The quarter's performance showcases India Glycols' ability to capitalise on improving industry dynamics whilst managing the inherent volatility of commodity chemicals markets. Revenue growth of 13.63% year-on-year demonstrates solid demand across the company's diversified client base spanning textiles, agrochemicals, oil and gas, personal care, pharmaceuticals, and paints sectors. The sequential revenue improvement of 4.97% from Q1 FY26 signals sustained operational momentum entering the second half of the fiscal year.
For the first half of FY26 (H1 FY26), India Glycols posted a consolidated net profit of ₹138.31 crores, representing growth of 25.09% compared to H1 FY25's ₹110.09 crores. This half-yearly performance underscores the company's strengthening fundamentals despite challenging macroeconomic conditions affecting the broader chemicals sector.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | YoY Growth | Consol. PAT (₹ Cr) | QoQ Growth | YoY Growth | Operating Margin |
|---|---|---|---|---|---|---|---|
| Sep'25 | 1,092.20 | +4.97% | +13.63% | 65.06 | -11.18% | +30.88% | 14.43% |
| Jun'25 | 1,040.46 | +20.53% | +7.41% | 73.25 | +14.42% | +21.32% | 14.38% |
| Mar'25 | 863.22 | -11.48% | -6.79% | 64.02 | +12.69% | +51.67% | 16.91% |
| Dec'24 | 975.20 | +1.46% | — | 56.81 | +14.28% | — | 12.68% |
| Sep'24 | 961.20 | -0.77% | — | 49.71 | -17.67% | — | 12.05% |
| Jun'24 | 968.64 | +4.59% | — | 60.38 | +43.05% | — | 12.96% |
| Mar'24 | 926.14 | — | — | 42.21 | — | — | 11.29% |
Financial Performance: Margin Expansion Drives Profitability
India Glycols' Q2 FY26 financial performance reveals a company successfully navigating the commodity chemicals landscape through operational efficiency and margin discipline. Net sales of ₹1,092.20 crores in Q2 FY26 represented a healthy 13.63% year-on-year increase from ₹961.20 crores in Q2 FY25, whilst sequential growth of 4.97% from Q1 FY26's ₹1,040.46 crores indicates sustained demand momentum.
The standout feature of the quarter was the company's operating margin performance. Operating profit (PBDIT excluding other income) reached ₹157.64 crores, translating to an operating margin of 14.43%, a substantial improvement of 238 basis points from 12.05% in Q2 FY25. This margin expansion demonstrates effective cost management and pricing power despite raw material volatility inherent to the chemicals sector.
Profitability metrics showed mixed trends. Standalone net profit for Q2 FY26 stood at ₹53.50 crores, reflecting a marginal sequential decline of 2.07% from Q1 FY26's ₹54.63 crores but marking a significant year-on-year improvement of 37.56% from Q2 FY25's ₹38.89 crores. The consolidated net profit of ₹65.06 crores, whilst down 11.18% quarter-on-quarter, surged 30.88% year-on-year, underscoring the company's improving earnings trajectory over longer timeframes.
The profit after tax margin compressed to 5.96% in Q2 FY26 from 7.04% in Q1 FY26, primarily due to higher interest costs which rose to ₹49.28 crores from ₹44.68 crores sequentially. Interest expenses have climbed significantly year-on-year, increasing 23.47% from ₹39.91 crores in Q2 FY25, reflecting the company's elevated debt levels as it pursues capacity expansion initiatives.
Tax expenses remained well-managed at ₹18.55 crores with an effective tax rate of 22.19%, slightly higher than the previous quarter's 19.09% but broadly in line with the company's historical average of 20.84%. Employee costs showed moderate growth, rising to ₹32.11 crores in Q2 FY26 from ₹31.06 crores in Q1 FY26, indicating disciplined workforce management.
Operational Excellence: Record ROCE Signals Improving Capital Efficiency
A critical positive development in India Glycols' recent performance is the substantial improvement in return on capital employed, a metric particularly important for capital-intensive commodity chemicals businesses. The company's ROCE for H1 FY26 reached a record 11.46%, the highest in the company's recent history and a significant improvement from the five-year average of 8.33%. This elevation in ROCE demonstrates that management is extracting better returns from the capital deployed in the business, a crucial indicator of operational excellence.
The company's return on equity (ROE) also showed improvement, with the latest reading at 10.83% compared to the five-year average of 9.08%. Whilst still modest in absolute terms, the upward trajectory is encouraging. Higher ROE indicates that India Glycols is generating better returns for shareholders, though the metric remains below industry-leading standards and suggests room for further improvement.
