Yasho Industries Navigates Tariffs with Strategic Growth and Innovation

Yasho Industries Limited, a prominent player in the specialty and fine chemicals sector, has reported its financial performance for Q2 and H1 FY26, demonstrating resilience amidst a challenging external environment. The company posted a consolidated revenue from operations of INR 183.30 crore for Q2 FY26, marking a 10% year-on-year growth. For the first half of the fiscal year, H1 FY26, revenue stood at INR 381.93 crore, reflecting a 12% increase compared to the previous year. Despite facing tariff pressures and a slowdown in demand across key markets, Yasho Industries achieved a robust 26.5% year-on-year volume growth in Q2, underscoring the underlying strength of its product portfolio.

Profitability saw a quarter-on-quarter improvement, with the EBITDA margin reaching 18.20% in Q2 FY26, up from 16.43% in Q1 FY26. The Profit After Tax (PAT) margin also improved to 2.65% in Q2. This enhancement was attributed to product mix optimization, operating efficiencies, and disciplined cost control. The company's diverse product portfolio, spanning Food Antioxidants, Aroma Chemicals, Rubber Chemicals, Lubricant Additives, and Specialty Chemicals, continues to serve a global customer base across the USA, Europe, Asia, and the Middle East, with exports contributing around 65% of revenue.

Strategic Initiatives and Operational Excellence

Yasho Industries has been proactive in implementing strategic initiatives to counter market headwinds. A significant development is the signing of a 15-year long-term supply agreement with a global MNC for lubricant additives. This agreement is projected to generate approximately INR 150 crore in annual revenue, with commercial supply expected to commence by Q4 FY27 from the company's Pakhajan facility. To support this, Yasho plans to set up the required plant within the next 12 to 18 months.

Further bolstering its capabilities, the company inaugurated a new R&D laboratory in October 2025, following an investment of INR 23 crore. This state-of-the-art facility is poised to accelerate innovation, facilitate the development of higher value-added products, and strengthen the specialty chemicals portfolio. Management highlighted that this investment positions Yasho for innovation-led growth and operational excellence.

Despite these advancements, the Pakhajan facility operated at slightly lower-than-optimal utilization levels in Q2 due to trade restrictions and tariffs in key export markets. However, strict cost control and operational discipline helped preserve margins. The company expects utilization levels to improve steadily in the coming quarters, driven by improving demand conditions, stable input availability, and renewed customer inquiries.

| Category-wise Revenue Breakup (Q2 FY26) | | :---------------------- | :------ | | Industrial Chemicals | 86% | | Consumer Chemicals | 14% |

Financial Outlook and Future Focus

Management remains committed to strengthening the balance sheet and improving capital efficiency. While tariffs led to a temporary increase in working capital and debt, the company is taking calibrated steps to optimize cash flows, inventory cycles, and enhance operating leverage. The long-term objective of reducing leverage remains intact, with a target Debt-to-EBITDA multiple of 3 to 3.5 by FY27. The revenue guidance for FY26 has been revised to INR 800-850 crore, reflecting the current tariff situation, down from an earlier projection of INR 900-1000 crore.

Yasho Industries is actively diversifying its market presence, increasing focus on domestic high-potential segments, and engaging with global customers for long-term offtake agreements. These measures aim to de-risk exposure to specific markets and improve volume stability. With strong order visibility, new customer additions, and operational ramp-up, the company is confident in achieving sustainable revenue growth in FY26 and generating value for shareholders. The management also aims to maintain EBITDA margins in the 17-19% range, demonstrating a disciplined approach to profitability.

In conclusion, Yasho Industries Limited is navigating a complex global trade landscape with strategic agility and a clear focus on operational excellence. The company's investments in R&D and long-term partnerships, coupled with its commitment to financial discipline, position it for sustained growth and value creation in the specialty chemicals sector.