Ester returns to Q2 profit as EBITDA margin doubles to 10%

Ester returned to a consolidated profit of Rs 7.8 crore in Q2 FY27, against a Rs 15.8 crore loss a year earlier, as EBITDA increased 160.0% to Rs 45.1 crore and margin more than doubled to 10.0% from 4.9%. Total income rose 25.7% to Rs 449.0 crore.

How did Ester’s Q2 FY27 consolidated earnings change?

Ester’s consolidated profit after tax, or PAT, turned positive at Rs 7.8 crore in Q2 FY27 from a Rs 15.8 crore loss in Q2 FY26. Total income increased to Rs 449.0 crore from Rs 357.2 crore, while earnings before interest, tax, depreciation and amortisation, or EBITDA, rose to Rs 45.1 crore from Rs 17.3 crore. The reported EBITDA figure includes other non-operating income.

The EBITDA margin increased by 510 basis points to 10.0% in Q2 FY27 from 4.9% a year earlier, while PAT margin moved to 1.8% from negative 4.4%. Earnings per share were Rs 0.75, compared with a loss per share of Rs 1.62 in Q2 FY26. Ester said the improvement seen in Q1 FY27 continued through Q2 FY27, supported by higher realisations, increased throughput and a favourable product mix.

The improvement also extended across the first half. H1 FY27 consolidated income rose 26.5% to Rs 891.0 crore from Rs 704.1 crore, and EBITDA increased 124.6% to Rs 104.0 crore from Rs 46.3 crore. H1 EBITDA margin was 11.7%, compared with 6.6% in H1 FY26, while PAT was Rs 26.5 crore against a Rs 22.9 crore loss.

What drove Ester’s EBITDA margin expansion?

Ester attributed the Q2 FY27 margin expansion to improved capacity utilisation, a higher proportion of value-added and specialty films, and a favourable product mix. Consolidated sales of value-added and specialty films increased by 1,273 metric tonnes, or MT, equivalent to 25.8% year on year. Management also cited improved value addition in film sales across domestic and export markets.

Film sales volume increased 13.9% to 24,291 MT in Q2 FY27 from 21,329 MT in Q2 FY26, while Polyester Films revenue rose 39.6% to Rs 414.5 crore from Rs 296.8 crore. Revenue therefore increased faster than film volume. Ester linked this difference to higher per-unit realisations following an increase in petrochemical feedstock prices, as well as the rise in sales volumes.

Polyester Films earnings before interest and tax, or EBIT, moved to Rs 34.5 crore in Q2 FY27 from a Rs 6.2 crore loss a year earlier. The segment’s EBIT margin consequently changed to 8.3% from negative 2.1%. In H1 FY27, Polyester Films EBIT was Rs 73.6 crore versus Rs 0.8 crore in H1 FY26, and the margin reached 9.0%.

Other non-operating income rose to Rs 5.23 crore in Q2 FY27 from Rs 3.05 crore in Q2 FY26. Ester said the increase was primarily due to interest earned on fixed deposits created from a fresh equity raise. Since its reported EBITDA includes this income, the item contributed to the stated EBITDA comparison alongside the operating factors of film mix, value addition and utilisation.

Which business segments supported Ester’s turnaround?

Polyester Films supported Ester’s turnaround, while Specialty Polymer remained profitable but reported lower sales volumes and revenue. Polyester Films revenue, which includes chips and recycled polyethylene terephthalate, or rPET, sales, rose 39.6% to Rs 414.5 crore in Q2 FY27. Specialty Polymer revenue declined 49.0% to Rs 29.3 crore from Rs 57.4 crore.

rPET was a growth component within Polyester Films. Q2 FY27 rPET sales volume increased 37.4% to 1,437 MT from 1,046 MT, while revenue rose 51.0% to Rs 18.4 crore from Rs 12.2 crore. In H1 FY27, rPET volume was 2,831 MT, up 27.7%, and revenue increased 36.7% to Rs 35.8 crore.

Specialty Polymer sales volume declined 38.8% to 711 MT in Q2 FY27 from 1,161 MT in Q2 FY26. Its EBIT decreased 53.3% to Rs 9.9 crore from Rs 21.2 crore, and EBIT margin was 33.9%, compared with 37.0% a year earlier. The segment’s H1 FY27 revenue fell 41% to Rs 62.0 crore, while EBIT was Rs 24.7 crore.

The volume mix within Specialty Polymer changed materially. Specialty-products volume fell 61% to 418 MT in Q2 FY27 from 1,059 MT, whereas value-added-products volume increased 187% to 293 MT from 102 MT. Management said demand had eroded for one marquee Specialty Polymer product and expects a product pipeline and potential customer approval for a new product, requiring marginal capital expenditure, to partially offset lost volume and margins.

What could affect Ester’s earnings after Q2 FY27?

Ester said the operating environment for biaxially oriented polyethylene terephthalate, or BOPET, films remained stable in Q2 FY27, with US tariff-related disruption experienced in FY26 largely behind it. It also reported that crude-oil supply disruptions and price movements linked to the war in West Asia were raising shipping costs and lengthening transit times, adversely affecting the working-capital cycle.

Management said Ester’s medium- to long-term plan centres on premium and value-added products, operational efficiency, capacity utilisation and advanced specialty products. This strategy is relevant to the Q2 FY27 result because film revenue rose 39.6%, compared with a 13.9% rise in film sales volume. Management nevertheless identified geopolitical uncertainty as a challenge to raw-material costs and pricing visibility.

Ester said implementation work on the ELiTe project is progressing towards the last quarter of calendar year 2028, with land acquisition expected by Q4 FY27. It disclosed a marketing and offtake agreement with an anchor customer and a letter of intent from a global sports and athletic brand for Loop PET Fiber Grade resin under a multi-year offtake framework from the proposed Gujarat facility. Ester said these arrangements would commit a significant portion of planned capacity before commercial production.

Conclusion

Ester’s Q2 FY27 profit reversal reflected both higher income and a larger improvement in profitability: total income increased 25.7% to Rs 449.0 crore, EBITDA rose 160.0% to Rs 45.1 crore and margin expanded by 510 basis points to 10.0%. Polyester Films supplied the largest earnings shift, while rPET added volume and revenue growth despite the decline in Specialty Polymer sales.

Next, investors can watch whether value-added and specialty-film sales, which rose 1,273 MT in Q2 FY27, continue to support utilisation and margins amid shipping-cost and working-capital pressures. Disclosed milestones include expected ELiTe land acquisition by Q4 FY27 and implementation by the last quarter of calendar year 2028, while Specialty Polymer’s recovery partly depends on expected customer approval for a new product.