Ganesha Ecosphere (514167) Q2 25/26 earnings summary

Executive summary

• Q2 FY26 was challenging, with consolidated revenue rising 7.8% sequentially to ₹363.4 Cr, but net profit turned slightly negative and return margins were at 6.1% due to high raw material price volatility and regulatory uncertainty.

• Inventory losses and delayed government notifications led to under-deliveries, elevated inventory, and compressed gross margins, especially in the rPET segment.

• Legacy textile business showed resilience with stable demand and improved GST structures, while subsidiaries' revenue declined 10% QoQ.

• Regulatory changes, particularly the MOEF draft notification, caused major disruptions in recycled material demand, impacting B2B deliveries and profitability.

• Consolidated revenue from operations for Q2 FY26 was ₹36,338.16 lakh, up from ₹33,712.42 lakh in Q1 FY26 and down from ₹38,680.59 lakh in Q2 FY25.

Financial highlights

• Q2 FY26 consolidated revenue: ₹363.4 Cr (down from ₹386.8 Cr YoY), PAT: ₹-0.5 Cr (down from ₹27.1 Cr YoY).

• EBITDA for Q2 FY26: ₹22.3 Cr (down from ₹55.3 Cr YoY), EBITDA margin: 6.1% (down from 14.3% YoY).

• Inventory loss for the quarter estimated at ₹10-11 crore.

• Exports contributed 11% of revenue for the quarter.

• Capacity utilization in Q2 was about 15%.

Outlook and guidance

• Margins in the legacy business expected to improve to 7%-9% in December and March quarters, with potential to reach 10%+ in Q4.

• rPET segment utilization and deliveries expected to recover from March 2026 as regulatory clarity emerges.

• Good order book and future demand visibility in legacy business; rPET granules demand expected to pick up from January 2026.

• No consolidated margin guidance provided until after Q3.

• Final dividend of ₹3.00 per equity share declared for FY25, aggregating to ₹803.88 lakh.