OCCL Limited: Navigating Headwinds with Strategic Resilience in Q2 FY26

OCCL Limited, a prominent player in the chemical industry, recently announced its financial results for the second quarter and half year ended September 30, 2025. The company demonstrated a resilient performance, achieving notable growth in revenue and profit despite facing several macroeconomic and operational challenges. For Q2 FY26, OCCL reported a total income from operations of 120.6 crore rupees, marking a robust 16% year-on-year increase from 103.9 crore rupees in Q2 FY25. This growth translated into a profit after tax (PAT) of 8.7 crore rupees, also up by 16% compared to 7.5 crore rupees in the previous year. The EBITDA for the quarter stood at 20.2 crore rupees, a 5% increase from 19.3 crore rupees in Q2 FY25, with an EBITDA margin of 16.8%.

For the first half of FY26, OCCL's total income reached 244.1 crore rupees, with an EBITDA of 46.9 crore rupees, yielding an EBITDA margin of 19.2%. The PAT for H1 FY26 was 21.8 crore rupees, with a margin of 8.9%. These figures underscore the company's continued focus on profitable growth amidst a dynamic market environment.

Product Performance and Market Dynamics

OCCL's product portfolio primarily consists of Insoluble Sulphur and Sulphuric Acid & Oleums. In Q2 FY26, Insoluble Sulphur contributed 86% of the revenue, amounting to approximately 103.72 crore rupees, while Sulphuric Acid & Oleums accounted for 14%, or about 16.88 crore rupees. The company is a market leader in Insoluble Sulphur, holding about 60% of the domestic market share and approximately 10% globally. This segment is crucial for the tire industry, where it is used as a vulcanizing agent.

Management highlighted that domestic sales realization improved following the imposition of anti-dumping duties on imports from China and Japan. However, this positive impact was somewhat muted by an increase in raw material prices, particularly sulphur. The global market for insoluble sulphur continues to face pressure due to oversupply, leading to softer realizations. Despite these challenges, the long-term outlook for the industry remains strong, driven by structural growth in the global tire sector and increasing demand for high-performance, environmentally compliant products.

Strategic Initiatives and Operational Efficiency

OCCL is actively pursuing several strategic initiatives to enhance its market position and ensure sustainable growth. The company has continuously expanded its Insoluble Sulphur capacity, growing from 3,000 MT in 2000 to 39,500 MT currently, through both greenfield and brownfield expansions. These expansions are critical to meet the growing demand, especially with the increasing radialization in commercial vehicles in India and the expanding business of large tire manufacturers in Asia.

Cost optimization remains a core focus, with strategies targeting raw material, freight, power, fuel, and other fixed costs. The company benefits from its strategic location near ports, reducing logistics costs, and leverages operating efficiencies from increased production. Furthermore, OCCL has made significant strides in sustainability, enhancing its renewable energy contribution and achieving certifications like ECOVADIS GOLD SUSTAINABILITY RATING and 'RESPONSIBLE CARE' accreditation. These efforts not only strengthen cost competitiveness but also reinforce the company's commitment to a greener future.

Outlook and Investor Takeaways

Looking ahead, OCCL's management remains optimistic about its growth trajectory. The recent GST reduction on automobiles is expected to boost vehicle sales, thereby increasing demand for insoluble sulphur in India. The company anticipates a 2% to 3% annual growth in global demand for insoluble Sulphur and expects to gain domestic market share, particularly as India emerges as the fastest-growing market for this product. While near-term realizations might remain soft due to oversupply and rising sulphur prices, management is confident in its ability to navigate these challenges through operational efficiency, product quality, and sustainability.

OCCL's strong R&D foundation, cost-competitive manufacturing base, and favorable domestic market environment, bolstered by anti-dumping duties, position it well for future growth. The company's disciplined approach to capital allocation and its focus on delivering consistent value to stakeholders are key themes for investors to consider. The management's transparency in discussing challenges, such as the impact of US tariffs and working capital increases, provides a balanced view of the company's performance and future prospects.

Financial Summary (Q2 FY26 Standalone)

OCCL Limited continues to demonstrate strategic clarity and disciplined execution, navigating market complexities while laying a strong foundation for sustained growth and value creation for its stakeholders.