Balance sheet metrics present a mixed picture. The company's debt-to-equity ratio stood at 0.86 times for H1 FY26, representing the highest level in recent quarters. Long-term debt increased substantially to ₹1,040.09 crores as of March 2025 from ₹725.08 crores in March 2024, reflecting aggressive capital expenditure to expand production capacity. The debt-to-EBITDA ratio of 3.59 times indicates moderate leverage, though the rising interest burden warrants close monitoring.
Key Operational Highlight
Record Capital Efficiency: India Glycols achieved its highest-ever ROCE of 11.46% in H1 FY26, demonstrating improved returns on capital deployed. The company also recorded its highest debtors turnover ratio of 30.92 times, indicating efficient working capital management and faster cash conversion cycles. These metrics signal strengthening operational fundamentals despite elevated debt levels.
Working capital management showed notable efficiency with the debtors turnover ratio reaching a record 30.92 times in H1 FY26, indicating that the company is collecting receivables rapidly and maintaining healthy cash conversion cycles. This efficiency is particularly valuable in the commodity chemicals sector where working capital intensity can significantly impact cash flows.
The company's operating profit to interest coverage improved to 3.75 times in the latest quarter, the highest on record, suggesting that despite rising interest costs, the company is generating sufficient operating profits to comfortably service its debt obligations. This coverage ratio provides a buffer against potential margin pressures.
The Debt Dynamics: Balancing Growth Ambitions with Financial Prudence
India Glycols' most pressing challenge lies in its escalating debt burden, which has grown substantially as the company pursues capacity expansion. Fixed assets increased to ₹3,737.55 crores in March 2025 from ₹3,172.91 crores in March 2024, representing a 17.80% year-on-year increase driven by capital expenditure programmes. This aggressive investment cycle has necessitated higher borrowings, with long-term debt surging 43.44% year-on-year.
The cash flow statement reveals the financing dynamics clearly. For FY25, the company generated ₹362 crores from operations but deployed ₹735 crores towards investing activities, resulting in a financing cash flow of ₹353 crores to bridge the gap. This pattern indicates that India Glycols is in an investment-heavy phase, prioritising capacity creation over debt reduction.
Interest expenses have become a material drag on profitability, rising to ₹164 crores in FY25 from ₹120 crores in FY24, a 36.67% year-on-year increase. The interest coverage ratio, whilst improving on a quarterly basis, remains a key monitoring point. The company's EBIT-to-interest ratio averaged 2.39 times over the past five years, which is relatively weak and suggests limited cushion during potential downturns.
Debt Sustainability Concern
Rising Leverage Profile: India Glycols' debt-to-equity ratio reached 0.86 times in H1 FY26, the highest in recent quarters, whilst long-term debt increased 43.44% year-on-year to ₹1,040.09 crores. Interest expenses surged to ₹49.28 crores in Q2 FY26, up 23.47% YoY, compressing profit margins. Whilst the company's operating profit-to-interest coverage remains healthy at 3.75 times, the trajectory of rising debt warrants careful monitoring, particularly if operating margins face pressure from commodity price volatility or demand slowdowns.
The company's net debt-to-equity ratio averaged 0.82 times over the past five years, indicating moderate but not excessive leverage. However, the recent acceleration in borrowings suggests this ratio is trending upwards. Cash and cash equivalents declined to ₹6 crores as of March 2025 from ₹26 crores in March 2024, limiting financial flexibility and increasing reliance on debt markets for funding requirements.
Industry Leadership: How India Glycols Compares to Peers
Within the commodity chemicals sector, India Glycols occupies a distinctive position with a market capitalisation of ₹6,656 crores, ranking second amongst its peer group. The company's valuation metrics present an interesting contrast to industry comparables, reflecting both its growth trajectory and quality concerns.
| Company | P/E Ratio (TTM) | P/BV Ratio | ROE % | Debt-to-Equity | Dividend Yield |
|---|---|---|---|---|---|
| India Glycols | 25.63x | 2.77x | 9.08% | 0.82 | 0.47% |
| Tata Chemicals | 58.21x | 0.82x | 5.64% | 0.28 | 1.54% |
| GHCL | 9.48x | 1.32x | 21.55% | -0.28 | 2.40% |
| Chemplast Sanmar | NA (Loss Making) | 2.51x | 9.03% | 0.68 | NA |
| Tanfac Industries | 57.05x | 12.57x | 29.08% | 0.01 | 0.21% |
| TruAlt Bioenergy | 27.01x | 2.73x | 0.0% | 0.00 | NA |
India Glycols trades at a P/E ratio of 25.63x, positioning it in the middle of the peer range. This multiple appears reasonable compared to Tata Chemicals (58.21x) and Tanfac Industries (57.05x), though it commands a significant premium to GHCL's 9.48x. The P/E valuation suggests the market is pricing in moderate growth expectations whilst acknowledging the company's below-average quality metrics.
