sir, what would be your sales volume guidance for the current March quarter, and what would be the EBITDA margin guidance over the medium-term period, sir, for us? That would be my last question. Historically, the quarter four has been the quarter where the demand picks up, and this is true not only for us but also for the industry. So we hope that the trend also continues this year, and we see a better volume number in quarter four, okay? And we are able. Sir, any growth we are looking at, any range? As compared to the previous year for the full year, we will see more of a flattish to slight increase in the volume for the full year. This is what our expectation is. We'll see how the demand picks up and how the market behaves in the next two months. Okay. Sir, what would be the EBITDA margin guidance on a sustainable basis for us? We would like to continue with the same margin. Let's see how things gets unfold over the period of time. We would like to maintain our margin level. Okay. Thanks a lot, sir. Thank you. The next question comes from the line of Shravan Shah from Dolat Capital. Please go ahead. Hi. Thank you. Sir, I have a couple of questions. Before that, just a couple of data points to get it right. So Agri, non-agri, sir? CPVC, sir, and fitting, sir, for Q3? Oh, agri, non-agri. Currently, we are at the 60-38 during current quarter. 60, 60. 60, 62. 62 versus 38. Okay. Okay? CPVC share is 8% in terms of volume. Okay. Fittings share 12% in terms of volume. Okay. Got it. And PVC VCM spread for Q3? PVC VCM spread for the Q3, on an average, INR 156. 156? Dollar, yes. Okay. 156. Yeah. Got it. So now, sir, coming to the main questions. So sir, as you just now said that we are looking at a flattish to marginal growth for Q4. That means in the last year, Q4, FY 2025, we did close to 1,002,000-plus kind of a volume. So if we want to have even flattish also, we need a 39% kind of a QOQ growth, which is a significant kind of a 30,000 extra that we need to sell in the Q4. So in January, did we have seen that kind of a growth? Just trying to understand. Shravan, good to meet you, although virtually. I would like to say we would refrain from making any forward-looking statements here, but there is a good traction in the market as far as January is concerned. So does that mean good traction that on and off, not the number, but was that a growth on yoy basis for us in January? So, Shravan, just we are about to wrap up the numbers, but things are looking positive in January month as well. So let us wrap up our numbers, then we'll be able to comment on that because January just closed yesterday only. So we are about to look at the numbers. But yes, overall, on a direction basis, as our MD has just communicated, we are looking somewhere around flattish to slightest growth on a year-on-year or on a full-year basis. Got it. So then from FY 2027 onwards, broadly, if you can help us, how one can look at the industry-level growth, and for us, how can we expect kind of a 5%-7% kind of a growth, or are we looking at kind of a 8%-10% kind of a growth from FY 2027 onwards? Shravan, we are just starting our budget planning for the next year. But overall, if we look at the industry and how the markets are behaving, I think having anything growth which is double-digit, I don't know if that would be something which I can comment on at this moment, yeah? But is it fair to say can we see a 5% at least plus kind of a growth for us and for industry? That's the broader thought process. I think our endeavor would be that we keep our market share. Okay. And then, sir, just on the margin front, so last quarter also and this quarter, so if you can help us in terms of accounting entry, particularly, this change in inventory, particularly, so last quarter, it was INR 172 crore, and this time, INR 168 crore. And that's why there is a significant improvement in the margin is there. So try to understand me. So whatever the closing higher inventory which was there in the Q2 similar was there in this quarter, and let's say if this gets sold in the Q4, so then one can expect kind of a 8%-9% kind of a margin? So if you see, Shravan, quarter three, we have ended with an EBITDA margin of roughly around 14%, right? So now, on a yearly basis, it's 12%. So as we have just replied to a previous question, we would like to maintain our 12% EBITDA, 12% around in that trajectory, our full-year EBITDA margin as well. So this is number one. Yeah. But sir, still not able to understand. Matlab, how come we have the similar kind of a higher closing inventory at the end of Q2 and the similar number, INR 170-odd crore, in the Q3 itself? So because that's the one which is actually have a significant delta on the margin, so. No, no. Sorry. Shravan, you have to keep in mind though; number more or less looks in terms of parity