Hold Clean Science and Technology Ltd For Target Rs.846 by Prabhudas Liladhar Capital Ltd
HALS volume to pick going ahead
Clean Science and Technology reported revenue of Rs2.5bn in Q4FY26, declining 5.5% YoY but increasing 13.5% QoQ. Sequential performance was driven by higher customer offtake and recovery in volumes. The HALS business achieved its highest ever quarterly revenue, with volumes crossing ~1,000mt in Q4FY26 and exit utilisation reaching 40% in March, supported by an improving product mix and rising exports. The segment also turned EBITDA positive for the first time, reporting a profit of Rs70–80mn during the quarter.
The company expects the growth momentum in HALS to continue, led by higher-grade products. It is also undertaking backward integration into key HALS intermediates by repurposing the DHTT (pharma intermediate) facility. For the Hydroquinone (HQ) and Catechol plant commissioned in Dec’25, management expects a gradual ramp-up over the coming quarters. On the capex front, commercialization of Performance Chemical 2 is now expected by Sep’26, delayed due to manpower shortages. Upcoming capacity additions are likely to support growth; however, we remain cautious given macroeconomic volatility and lower realizations in certain legacy products. At the current valuation of 24x FY28E EPS, we maintain a ‘HOLD’ rating on CLEAN, with a TP of Rs846, based on 25x FY28 EPS.
Revenue increases by 14%QoQ/-6%QoQ:
Consolidated revenue stood at Rs2.5bn, -5.5% YoY/ 13.5% QoQ (PLe: Rs2.2bn). FY26 revenue was -1% lower than FY25.Revenue increase is primarily led by increase in volumes. Gross profit margin was 63.5% (vs 63.7% in Q4FY25 and 60.7% in Q3FY26), margin remained stable YoY but Expanded 280bps QoQ. Gross profit decreased by 5.8% YoY but increased 19% QoQ
EBITDAM increased sequentially by 550bps:
EBITDA stood at Rs958mn, -8.6% YoY/ 32.7% QoQ (PLe: Rs710mn), EBITDA margin came at 38.4%, expanded by 550bps QoQ driven by lower employee expenses expense. (vs32.9% in Q3FY26 and 39.7% in Q4FY26). FY26 EBITDA decreased by 8.4% to Rs3,550mn. Reported PAT was at Rs583mn, -21% YoY/27% QoQ. PAT margins were at 23% vs 28% in Q4FY25 and 21% in Q3FY26. Tax rate decreased to 25% vs 25.6% Q4FY25 and 26.7% in Q3FY26.
Concall takeaways:
(1) Domestic and Export mix: 50% 50%.
(2) Revenue mix: Performance: 72%, Pharma & Argo: 19%, FMCG: 9% for full year.
(3) MEHQ business continues to face pricing pressure from Chinese Hydroquinone capacities.
(4) HALS business witnessed strong export-driven growth after completion of customer validation cycles.
(5) Hals Export mix improved from ~20% earlier to ~50% currently.
(6) HALS sales volume crossed 1,000mt during the quarter.
(7) Higher-grade HALS products are gaining traction, improving product mix and realizations.
(8) Hals Blended realization improved to Rs460/kg versus Rs420-430/kg in previous quarter.
(9) Hydroquinone-Catechol plant commissioned in Dec’25 is under stabilization phase.
(10) Capex for FY27 Rs80- 100cr.
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