The price-to-book value of 2.77x is notably higher than industry stalwart Tata Chemicals (0.82x) and GHCL (1.32x), but lower than Tanfac Industries' elevated 12.57x. This P/BV multiple appears stretched given India Glycols' modest ROE of 9.08%, which trails the peer group average and is substantially below GHCL's 21.55% and Tanfac's 29.08%.
The company's debt-to-equity ratio of 0.82 times is higher than Tata Chemicals (0.28) and similar to Chemplast Sanmar (0.68), reflecting a more leveraged capital structure. This elevated leverage differentiates India Glycols from peers like GHCL and Tanfac Industries that operate with minimal debt, potentially limiting the company's financial flexibility during industry downturns.
Dividend yield of 0.47% is amongst the lowest in the peer group, with GHCL offering 2.40% and Tata Chemicals providing 1.54%. The low payout reflects management's preference to retain earnings for growth investments rather than returning cash to shareholders, consistent with the company's capacity expansion strategy.
Valuation Analysis: Premium Pricing Despite Quality Concerns
India Glycols' current valuation presents a complex picture, with the stock trading at what appears to be expensive levels relative to its fundamental quality metrics. At ₹990.80, the stock trades 18.98% below its 52-week high of ₹1,222.85 but remains 97.17% above its 52-week low of ₹502.50, indicating substantial appreciation over the past year.
The company's P/E ratio of 25.63x represents a premium to its historical averages and appears elevated given the modest ROE of 9.08% and average ROCE of 8.33%. Traditional valuation theory suggests that companies with single-digit returns on equity should trade at P/E multiples closer to their ROE levels, implying potential overvaluation at current levels.
Enterprise value metrics provide additional context. The EV/EBITDA multiple of 14.90x and EV/EBIT of 19.37x suggest the market is pricing in significant growth expectations. The EV/Sales ratio of 2.17x appears reasonable for a commodity chemicals player with improving margins, though it represents a premium to historical norms for the sector.
The proprietary Mojo Score of 51 out of 100 places India Glycols in "HOLD" territory, reflecting the tension between improving operational trends and stretched valuation. The valuation grade has oscillated between "Expensive" and "Fair" over the past year, currently classified as "Expensive" as of August 2025. This expensive designation suggests limited margin of safety at current price levels.
The PEG ratio of 1.09 indicates the stock is trading roughly in line with its growth rate, though this metric should be interpreted cautiously given the cyclical nature of the commodity chemicals business. A fair value estimate based on peer comparisons and historical multiples suggests the stock may be 10-15% overvalued at current levels, implying a fair value range of ₹840-890.
Shareholding Pattern: Promoter Reduction Raises Questions
The shareholding pattern reveals notable shifts in ownership structure over recent quarters, with promoter holdings declining from 61.01% in September 2025 to 59.63% in December 2025, a reduction of 138 basis points. This decrease, whilst modest, represents a meaningful change in promoter commitment and warrants attention from investors.
| Shareholder Category | Dec'25 | Nov'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|---|
| Promoter Holding | 59.63% | 59.63% | 61.01% | 61.01% | 61.01% | -1.38% |
| FII Holding | 2.42% | 2.45% | 2.62% | 3.44% | 2.25% | -0.03% |
| Mutual Fund Holding | 0.27% | 0.30% | 0.24% | 0.33% | 0.12% | -0.03% |
| Other DII Holdings | 4.96% | 4.75% | 1.10% | 1.06% | 0.79% | +0.21% |
| Non-Institutional | 32.72% | 32.87% | 35.03% | 34.16% | 35.83% | -0.15% |
The Bhartia family, through entities including Kashipur Holdings Limited (49.77%), maintains majority control, and importantly, there is no promoter pledging of shares, which is a positive signal. However, the recent reduction in promoter stake could indicate either a need for capital by promoter entities or a lack of conviction in near-term stock performance.
Foreign institutional investor holdings declined from 3.44% in June 2025 to 2.42% in December 2025, a reduction of 102 basis points over two quarters. This FII exodus suggests international investors may be taking profits after the stock's strong run or rotating to higher-quality opportunities within the chemicals sector. With 76 FII entities holding stakes, the reduction appears broad-based rather than concentrated.