from our previous quarter. However, in terms of volume, because price is always changing. So if you compare the inventory changes, which is getting reflected in our quarterly results, in terms of volume, this is not always in parity. So though coincidentally, numbers is looking quite similar in terms of the previous quarter, but actually, if you see the quantitative basis, the numbers is not similar. So Q2 always remain where we keep the higher inventory, and Q3 is where the inventory starts getting liquidated. That's how the industry works. But that doesn't get reflected in the number. So correct me if I am wrong or simple basic math. I am not able to understand. This minus INR 168 crore, how this number comes? If we have the INR 160, does that mean that the closing inventory as on December is higher by INR 168 crore versus Q2, and that's why it is resulting, or something I am missing? Yeah, yeah. So it's basically difference between the opening stock at the beginning of the quarter and the closing stock at the end of the quarter. So that is what this number gets reflected, changes in the inventory. Accounting standard requirement. No, so then the question arises similar. Then why the closing inventory of 2Q did not get sold in the Q3, and why we kept, again, the similar kind of inventory? Shravan, it's not like that. Q2 inventory because we have every company has a continuous production process. So inventory gets liquidated over the period of time. Then again, inventory gets built up. And there are a lot of factors that we keep in play, like what is the raw material availability, what kind of future forecast we are having, what kind of inventory level we have to maintain. So there are multiple factors which keep playing around when we see a particular inventory number at a particular point in time. So you are saying that inventory has been whatever it was in the Q2 end, it's continued at the Q2 end. That is not exactly a correct statement because whatever inventory it was there in the Q2 end, that gets liquidated. Then again, there is a buildup of inventory because of the production that has taken place during the quarter. Okay. Lastly, sir, what we heard, just to correct me if I am wrong, that from the 1st January till now, what we have seen is there is a INR 7 hike in the PVC prices. First, if it is yes or no, and then if yes, have we also seen the similar kind of pass on to the consumer levels? Yeah, you are right. We have seen a price increase in the PVC prices here in India. You know it, ours is primarily a pass-through business, so quite a bit of it is passed. So at the channel level, have we started seeing the significant improvement at the inventory level, so which was kind of below average? So have the channel kind of seen a normal level of inventory, or still it is below the normal? I think channel has started building up the inventory slowly, slowly in the month of January after the prices have started increasing because sentiment has changed, right? But I don't think so it is at a level where it should be. There is still room for improvement. Okay, okay. I have more questions will come up in queue. Thank you, and all the best. Thank you, Shravan. Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one. The next question comes from the line of Vipul Kumar Shah from Sumangal Investments. Please go ahead. Hi. Thanks for the opportunity, and congratulations for a very good set of numbers. My question is regarding the cash balance. We have very modest CapEx every year, and we are building cash. We are neither taking any big CapEx nor sharing it with shareholders through dividend or buyback or any other route. What are we going to do with this cash? So Vipul, as you are saying, yes, we have been seeing there is a good increase in the cash balances over the year. So last year, I think we have a for the financial year 2025, 2026, roughly around INR 100-150 crore was the CapEx plan for the current year 2025, 2026, basically. So that is all the CapEx spending already on. And if you can recall, last year, we have declared a dividend of INR 3.6 per share. So that amount still will that was a huge dividend that we have declared last year. We are waiting for the current year's number, then we will have to take a call on that, number one. Even saying that, yes, there will be still a sufficient balance of cash will remain. The discussion is around we react to conclude upon what to do with this cash over the period in time. Once something will be frozen out, then we will be able to conclude upon. A company of our size in this, I mean, we always keep looking at opportunities for the CapEx, and there are different discussions which happen at a board level. So we all are working under the direction of Board, and as soon as we have some more decisions around it, happy to communicate. This standard answer is given in every call, sir. Anyway, so what is the current delta, PVC/EDC delta, current as on today? As on today, it's INR 465. 