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Asahi Songwon Navigates Global Headwinds with Strategic Diversification and Turnarounds

Asahi Songwon Colors Limited, a prominent player in the Indian chemical industry, recently shared its Q2 and H1 FY26 earnings, revealing a period marked by global economic challenges alongside strategic advancements in its diversified business segments. The company, known for its leadership in blue (Phthalocyanine) pigments, has been actively expanding into AZO pigments and Active Pharmaceutical Ingredients (APIs), a move that is proving crucial in mitigating the impact of a subdued market.

For the first half of fiscal year 2026 (H1 FY26), Asahi Songwon reported consolidated revenues of Rs. 270.78 crore. The consolidated EBITDA stood at Rs. 23.15 crore, reflecting a 20.24% year-on-year decrease from H1 FY25. Net profit for H1 FY26 was Rs. 4.69 crore, a 38.91% decline compared to the previous year. The second quarter (Q2 FY26) saw revenues from operations at Rs. 120.90 crore, a 14.62% year-on-year decrease, with EBITDA at Rs. 11.14 crore and Profit After Tax (PAT) at Rs. 2.10 crore. Despite the challenging financial metrics, management highlighted significant operational turnarounds and strategic progress in its newer verticals.

Financial Performance Snapshot (Consolidated)

Particulars (Rs. Crore)Q2 FY25Q1 FY26Q2 FY26H1 FY25H1 FY26
Revenue from Operations141.61149.88120.90275.88270.78
Total Income142.62151.34122.55277.68273.89
Total Operating Expenses128.12139.33111.41248.65250.74
EBITDA14.5112.0011.1429.0223.15
EBITDA Margins (%)10.177.939.0910.458.45
Profit After Tax3.302.592.107.684.69

Strategic Diversification Bearing Fruit

The blue pigment business, traditionally Asahi Songwon's mainstay, faced significant headwinds during the quarter. US tariffs and a general slowdown in demand across key markets like Europe, Japan, and Korea led to reduced utilizations, dropping from 95% to about 70%. Management acknowledged that the blue business was

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Frequently Asked Questions

For Q2 FY26, consolidated revenue from operations was Rs. 120.90 crore, with EBITDA at Rs. 11.14 crore and PAT at Rs. 2.10 crore. For H1 FY26, consolidated revenue was Rs. 270.78 crore, EBITDA Rs. 23.15 crore, and PAT Rs. 4.69 crore. The company noted a challenging global environment but highlighted strong cash flow generation from new segments.
The AZO pigment business has shown encouraging progress, with the Dahej plant turning cash contributive and positive. Utilization levels improved to about 57% in H1 FY26, and management expects continued improvement by 5-10% quarter-on-quarter, aiming for PAT break-even around 60% utilization.
The API business, while generating strong cash flows, has faced challenges with low utilization at the new Chhatral plant, currently around 15%. Realizations have also corrected by nearly 40%. However, a new API product, Etoriocoxib, has been launched, and CEP filing for Pregabalin is underway, expected to open doors to regulated markets in 7-8 months.
Management hopes for full year FY26 consolidated revenue to be similar to FY25 levels. Consolidated EBITDA is projected to be around Rs. 50 crore, which would represent about a 20% decrease from FY25, with EBITDA margins expected to be around 9% for the full year.
The blue pigment business has been significantly impacted by US tariffs and customer nervousness, leading to reduced utilizations. While the company has seen a direct hit to its US business, it is focusing on improving overall demand and expects normalcy to return once clarity emerges on the tariff situation and existing inventories are depleted.
The company is on target to deleverage by March 2026, supported by strong cash flow generation from its diversified businesses. Management expects ROCE for the Dahej AZO plant to be 11-12% and anticipates significant ROCE improvement in 2-3 years, especially with future capacity expansions having a better investment-to-turnover ratio. The overall internal target for ROCE is upwards of 15% after two years.

Content

  • Asahi Songwon Navigates Global Headwinds with Strategic Diversification and Turnarounds
  • Financial Performance Snapshot (Consolidated)
  • Strategic Diversification Bearing Fruit
  • Frequently Asked Questions
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