HLE Glascoat achieves 33% profit surge in Q2 FY25, cuts debt significantly

HLE Glascoat Limited has reported strong second-quarter results for FY25, showcasing a notable 5.1% year-over-year revenue increase and substantial debt reduction efforts. Known for its specialized chemical process equipment, HLE Glascoat has leveraged strategic acquisitions and an expanding order book to stabilize its financial growth, despite challenges in the global chemical sector.

In the Q2 FY25 report, HLE Glascoat disclosed consolidated revenue from operations at ₹23,577.9 lakhs, a rise from ₹22,442.1 lakhs in the same period last year. The company attributes this growth to its expanding presence in the pharmaceutical sector, robust demand for glass-lined equipment, and a steady flow of inquiries across all product segments. EBITDA reached ₹3,548.8 lakhs, up 18.9% from Q2 FY24, translating to a 15.1% EBITDA margin—an improvement of 170 basis points year-over-year.

The company’s net profit, or PAT, surged by 33.3% year-over-year to ₹1,442.1 lakhs, supported by improved operating cash flows and effective debt reduction. HLE Glascoat’s Managing Director, Himanshu K. Patel, cited a resilient order book valued at ₹60,247.1 lakhs as of September 2024, indicating a promising outlook for the company. Patel emphasized that demand in the pharmaceutical sector and the strength of the company’s filtration, drying, and glass-lined equipment businesses were instrumental in achieving these results.

Strategic Moves Strengthen Position

HLE Glascoat has also strengthened its position through strategic acquisitions and partnerships. In September 2023, the company acquired a 35.56% stake in Kinam Engineering Industries, adding Kinam’s heat transfer expertise to HLE’s portfolio. This acquisition has allowed HLE Glascoat to enter new sectors such as oil and gas, diversifying its revenue sources and expanding its market reach.

Further bolstering its sustainability strategy, HLE Glascoat is set to acquire a 26% equity stake in Clean Max Anchorage Private Limited (CMAPL). This partnership aims to create a captive open-access renewable energy model in Gujarat, enhancing HLE’s energy efficiency and reducing operating costs. This step underscores HLE Glascoat’s commitment to sustainable operations and cost optimization.

Segment-wise Performance Highlights

HLE Glascoat’s glass-lined equipment segment reported a robust 18.4% year-over-year revenue growth for Q2 FY25, marking it as one of the top-performing divisions. In contrast, revenue from the filtration, drying, and other equipment segments declined by 35.5% year-over-year, with total revenue for this division standing at ₹6,495.5 lakhs. The heat transfer equipment division, meanwhile, recorded revenues of ₹2,473.6 lakhs, reflecting new market opportunities gained through the Kinam Engineering acquisition.

Despite a challenging macroeconomic landscape that impacted capital expenditure decisions in the chemical sector, HLE Glascoat’s operational efficiency and diversified client base have positioned it favorably. Patel noted that, while demand remained sluggish in the chemical sector, momentum in pharmaceuticals helped offset this, resulting in an overall positive outlook for HLE Glascoat’s equipment business.

Financial Health and Future Outlook

As part of its financial strategy, HLE Glascoat reduced its debt by approximately ₹35 crore, strengthening its balance sheet and optimizing cash flow. Patel underscored that improved receivables management and enhanced working capital efficiency were key contributors to this achievement.

With the recent approval for the amalgamation of Kinam Enterprise Private Limited into HLE Glascoat, the company expects further operational synergies. The integration aims to enhance HLE’s production capabilities and expand its product offerings across key sectors, including specialty chemicals and pharmaceuticals.

Expert Opinion: Resilience Amid Global Headwinds

Industry experts recognize HLE Glascoat’s performance as resilient, considering the slowdown in chemical sector capex globally. Market analyst Rajesh Kumar noted that HLE Glascoat’s agility in diversifying into pharmaceuticals and leveraging acquisitions like Kinam Engineering has provided a strong buffer against market volatility. He added that the joint venture with Clean Max Anchorage could set a benchmark for sustainability in manufacturing, aligning with global trends toward eco-friendly operations.

As HLE Glascoat progresses through FY25, its diversified product portfolio, strategic acquisitions, and commitment to renewable energy are expected to drive further growth and stability. With a robust order book and effective debt management, the company appears poised to navigate economic challenges and capitalize on emerging opportunities in pharmaceuticals and sustainable manufacturing.