465? Yeah. Sir, you said your CPVC volume was 12% of the overall volume, right? Volume 8%. 8% CPVC? Yes. Yes. Okay. Okay. Thank you, and I'll return to this. Thank you. Thank you. The next question comes from the line of Shravan Shah from Dolat Capital. Please go ahead. Hi, sir. Sir, what last time we said that we are looking at so currently 520,000 capacity, we are looking at 50-80,000 kind of addition. So is it fair to say that by FY 2027, we will be able to add this 20-80,000 kind of capacity? And if yes, how much CapEx that we need to do? Shravan, for us, the capacity addition is a continuous process, yeah? And as you know that we recently, in the last one year, we have increased our capacity. And the discussions are on to increase the capacity further to support the growth, right? So this is an ongoing exercise, but typically, we end up doing a CapEx of between INR 100-INR 200 crores year-on-year basis. So we'll continue to see that kind of a direction. Okay. So roughly, one can say similar kind of 50,000 to maybe a 70,000 kind of a yearly basis, one can look at if he finds the demand is growing. But there also, we are not kind of confidently saying that we can see a double-digit kind of growth. So that's what I'm trying to wondering how one can look at because. Yeah. So you don't build. So you build build. So you build capacities also with a little outlook of the demand, not only for a short period, but also maybe over a horizon of 2-3 years because capacities also do not come up immediately. They also take their own time in coming up. So you always have excess capacity than what you can sell. It is a continuous process. You keep evaluating, keep evaluating year-on-year. Yeah. Got it. And given, let's say, if there is a INR 7 price hike in PVC, and let's assume that it remains constant till the March 31st, though we will be passing on to the customers, but given if we have a similar volume, but if we are selling at, let's say, previously 100, now at 107, so is it fair to assume that we will be having some operating leverage, and then our margin should be better? But at the same time, we are seeing our margin for Q4, we are looking at a 12%. So yeah, if you can clarify. Yes, Shravan. So as the prices so long as the PVC prices will show the upward trend, there will be definitely an advantage in terms of our operating margin, not only for us, but through the industry as well, across the industry. But if you will see the stress in the PVC prices, then the things will, again, go into different directions. So more the PVC price level is stable, the more the efficiency will be appearing in the numbers. Okay. And before this, the China, whatever the extra tax, they are putting up for the export, particularly to, let's say, India. But this is applicable, I think, from the 1st April onwards. So is there a possibility that for that, there will be some dumping will be happening, and that may lead to some rollback in the prices? Is that also a fair probability? I think that is one of the reasons that we see a price increase here in India with the lead time taken into consideration. That expectation is that the prices would be sustaining year-round. Okay, okay. Prices will sustain. There will be a less probability that there will be a dumping from China before 1st April. It should not be impacting the prices. More or less, the prices from here on should stay stable, if not increase further. Yeah, but I would like to always have a caveat here that we do not know what would be the reaction or how the producers in that country would look at their book accounts and the underutilization of their capacities. So cannot say it with 100% certainty, but trend looks like that way. Okay, okay. Got it. Hold on. Yeah. And for us, the CPVC for the 8% share, so there also, we have continuously seen the double-digit growth. Yes, because CPVC, we are getting a good appreciation in volume, so that is going in a higher rate. Okay, okay, okay, okay. Got it. And then broadly, our long-term target, 50/50 agri, non-agri, so how do we so that long-term so structurally, let's say by FY 2027, on an average basis, if one has to see, can we see 33%-44% kind of improvement there, or how one can look at? Shravan, though our overall ambition is also to increase our non-agri sales because there are a lot of variety factors that keep to play. While though there is a great emphasis going on from our side to push our non-agri sale, so things will come unfold over the period of time, but it's still difficult to comment what is the time horizon, when will we be able to get. But yes, our emphasis is already on to improve our sale for the non-agri