Alufluoride Q2 margin rises as materials costs decline

Alufluoride Limited lifted Q2FY27 EBITDA margin before other income by 1,070 basis points year on year to 36.1%, as materials, net of inventory change, fell to Rs 23.3 crore from Rs 26.7 crore. Revenue grew 17% to Rs 63.9 crore and profit before tax rose Rs 9.2 crore to Rs 20.5 crore.

What lifted Alufluoride's Q2FY27 EBITDA margin?

Alufluoride's Q2FY27 margin expansion was primarily driven by lower material costs alongside revenue recovery. Materials, net of inventory change, declined 13% to Rs 23.3 crore from Rs 26.7 crore, while revenue from operations increased to Rs 63.9 crore from Rs 54.8 crore. As a result, cash operating costs were broadly unchanged at Rs 40.8 crore versus Rs 40.9 crore, and EBITDA before other income rose to Rs 23.1 crore from Rs 13.9 crore.

Management attributed about Rs 7.9 crore of the Rs 9.2 crore year-on-year increase in profit before tax, or PBT, to lower materials costs. Higher revenue added about Rs 2.3 crore and other income about Rs 0.9 crore, while other costs reduced the gain by about Rs 2 crore. EBITDA including other income increased 70% to Rs 24.4 crore, and the reported EBITDA margin rose to 38.1% from 26.1%.

Why did Alufluoride's material costs fall?

Alufluoride said Q2FY27 materials costs reflected alumina hydrate bought ahead and prices agreed in May 2026. Materials represented 36.4% of revenue in Q2FY27, down from 48.8% in Q2FY26, making this the largest disclosed movement in the cost structure. Management also said annual pricing agreed with smelters and forward buying of key raw materials supported the quarter's margins.

Management has cautioned that the inventory-related benefit will taper as forward-bought stocks are consumed. That disclosure is material because the estimated Rs 7.9 crore PBT contribution from lower materials costs exceeded the Rs 2.3 crore contribution attributed to revenue growth. The presentation does not provide a target materials-cost ratio after the lower-cost inventory is used.

Which costs increased during Q2FY27?

Alufluoride's power and fuel cost rose 18% year on year to Rs 8.7 crore, while other expenses, including freight, increased 18% to Rs 5 crore. Power and fuel remained broadly stable as a proportion of revenue at 13.6%, compared with 13.5% in Q2FY26. The company said freight on Hydrofluosilicic Acid, or FSA, from more distant sources is rising with fuel prices.

Employee benefits increased 52% to Rs 3.8 crore, or 6.0% of revenue against 4.6% a year earlier. Finance costs rose to Rs 97 lakh from Rs 62 lakh, and depreciation increased to Rs 2.9 crore from Rs 2.4 crore, with the presentation linking the latter two items to the capitalised expansion. Total expenses rose 2% to Rs 44.7 crore despite 17% revenue growth.

The presentation's annual energy data also shows higher unit consumption and power pricing in FY26. Electricity use increased 15% to 332 kilowatt-hours per tonne from 289 kilowatt-hours per tonne in FY25, while the power rate rose 30% to Rs 9.31 per unit from Rs 7.18. These are full-year figures, rather than Q2FY27 per-tonne measures.

How did FSA recovery and expansion affect Alufluoride's revenue?

Alufluoride's Q2FY27 revenue was 2.4 times Q1FY27 after the FSA supply constraint was resolved. The constraint disclosed on 23 May 2026 ended after the supplier reported a resolution on 15 July 2026, and Visakhapatnam operations returned towards normal. The final expansion phase, commissioned in June 2026, was available for the full Q2FY27 period.

All Rs 63.9 crore of Q2FY27 operating revenue came from Aluminium Fluoride, or AlF₃, compared with Rs 54.8 crore in Q2FY26. The 4.1-megawatt captive solar units recorded no revenue in either quarter because they are largely used internally to lower conversion costs. Alufluoride said it added an FSA source from April 2026, while long-term contracts with fertiliser producers cover the bulk of feedstock needs.

What did Q2FY27 mean for Alufluoride's first-half results and balance sheet?

Alufluoride reported Q2FY27 PBT of Rs 20.5 crore, up 81% from Rs 11.3 crore, while profit after tax, or PAT, rose 91% to Rs 15.2 crore from Rs 7.9 crore. The effective tax rate fell to 26.1% from 29.9%, helping PAT grow faster than PBT. Other income increased to Rs 1.3 crore from Rs 40 lakh and represented 6.4% of PBT.

For H1FY27, revenue remained 8% lower at Rs 90.5 crore versus Rs 98.6 crore in H1FY26 because of the Q1FY27 supply shortfall. Yet EBITDA rose 43% to Rs 31.3 crore, PBT increased 51% to Rs 23.8 crore and PAT grew 62% to Rs 17.9 crore. Alufluoride declared an interim dividend of Rs 2.5 per share.

At 30 September 2026, net block was Rs 92.9 crore, compared with Rs 65 crore at 31 March 2026, as the expansion was capitalised. Capital work in progress declined to Rs 1.8 crore from Rs 22.5 crore, while inventories rose to Rs 29.1 crore from Rs 21 crore and trade receivables increased to Rs 18.9 crore from Rs 10.9 crore. Borrowings were Rs 34.3 crore, up from Rs 28.5 crore at March 2026.

Conclusion

Alufluoride's Q2FY27 margin increase was mainly a materials-cost outcome, supported by revenue recovery after the FSA constraint ended. Materials costs fell Rs 3.4 crore while revenue rose Rs 9.1 crore, allowing EBITDA before other income to increase Rs 9.2 crore and its margin to reach 36.1%, despite higher power, employee, freight, finance and depreciation expenses.

The next item to watch is management's stated expectation that the forward-bought inventory benefit will taper as stocks are consumed. The company has expanded AlF₃ capacity to 24,000 tonnes per annum from 18,000 tonnes per annum, while its wider FSA supplier base and freight costs on distant supply remain disclosed operating variables.