Are India’s Manufacturing and Chemical Majors Entering a Volatile Transition Phase?
About India’s Manufacturing & Chemical Landscape
India’s manufacturing backbone — spanning defense, chemicals, textiles, and engineering — has seen a mixed Q2 FY26 performance. Companies such as HAL, HEG, Bodal Chemicals, VIP Clothing, and Kopran reported divergent earnings as cost pressures and order cycle delays tested operational efficiency.
The quarter underlined the growing gap between high-margin and volume-driven players, even as policy support and long-term industrial demand remain intact.
HAL Q2 FY26 – Margins Miss Guidance ✈️
HAL posted healthy topline growth but fell short on margins due to cost escalations and delayed project closures. The management reaffirmed its FY26 margin guidance at 31%, with H2 expected to drive recovery.
- Net Profit: ₹1,669 Cr (↑10.5% YoY)
- Revenue: ₹6,628 Cr (↑10.9% YoY)
- EBITDA Margin: 23.5% (↓ -394 bps YoY)
HAL remains a core defense growth proxy with strong order visibility across engine and aircraft verticals.
HEG – Demerger Approval Expected by April 2026 ⚙️
HEG management expressed optimism about obtaining exchange and NCLT approvals for its demerger proposal by April 2026. The move aims to unlock value in its graphite electrode and renewable segments.
- Focus: Post-demerger specialization in clean materials
- Timeline: NCLT approval targeted by April 2026
- Outlook: Positive on capacity utilization and margin recovery
This structural move could position HEG as a sharper play on both energy transition and metallurgical demand.
Bodal Chemicals – Returns to Profit 💡
Bodal Chemicals reported a turnaround from losses to profit in Q2 FY26. Despite margin contraction due to raw material volatility, the firm saw higher revenue driven by dye intermediates and specialty chemicals.
- Net Profit: ₹60 Mn vs ₹2.4 Mn loss YoY
- Revenue: ₹4.8 Bn (↑11.6% YoY)
- EBITDA Margin: 4.8% vs 8.37% (↓ -357 bps)
Management expects stabilization in pricing and stronger margins from H2FY26 as capacity utilization improves.
VIP Clothing – Demand Uptick in Innerwear Segment 👕
VIP Clothing recorded strong YoY growth in profits and revenues, supported by better inventory management and branding-led premium sales. Margins improved sharply YoY.
- Net Profit: ₹2.2 Cr (↑175% YoY)
- Revenue: ₹66 Cr (↑11.9% YoY)
- EBITDA Margin: 9.28% vs 5.74% YoY
The revival in consumer spending in Tier-2 cities continues to aid its mid-premium brand portfolio.
Kopran – Operating Loss Amid Weak API Sales 💊
Kopran reported a loss due to a slowdown in the API business and higher input costs. Management expects gradual recovery from Q3 FY26 as product rationalization efforts take hold.
- Net Loss: ₹9.9 Cr vs ₹7.37 Cr profit YoY
- Revenue: ₹117 Cr (↓ -22.5% YoY)
- EBITDA: ₹3.21 Cr loss vs ₹15.67 Cr profit YoY
Margins were impacted by one-off expenses, but the company retains a solid export order book for FY27.
Investor Takeaway
Manufacturing and specialty chemical companies are undergoing a temporary transition as raw material and export cycle fluctuations play out. Selective exposure to debt-light, integrated businesses is advised.
Nifty and Bank Nifty Expert Gulshan Khera, CFP®, who is a SEBI Regd Investment Adviser.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