side. Okay, okay. Got it. And broadly, for Q3, the CPVC prices, more or less, has remained stable, or still there was also some decline in the CPVC prices? CPVC prices also go in tandem with the PVC prices. So though there is no exactly in the same tandem, but yes, it's in sync with the prices of the PVC prices. Okay, okay. Got it, sir. Thank you. Thank you. Thank you. The next question comes from the line of Sonali from Jefferies. Please go ahead. Thank you for the opportunity. Sir, sorry, but I have to ask this question on margins yet again. If I look at our gross margin from Q2 FY 2025 to Q1 FY 2026, we were somewhere always at about our raw material cost to sales was somewhere between 65%-70%. Suddenly, over Q2 and Q3 FY 2026, it has dropped to 57%. Now if I look at the last two quarters, the volume growth has not been as great, and the PVC prices are also weakening, also suggesting that the realizations are getting lower. Could you help us reconcile what exactly are we doing right, or what has changed in the past two quarters that our gross margin has suddenly improved by about 700-800 basis points year-on-year? Thank you. Okay, Sonali. So if you see, consider our structure of business, roughly, our 75% of total consumed raw material cost comes from the in-house, and 25% comes from the outright procurement. When I am saying 75% on an average comes out from the in-house procurement, it consists of prices of imported raw material, which is though move in line with the PVC prices, but there is no absolutely spread always remains same. So if the PVC prices I am giving one example, it goes by the 10 basis point, goes down by the 10 basis point, it is not always necessary that prices of EDC or Ethylene will also go in the same period, in the same number. So it always keeps a lag sometimes, and sometimes it remains. Like if I see a decline in the PVC prices of 10%, we have seen the decline in the EDC prices by 8%, 8 basis points. So in a way, so our raw material prices, if so long as it is not getting affected the way the PVC price is getting affected, we are finding a cost advantage, number one. Number two, though there is a decline in the overall PVC prices, we have improved our realization in terms of our structuring of prices in the market. That also gives us increase our realization. So on an absolute basis, you can see from the outside world, yes, price of the PVC is declining from the in-house realization, but we have improved our restructured our sales price on a net realization basis. That has given us a price advantage as well in the market. These two factors, both added in our favor, which is resulting in the better gross margin. Sir, if I may just extend this question, we do understand that PVC and EDC are not exactly correlated to each other as both are global commodities. But would you agree that whatever the delta is, is captured in that one ratio of PVC to EDC spread? If I look even at that ratio, that ratio has come down from $500 per MT in Q3 last year to $449, which reflects the movement of both PVC and EDC. So I'm just still trying to understand that if your realizations are lower, if your volume growth is not as great, plus we did add this new employee cost as per the new labor code, it's certainly a great surprise that the gross margins and the EBITDA margins are growing so well year-on-year. So just wanted to reconcile these bits. Thank you. Yes, sir. Yes, sir. Yes, sir. Yes, sir. Yes, sir. sir. Yes, sir. Where, Sonali, the employee benefit cost is not forming part of the gross margin. It is even forming part of the EBITDA, not the gross margin. Right, sir. Yes, I was meaning the EBITDA only, but my main question is regarding the 840 basis points jump in the gross margin. Yeah. So gross margin, as I'm just wanting to reiterate, the prices that you see in the PVC, it is delta. That is more or less indicative. But when we go actually commercial negotiation, the prices, the prices will definitely there are a lot of factors that quantity volume discount, the landed price at which and rupee/dollar as well. So all these factors considering our landed cost of PVC sorry, EDC has seen a significant decline from last year's Q3 versus Q3 of the current year. That has resulted in the cost saving to us. Sure, sir. Thank you. That's all from my side. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you, and over to you, sir. Thank you. Thank you, everybody, for participating in the call and asking the well-researched and deeper-level questions. Hope to meet you next time in the conference call. Thank you. Have a good evening. Thank you, all participants from the Finolex side. Thank you very much for showing your continuous support for the Finolex. Thank you so much. Thank you. Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect with us. Thank you.