Shares cratered as investors concluded that Himadri Speciality Chemical's impressive headline growth masked a troubling deterioration in profitability. The stock, trading near ₹544 on October 21, has shed roughly 18% in just five sessions — wiping out months of gains and touching its 52-week low — after Q2 FY27 results revealed that more sales didn't translate into proportionally more profit.
Revenue Nearly Doubled, But the Company Kept Less of Every Rupee
Revenue climbed 44.2% year-over-year to ₹1,543 crore , and profit after tax rose 28.9% to ₹240 crore . Normally, those would be celebration-worthy numbers. But sales grew almost twice as fast as profit; EBITDA margin — the share of revenue left after day-to-day operating costs — fell to roughly 17.9%, down from 22.2% a year earlier . EBITDA grew at only ~27% versus the 58% revenue surge, suggesting incremental costs in raw materials and logistics absorbed much of the additional revenue. For shareholders, that means the company is running harder just to grow profit modestly.
Coal Tar Dependence Creates an Unpredictable Cost Floor
Himadri relies on coal tar — a by-product of steel production — as its primary raw material, so any volatility in steel output or global coal tar prices can directly squeeze margins. With revenue jumping partly from volume, higher input costs likely ate into returns. Management touted an "optimised product mix," but the numbers tell a different story.
Ambitious Battery Bets Are Burning Cash Before They Earn It
As the company invests heavily in expanding capacity for advanced carbon black and battery materials, maintaining healthy cash flow and managing debt will be essential.
Cash reserves fell to ₹121 crore in FY26 from ₹392 crore in FY25 , thinning the cushion before the heaviest spending phase begins. The proposed merger of Birla Tyres into Himadri adds further complexity at a moment when investors want simpler margin recovery.
The Market Is Repricing the Stock Around Execution Risk
The sell-off marks at least three consecutive days of losses , with a PE ratio of roughly 35.6× — still demanding for a company whose margins are moving in the wrong direction. Until Himadri proves its battery-materials investments can restore profitability to prior levels, the stock faces sustained skepticism from a market that rewards margin quality over top-line vanity.