Vishnu Chemicals reports 12% revenue growth despite cost pressures in Q2FY25

Vishnu Chemicals Limited, a leading manufacturer of speciality chemicals, reported a consolidated revenue growth of 12.2% year-on-year (YoY) for the first half of the fiscal year 2025 (H1FY25). Despite global economic challenges, including inflation and geopolitical pressures, the company achieved ₹343.8 crore in revenue for the quarter ending September 30, 2024, an 11.6% increase compared to the same quarter last year.

However, the consolidated profit after tax (PAT) for Q2FY25 declined by 5% YoY to ₹22.8 crore, primarily due to elevated freight costs, rising input expenses, and one-time charges related to recent acquisitions.

Expansion efforts bolster long-term growth strategy

In Q2FY25, Vishnu Chemicals announced two major acquisitions to diversify and strengthen its business portfolio. The company acquired Jayanshree Pharma Private Limited for ₹51.99 crore, a move designed to enhance operations in Visakhapatnam and support its long-term growth strategy. Additionally, a definitive agreement was signed for acquiring a chrome mining complex in South Africa. The deal will be executed on a debt-free, cash-free, and liability-free basis.

Chairman and Managing Director Krishna Murthy Ch. stated that these acquisitions align with the company’s strategy to enhance operational capabilities while maintaining resilience against external pressures. The company’s strong balance sheet, with a net debt-to-equity ratio of 0.32 and cash reserves of ₹100.1 crore, provides ample room for further investments.

Freight costs and operational challenges weigh on margins

Soaring freight rates—up by 70% during the quarter—alongside maintenance shutdowns at the Vizag unit, significantly impacted profitability. Gross margins declined to 42.8% in Q2FY25 from 45.2% in Q2FY24, while EBITDA margins fell from 14.9% to 13.1% during the same period.

Joint Managing Director Siddartha Ch. remarked that the company is navigating a tough economic climate by balancing short-term challenges with its long-term objectives.

Domestic sales outperform exports

The domestic-to-export sales mix shifted to 57:43, driven by robust domestic demand. Export performance continues to face headwinds from global shipping disruptions and inflationary trends. Despite these challenges, the barium business achieved its highest PAT in 12 quarters, attributed to process improvements and a diversified product mix.

Outlook and strategic focus

Vishnu Chemicals aims to leverage its recent acquisitions to create a stronger presence in key markets while exploring opportunities for operational efficiencies. The management remains cautiously optimistic about a recovery in the export sector and expects acquisitions to deliver significant strategic benefits in the long run.