This article first appeared on GuruFocus .
Release Date: November 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Polyester films segment revenue grew 39.6% YoY to Rs 414.5 crore in Q2 FY27, with EBIT turning positive at Rs 34.5 crore versus a loss last year.
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Value-added and specialty film volumes rose 25.8% YoY and now account for 26% of total film volumes, supporting margin expansion.
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Ester FilmTech turned profitable with PAT of Rs 2.2 crore in Q2 FY27 versus a loss, and capacity utilization improved to 85.3% in H1.
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Exports contributed 37% of revenue, with US exports reviving as tariff-related disruptions were largely resolved.
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The Elite JV project has secured a term loan in-principle approval and anchor customer Nike, with 40-45% expected EBITDA margins and no debt consolidation.
Negative Points
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Specialty polymers segment revenue declined 49% YoY to Rs 29.3 crore in Q2 FY27 due to demand erosion in a key high-margin product after a customer process change.
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Consolidated EBITDA fell sequentially to Rs 45.1 crore in Q2 FY27 from Rs 58.9 crore in Q1 FY27, with EBIT declining in both films and specialty polymers.
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Working capital requirements increased, with trade receivables rising to Rs 264.3 crore and inventories to Rs 245.2 crore as of September 2026, leading to higher short-term borrowings.
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Total borrowings increased to Rs 748.8 crore as of September 2026 from Rs 729 crore in March 2026, with net debt/EBITDA at 3.0-3.25x, above the targeted 2-2.25x.
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The company expects it will be difficult to reach last year's specialty polymer revenue and profitability levels in FY27, with recovery largely dependent on new product approvals over the next 6-8 quarters.
Q & A Highlights
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Q: Polyester film segment EBIT margins improved from negative 2.1% last year to 8.3% this quarter. How sustainable are these margins given raw material volatility and industry cyclicality? A: CEO Vaibhav Shah said demand is growing 8-10% annually (India demand ~900,000-950,000 tons), requiring two new lines per year, but no capacity was added in the last year and only two to three additions are expected over the next two years. He expects the overcapacity situation not to recur for 8-10 quarters. Raw material cost increases are passed through to customers, as demonstrated in the last two quarters, insulating the business from feedstock volatility.
Q: What are the key challenges in raising the value-added/specialty share to ~35% by Q4 FY27 and 50-60% in two to three years, and what margin impact could this mix shift deliver? A: CEO Vaibhav Shah said the biggest challenge is customer approvals, which cause delays, but the pipeline is healthy and robust. He is confident of hitting 50-60% specialization in two to three years, which should support a sustainable 15% EBITDA margin profile.
Q: Could you elaborate on the Elite (Loop Industries JV) project's capital requirements, funding structure, targeted returns, and contribution to consolidated earnings? A: Executive Director Pradeep Rastogi said the 50-50 JV will be consolidated only at the bottom line (50% share), not line by line. The 45,000 MTPA polyester chips project has a capital outlay of Rs 1,200-1,400 crores with expected EBITDA margins of 40-45%, and most of the volume is pre-sold before commercial production begins.
Q: Loop Industries has flagged going-concern concerns and reportedly reduced project scope. What is the plan B if Loop cannot fund its equity? A: Executive Director Pradeep Rastogi said the Elite project requires only equity, not debt, from Loop. Loop has commitments from private equity partners tied to milestones, and Elite has received in-principle approval for a term loan from a reputed public sector bank, with final sanction expected in three to four months. He noted Loop is an R&D/technology company without regular revenue and must report going-concern language under US GAAP, but no problem is foreseen.
Q: Why did specialty polymers volumes and revenue decline sharply this quarter, and when is recovery expected? A: CEO Vaibhav Shah said the largest customer made a technology/process change and shifted to a completely different chemistry, causing demand erosion for one marquee high-margin product. The company has innovated a new product, but it is treated as new by customers and faces a 1.5-2 year approval cycle, with commercial sales expected over the next six to eight quarters. Recovery is largely expected in Q4 FY27 and into FY28.
Q: Standalone and consolidated EBITDA margins declined sequentially from Q1 to Q2 FY27. What caused this? A: CEO Vaibhav Shah said the film business remained almost stable sequentially; the drop was mainly due to the specialty polymer business (located at EIL Khatima) taking a hit from the loss of the marquee product. Executive Director Pradeep Rastogi added that Q1 had also benefited from one-time forex and investment gains in other income.
Q: What is the status of anti-dumping duty (ADD) on Chinese imports, and what is the current film-to-chip spread? A: CEO Vaibhav Shah said DGTR recommended ADD on imports from China and a couple of other countries in September, and the government is expected to notify it by end-December, which should help margins. The current spread is around Rs 27-28. On raw materials, he noted the recent crude fall is yet to reflect in PTA and MEG prices, which are declared based on international indices.
Q: What is the current gross and net debt position, and how much equity has been invested in the Elite JV so far? A: Executive Director Pradeep Rastogi said gross interest-bearing debt is about Rs 750 crores (Rs 480 crores term debt and Rs 270 crores working capital debt), excluding cash on the balance sheet. Ester has invested about Rs 25 crores as equity in Elite, matching Loop's Rs 25 crores, for a total of Rs 50 crores.
Q: With debt elevated, what is the roadmap for deleveraging, and what net debt-to-EBITDA target is the company working toward? A: Executive Director Pradeep Rastogi said the company has been repaying debt on schedule, but working capital borrowings rose due to higher raw material prices, freight costs, and longer transit times, while rupee depreciation inflated foreign currency liabilities. He targets net debt-to-EBITDA of 2-2.25x, calling 2-2.5x prudent, and expects a significant reduction once the working capital cycle normalizes.
Q: What should investors expect for H2 FY27 in the films and specialty polymers segments? A: CEO Vaibhav Shah expects the films segment to deliver similar or slightly better results in H2 versus H1. Specialty polymers should also be slightly better than H1 as two or three products in advanced stages of approval mature between January and March. He acknowledged FY27 specialty polymer revenue will fall short of last year's levels but reiterated confidence in 25% CAGR from this year as the base.
Q: How is the specialty polymers product portfolio diversifying beyond the two marquee products? A: CEO Vaibhav Shah said the company now sells close to seven to eight product types versus two to three two years ago, with the customer base expanded from six to seven to around 15-16. It is working with 27 customers across eight to nine products at various approval stages, expected to mature over the next six to eight quarters. Executive Director Pradeep Rastogi added that the two marquee products contribute only 50-55% of volumes, with 40-45% coming from newer products.
Q: What are the spreads on value-added/specialty products compared with commodity films? A: CEO Vaibhav Shah said specialty spreads vary by product and customer
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
