In a quarter when revenue was slightly down, 20 Microns, India’s leading R&D driven specialty industrial minerals company, reported higher profits on the back of normalisation of operating margins. Its EBITDA margin was impacted for the last few quarters due to logistics costs and was running below 13%. Improvement in logistics costs, partly due to increase in captive mine capacity via an acquisition in Malaysia last year, has helped push EBITDA to a more normal trend range of around 14%.
For Q2 FY26, the company reported consolidated revenue of ₹2,323 mn – down 3.9% on a Y-o-Y basis – despite headwinds from the paint industry. PAT rose 5.5% Y-o-Y to ₹173 mn, driven by improved cost efficiencies. The main driver of net profit growth was better EBITDA margin.
The topline headwinds were driven by an extended monsoons and the late onset of the festive season that slowed demand for paints during the quarter. The paints segment remained the largest revenue contributor (48%), followed by Plastics and Rubber at 25% and 9% respectively. However, despite these headwinds in the paints segment, the company said it strengthened its position, gaining market share.
The company once again stressed its continued emphasis is on innovation and product diversification, especially in plastics and rubber segments. 20 Microns expects these and some other new sectors like construction chemicals, cosmetics and petrochemicals to drive future growth, resulting in a favourable shift in the overall revenue mix and improved margins in the coming years. While new product introductions and deeper market penetration drive Plastics business, Rubber segment will be supported by rising demand in industrial applications and improved distribution reach.
The company expects demand recovery in the second half of FY26, driven by the festive and wedding season and also the recent GST cuts that are spurring consumer demand revival. As we have noted earlier, 20 Micron supplies to sectors closely tied to consumer demand. It has consistently delivered double digit revenue growth with margins in the 13-15% range, a rarity amongst listed companies in India. It remains a company poised to create sustained shareholder value, given its strong R&D focus, increasing product basket and diversifying customer base.
Wisdom-IR is investor relations advisor to 20 Microns. In case you have any queries for the management, you can address them to us.