Supreme Petrochem Navigates Q2/H1 FY26 Amidst Market Headwinds and Strategic Expansions

Supreme Petrochem Ltd, a prominent player in the Indian styrenics industry, has released its financial performance for the second quarter and first half of the fiscal year 2026. The company reported a standalone operating income of INR 1,100 crore for Q2 FY26 and INR 2,487 crore for H1 FY26. While the company maintained a debt-free status and continued strategic expansions, it faced significant market headwinds that impacted its top-line and profitability during the period.

For Q2 FY26, the operating EBITDA stood at INR 77.6 crore, with an operating EBITDA margin of 7.05%. The net profit after tax (PAT) for the quarter was INR 48.2 crore, resulting in a PAT margin of 4.38%. For the first half (H1 FY26), the operating EBITDA was INR 192.3 crore, with an operating EBITDA margin of 7.73%, and PAT reached INR 129.1 crore, yielding a PAT margin of 5.19%. These figures reflect a decline compared to the previous year, primarily driven by lower raw material prices and reduced sales volumes.

*Total EBITDA includes other income.

Market Dynamics and Operational Performance

The company's sales volumes for manufactured products in Q2 FY26 stood at 76,962 metric tons, a decrease from 81,566 metric tons in Q2 FY25. Similarly, H1 FY26 volumes were 170,826 metric tons, down 2.3% from 174,813 metric tons in H1 FY25. This reduction was attributed to several factors, including an extended and heavy monsoon impacting demand for cooling devices, deferred purchases due to anticipated GST rate reductions, and subdued economic activity across major global economies. The decline in styrene monomer prices, from approximately US$940 PMT in June 2025 to US$ 800 PMT, also led to destocking by processors and put downward pressure on margins.

Despite these challenges, Supreme Petrochem achieved a significant milestone with the commissioning of its first mass Acrylonitrile Butadiene Styrene (ABS) plant in September 2025. This plant, with a capacity of 70,000 TPA, was established with technical collaboration from M/S Versalis SPA. The company highlighted the superior qualities of its ABS product, including its white color, better consistency, zero odor, and high thermal stability, which are expected to give it a competitive edge in applications across automotive, electrical, and consumer goods sectors. The integration of M/S Xmold Polymers Pvt Ltd, a subsidiary focused on engineering polymer components, is also progressing well, aiming to streamline operations and enhance market offerings.

Strategic Initiatives and Future Outlook

Supreme Petrochem continues to focus on sustainability and strategic growth. The company has implemented zero liquid discharge at both its manufacturing plants and sources approximately 50% of its power from renewable sources, including a 12.5 MW solar power plant established in a joint venture with Tata Renewable Energy Ltd. This commitment to environmental responsibility not only aligns with global sustainability goals but also contributes to operational efficiency.

Looking ahead, the management expects the market to stabilize by the last quarter of the current financial year, with the 4th quarter typically being the strongest. They have guided for ABS production of around 15,000 tons for FY26. Furthermore, the company plans for a second phase of its ABS plant, targeting an additional 70,000 tons capacity with a capital expenditure of approximately INR 300 crore, expected to be ready by FY28. The company remains debt-free with an investable surplus of INR 522 crore, funding all capital expenditures through internal accruals, underscoring its strong financial health and disciplined capital allocation.

Conclusion

Supreme Petrochem Ltd is navigating a complex market environment with a clear strategic vision. Despite facing short-term headwinds from market and economic factors, the company's focus on capacity expansion, product diversification into higher-value segments like ABS, and strong commitment to sustainability positions it for long-term growth. The management's prudent financial management, evidenced by its debt-free status and internal funding of capex, provides a solid foundation for future endeavors. Investors will be keen to observe the realization of benefits from the new ABS plant and the broader market recovery in the coming quarters.