PONDYOXIDESANDCHEMICALS Q1 FY27 earnings call.

Guidance to track

• Management maintained full-year guidance despite Q1 supply chain disruptions, expecting to catch up volumes in H2 FY27 as shipping delays normalize. First month of Q2 has shown improvement.
• Revised upward from previous guidance of INR 35,000-40,000, driven by increased capacity efficiencies from the 6,000 MT expansion and compressed working capital cycle. Blended margin guidance for cathode plant remains INR 60,000-65,000/ton.
• 36,000 MT per annum copper cathode facility at Tamil Nadu plant remains on schedule. Phase 1 (18,000 MT) trial production targeted for December 2026, with Phase 2 (additional 18,000 MT) expected by Q3 FY28.
• Of which INR 20-25 crores is maintenance capex and INR 140-150 crores for the new copper cathode plant addition. INR 25 crores already incurred on the cathode project.

Risks flagged

• Shipping delays through the Red Sea and Suez routes continue to impact lead scrap imports, causing volume constraints. Management noted Q1 volumes moderated due to supply chain issues and is cautiously optimistic about Q2 improvement.
• To achieve 1.25-1.30 lakh tons FY27 volume guidance, significantly higher volumes are required in H2. If supply chain disruptions persist, full-year guidance could be at risk. One analyst specifically questioned whether capacity exists for the required H2 ramp-up.
• More countries are restricting scrap exports, potentially tightening global copper scrap availability. Management acknowledged this risk and is developing a dynamic sourcing model, targeting 25-30% domestic copper sourcing going forward.
• Delayed vessel arrivals shift cash receipts from one quarter to another, creating timing mismatches. The April 5th receipt of INR 110-115 crores that was due in March created negative cash flow appearance in Q1, though management confirmed working capital cycle improved to 46 days from 53 days.

Key quotes

• We have already started looking into other regions like the Southeast Asian region and little more on the domestic part of it and those specific shipping routes will have to be avoided. Because of it there could be a little impact on the pricing in terms of raw material overall but it will find its balance in the new course.
• The blended margin guidance on the cathode will be approximately 60 to 65,000 but definitely that should go up once the efficiencies come in. Whatever we sell the recycled product directly without processing into the cathode plant will be about 40,000 per ton.
• When you look at percentage it might be slightly lower [for EBITDA margin] but in terms of absolute quantum it will be much higher. We will be able to have a blended 8% by 2030 but we are confident we'll achieve much before that.