Mutual fund participation remains minimal at 0.27%, down from 0.33% in June 2025, indicating limited institutional conviction from domestic fund managers. Only 9 mutual fund schemes hold positions in the company, suggesting India Glycols is not a preferred holding amongst professional investors who typically favour higher-quality, less-leveraged chemical companies.
The notable development is the surge in other domestic institutional investor (DII) holdings, which jumped from 1.10% in September 2025 to 4.96% in December 2025, an increase of 386 basis points. This sharp increase suggests certain institutional investors see value at current levels, potentially providing a counterbalance to FII selling pressure.
Non-institutional holdings, representing retail and high-net-worth investors, stood at 32.72% in December 2025, down from 35.83% in March 2025. This decline suggests retail investors have been booking profits following the stock's strong appreciation, a prudent strategy given the expensive valuation.
Stock Performance: Exceptional Returns Mask Volatility Concerns
India Glycols has delivered exceptional returns across multiple timeframes, significantly outperforming both the benchmark Sensex and its commodity chemicals sector peers. The stock's one-year return of 54.40% compares favourably to the Sensex's 9.01%, generating alpha of 45.39 percentage points. This outperformance extends across longer periods, with three-year returns of 218.41% and five-year returns of 369.46% dwarfing the broader market.
| Period | India Glycols Return | Sensex Return | Alpha | Sector Return |
|---|---|---|---|---|
| 1 Week | +13.35% | +0.64% | +12.71% | — |
| 1 Month | +3.96% | +0.83% | +3.13% | — |
| 3 Months | -1.19% | +0.88% | -2.07% | — |
| 6 Months | +13.88% | +5.53% | +8.35% | — |
| 1 Year | +54.40% | +9.01% | +45.39% | +11.18% |
| 2 Years | +126.94% | +17.71% | +109.23% | — |
| 3 Years | +218.41% | +38.88% | +179.53% | — |
| 5 Years | +369.46% | +64.25% | +305.21% | — |
The stock's recent momentum has been particularly strong, with a one-week return of 13.35% reflecting renewed investor interest following the Q2 results. However, the three-month performance shows a marginal decline of 1.19%, indicating some consolidation after the sharp rally. Year-to-date, the stock is down 2.76%, suggesting profit-booking at higher levels earlier in the fiscal year.
Sector comparison reveals India Glycols' exceptional outperformance, with the stock's one-year return of 54.40% crushing the commodity chemicals sector return of 11.18% by 43.22 percentage points. This outperformance suggests the market is rewarding India Glycols' improving operational metrics and margin expansion trajectory more generously than sector peers.
However, this exceptional performance comes with elevated risk. The stock's volatility of 43.10% over the past year is nearly four times the Sensex's 11.54%, classifying India Glycols as a "HIGH RISK HIGH RETURN" investment. The beta of 1.35 indicates the stock is 35% more volatile than the broader market, amplifying both gains and losses during market swings.
The stock trades above all key moving averages, including the 5-day (₹904.08), 20-day (₹890.84), 50-day (₹982.53), 100-day (₹976.51), and 200-day (₹931.61) averages. This technical configuration suggests strong momentum, though the proximity to the 50-day and 100-day averages indicates potential resistance zones that could cap near-term upside.
Investment Thesis: Growth Potential Constrained by Quality Concerns
India Glycols presents a nuanced investment case characterised by improving operational performance offset by structural quality limitations and expensive valuation. The company's proprietary Mojo Score of 51 out of 100 places it firmly in "HOLD" territory, reflecting this balance of positives and negatives.
The investment thesis rests on several pillars. First, the company has demonstrated consistent revenue growth with net sales expanding at a five-year CAGR of 7.92%, indicating steady demand for its diversified product portfolio across multiple end-use industries. Second, margin expansion has been notable, with operating margins improving from 11.29% in March 2024 to 14.43% in September 2025, suggesting operational leverage and pricing power.
Third, the record ROCE of 11.46% in H1 FY26 signals improving capital efficiency, a critical metric for capital-intensive businesses. Fourth, the company's diversified customer base spanning textiles, agrochemicals, pharmaceuticals, and personal care provides revenue stability and reduces concentration risk.
However, significant concerns temper the bull case. The company's below-average quality grade reflects weak long-term fundamentals, with average ROCE of 8.33% and average ROE of 9.08% falling well short of quality benchmarks. These modest returns on capital suggest the business lacks sustainable competitive advantages or pricing power in its core markets.
The elevated debt burden represents the most material risk. With debt-to-equity at 0.86 times and rising, and interest coverage averaging just 2.39 times, the company has limited financial cushion during potential downturns. The aggressive capacity expansion programme, whilst necessary for growth, has stretched the balance sheet and reduced financial flexibility.
