/** blogpostTitle: Ester Industries Q4 FY26: Signs of a cycle turn, with rPET scaling and anti-dumping tailwinds */

Ester Industries Q4 FY26: Signs of a cycle turn, with rPET scaling and anti-dumping tailwinds

Ester Industries closed Q4 FY26 with a visible improvement in operating performance after a difficult year for polyester films. On a consolidated basis, income rose 7.2% year on year to INR345.1 crores. EBITDA increased 10.7% to INR43.3 crores, with a reported margin of 12.6%. Profit after tax improved to INR7.9 crores from INR2.0 crores in Q4 FY25.

Management framed the quarter as an inflection point for the BOPET film cycle. The key changes were a moderation in aggressive price competition from Chinese dumping and easing disruption from US trade tariffs. On the domestic side, the Directorate General of Trade Remedies has imposed anti-dumping duties on BOPET film imports from China and certain other countries, with a formal notification from the Ministry of Finance expected to operationalize the measure.

A recurring nuance in this quarter was foreign currency mark-to-market impact. Management highlighted that Q4 had MTM and reinstatement losses of INR10.24 crores on foreign currency term loans. Excluding these non-cash items, core operational EBITDA in Q4 would have been INR53.6 crores, translating to an adjusted margin of 15.5%.

FY26: revenue growth, but profitability hit by forex MTM

For FY26, consolidated income increased 7.2% to INR1,392.7 crores. Reported EBITDA fell to INR110.6 crores, and the company reported a net loss of INR27.5 crores. Management attributed the full-year loss primarily to cumulative non-cash MTM and reinstatement losses of INR37.4 crores on foreign currency liabilities, along with a one-time INR2.7 crores increase in gratuity and leave encashment liability due to new labour codes.

The company’s board proposed a dividend of INR0.25 per share for FY26.

Segment performance: films recovery in Q4, specialty polymers remain high-margin

Ester reports two operating segments: Polyester Films (including chips and rPET) and Specialty Polymers. The revenue mix underscores the company’s current reliance on films, while specialty polymers provide margin support.

In FY26, Polyester Films contributed 87% of consolidated segment revenue (INR1,196 crores) and Specialty Polymers contributed 13% (INR179.3 crores). For Q4 FY26, the split was 93% films (INR321 crores) and 7% specialty polymers (INR22.6 crores).

In films, Q4 FY26 showed margin expansion on the back of reduced imports, improved global pricing, geopolitical inflation, and rupee depreciation. Consolidated film volumes rose 2.3% year on year in Q4 to 19,656 MT, while FY26 film volumes rose 5.1% to 80,517 MT. Segment EBIT for films increased sharply in Q4 to INR42 crores, with EBIT margin expanding to 13%.

Specialty Polymers remained structurally high-margin, with FY26 EBIT at INR58.7 crores and EBIT margin at 32.7%. However, Q4 FY26 was weak versus last year. Management attributed the quarter’s softness to uncertainty in a particular specialty polymer segment and seasonality, while reiterating confidence in long-term growth driven by product development and customer acquisition.

rPET and PCR-content films: the regulatory pull begins to show

The most visible growth driver in FY26 was rPET. rPET sales volume increased to 5,325 MT from 1,486 MT in FY25, while rPET revenue rose to INR59.3 crores from INR16.2 crores. Management linked the demand shift to regulatory drivers, particularly Plastic Waste Management Rules (PWMR), which require 10% post-consumer recycled content in flexible packaging in FY26 and FY27, increasing to 20% in FY28 and FY29.

Ester commissioned a 20,000 TPA rPET extruder at Hyderabad and positioned it as a vertical integration lever to supply film-grade and textile-grade rPET. Management also highlighted that PWMR is pushing brand owners toward sustainable packaging film solutions and that Ester is collaborating with ecosystem partners to capture demand.

The company continues to expand the share of Value Added and Specialty (VAS) products to reduce cyclicality in films. In FY26, VAS volumes were reported at 25% of total film sales volume, and management aims to increase the share of Value Added Products to about 35% by the last quarter of FY27.

ELITE JV with Loop Industries: long-dated, but potentially transformative

Ester’s longer-term sustainability narrative is anchored in ELITE, its 50:50 joint venture with Loop Industries for chemical recycling of polyester textile waste. The investor presentation indicates a planned project cost of about US$180 million and targeted output of 70,000 MT per year of recycled chips produced from recycled monomers (rDMT and rMEG).

In the earnings call, management said land acquisition is in progress, FEED has been completed by Tata Consulting Engineers, and Toyo Engineering has been appointed for detailed engineering. The company expects operations to commence by the last calendar quarter of 2028 or early 2029, with meaningful financial contribution expected from FY30.

The JV’s commercial narrative is supported by regulatory and brand pressure internationally. The presentation cites the EU’s Ecodesign for Sustainable Products Regulation framework and related measures for textile waste collection and recycled content expectations, which management expects could support demand for textile-to-textile recycled PET around end of calendar 2028.

Balance sheet and capital allocation signals

As of March 31, 2026, consolidated equity stood at INR782.7 crores and total assets at INR1,673.9 crores. Closing cash and bank balance including other bank balances was INR104.9 crores, while management noted consolidated cash, bank balances, and liquid investments at INR159.5 crores.

Borrowings remain meaningful. Management indicated total borrowings of about INR732 crores as of March 31, 2026, with annual repayment of around INR85 crores in FY27. The company guided consolidated capex of about INR70 crores for FY27, with around INR15 crores allocated to new high payback projects and the balance toward sustenance and maintenance. The CFO said the company intends to limit new borrowings to below INR40 crores in FY27, implying net debt reduction if operating cash flow improves as expected.

The company also highlighted a capital infusion through share warrants, stating it has secured INR165.25 crores against the INR175 crores share warrant issue.

Takeaways

Q4 FY26 suggests Ester Industries is emerging from the bottom of the BOPET cycle, with improving spreads and a more supportive domestic trade environment. The medium-term playbook is clear in the company’s own words: improve specialty mix in films, scale high-margin specialty polymers, and grow rPET to ride regulatory PCR mandates. The long-dated ELITE project adds a potential second leg of growth, but its timeline remains tied to execution milestones through calendar 2028 and beyond.

The key monitorables remain the sustainability of film value-adds, the pace of recovery in specialty polymer quarterly performance, and the extent to which forex MTM volatility recedes as profitability strengthens and leverage reduces.