Key Strengths & Risk Factors
KEY STRENGTHS ✓
- Record Capital Efficiency: ROCE reached highest-ever 11.46% in H1 FY26, demonstrating improving returns on deployed capital
- Margin Expansion: Operating margins improved 238 bps YoY to 14.43%, indicating pricing power and operational efficiency
- Revenue Growth: Consistent top-line expansion with 13.63% YoY growth in Q2 FY26 and five-year CAGR of 7.92%
- Working Capital Efficiency: Debtors turnover ratio at record 30.92 times signals efficient receivables management
- Diversified Revenue Base: Client portfolio spans textiles, agrochemicals, pharmaceuticals, personal care, reducing concentration risk
- No Promoter Pledging: Zero pledged shares indicates promoter confidence and financial stability
- Strong Momentum: Stock delivered 54.40% one-year returns, outperforming Sensex by 45.39 percentage points
KEY CONCERNS ⚠
- Weak Quality Metrics: Average ROCE of 8.33% and ROE of 9.08% indicate below-average capital efficiency over longer periods
- Rising Debt Burden: Long-term debt surged 43.44% YoY to ₹1,040.09 crores, with debt-to-equity at 0.86 times
- Interest Cost Pressure: Interest expenses jumped 23.47% YoY, compressing profit margins and cash flows
- Expensive Valuation: P/BV of 2.77x appears stretched given modest ROE, with valuation grade at "Expensive"
- Low Institutional Holding: MF holding at just 0.27% and declining FII stake suggest limited institutional conviction
- Promoter Stake Reduction: Promoter holding declined 138 bps to 59.63%, raising questions about long-term commitment
- High Volatility: Beta of 1.35 and volatility of 43.10% indicate elevated risk profile unsuitable for conservative investors
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained Margin Expansion: Further improvement in operating margins beyond 14.43% would validate pricing power
- ROCE Trajectory: Continued elevation in ROCE above 11% would demonstrate sustainable capital efficiency gains
- Debt Stabilisation: Completion of capex cycle and debt-to-equity stabilisation below 0.85 times
- Volume Growth: Market share gains in key segments driving revenue growth above 15% annually
- Institutional Accumulation: Increase in MF and FII holdings signalling improved quality perception
RED FLAGS
- Margin Compression: Operating margins falling below 13% due to raw material cost pressures or pricing weakness
- Rising Leverage: Debt-to-equity exceeding 1.0x or interest coverage falling below 2.0x
- Working Capital Deterioration: Debtors days increasing or inventory buildup indicating demand slowdown
- Further Promoter Reduction: Additional decline in promoter stake below 58% would signal concern
- ROCE Reversal: Return on capital employed falling back below 10% indicating unsustainable improvement
Looking ahead, India Glycols' trajectory will largely depend on its ability to sustain margin improvements whilst managing the elevated debt burden accumulated during the capacity expansion phase. The company's record ROCE and improving operational efficiency provide a foundation for optimism, but these gains must prove durable rather than cyclical.
The completion of ongoing capital expenditure programmes and subsequent shift towards debt reduction would significantly improve the investment case. Until then, the combination of expensive valuation, below-average quality metrics, and rising leverage creates a risk-reward profile that favours existing holders maintaining positions rather than fresh capital deployment.
For the company to justify its current valuation and merit an upgrade to "BUY" territory, investors would need to see sustained ROCE above 12%, operating margins consistently above 15%, and tangible progress on deleveraging with debt-to-equity declining towards 0.60-0.65 times. Without these developments, the stock appears fairly to fully valued at current levels.
The Verdict: Selective Holding for Existing Investors
Score: 51/100
For Fresh Investors: India Glycols is not recommended for fresh purchases at current levels. The expensive valuation (P/BV 2.77x against ROE of 9.08%), below-average quality grade, and rising debt burden create limited margin of safety. Investors seeking exposure to commodity chemicals would be better served waiting for a correction to ₹840-890 levels or allocating capital to higher-quality peers with stronger balance sheets and superior returns on capital.
For Existing Holders: Continue holding positions accumulated at lower levels. The improving operational trends (record ROCE of 11.46%, margin expansion to 14.43%) and positive financial momentum justify maintaining exposure despite valuation concerns. However, consider booking partial profits on rallies above ₹1,050 to reduce position size and manage risk. The stock's high volatility (43.10%) and elevated beta (1.35) warrant disciplined position sizing, with India Glycols representing no more than 3-4% of a diversified equity portfolio.
Fair Value Estimate: ₹865 (12.70% downside from current levels)
Note: ROCE = (EBIT - Other Income) / (Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results, and all investments carry risk of loss.
