GACL Expands Capacity by ₹1029 Cr, Boosts EBITDA Amidst Inventory Gain

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AuthorRiya Kapoor|Published at:
GACL Expands Capacity by ₹1029 Cr, Boosts EBITDA Amidst Inventory Gain
Overview

Gujarat Alkalies and Chemicals Limited (GACL) announced its Q3 FY26 results, reporting a modest 0.70% YoY revenue growth to ₹1008 Cr. However, EBITDA surged by 19% to ₹135 Cr, and Profit Before Tax (PBT) improved significantly to ₹13 Cr. The company has sanctioned major expansion projects totaling approximately ₹1029 Cr, including a new Food Grade Phosphoric Acid plant and increased Caustic Potash capacity. A notable inventory valuation correction added ₹18.3 Cr to profits, but also resulted in a negative standalone Q3 PAT of ₹11.16 Cr due to its impact on Other Comprehensive Income.

📉 The Financial Deep Dive

Gujarat Alkalies and Chemicals Limited (GACL) posted its unaudited financial results for the third quarter and nine months ended December 31, 2025. The company reported a sales revenue of ₹1008 Crores for Q3 FY2025-26, a marginal increase of 0.70% (₹7 Crores) compared to ₹1001 Crores in the same period last year. This slight revenue bump was attributed to enhanced capacity utilization and better sales realization for certain products.

However, operational performance showed more robust gains. EBITDA for Q3 FY2025-26 saw a substantial 19% jump, rising by ₹22 Crores to ₹135 Crores from ₹113 Crores year-on-year. For the nine-month period, EBITDA climbed 25% (₹80 Crores) to ₹394 Crores, up from ₹314 Crores in the prior year's comparable period.

Profit Before Tax (PBT) also demonstrated significant improvement. Q3 FY2025-26 PBT stood at ₹13 Crores, a marked turnaround from ₹4 Crores in Q3 FY2024-25. For the nine-month period, PBT was ₹36 Crores, reversing a loss of ₹13 Crores in the previous year.

The Quality & The "One-Off":

A significant event impacting the reported figures was an inventory valuation correction for Spent Palladium (Pd) catalyst, amounting to ₹18.3 Crores (₹1829.48 Lakhs) for the quarter and nine months. While this correction boosted reported profits, it also substantially affected 'Other Comprehensive Income' (OCI). Consequently, the standalone Q3 results reported a negative Profit After Tax (PAT) of ₹11.16 Crores and negative Total Comprehensive Income, despite the positive PBT. This highlights a divergence between operational profitability (EBITDA, PBT) and the final reported PAT for the standalone entity due to accounting adjustments.

On the cost front, GACL reported reduced energy costs during the nine months, benefiting from a higher share of renewable power, which increased to 35.7% from 29.7% in FY2024-25.

🚀 Expansion & Strategic Moves

The Board of Directors sanctioned ambitious expansion projects with an aggregate estimated cost of approximately ₹1029 Crores:

  1. Bio-fuel/Coal Fired Boilers: Four boilers (two each at Vadodara and Dahej) at an estimated cost of ₹389-390 Crores. These are expected to lower steam costs, generate 12 MW of power, and reduce overall production expenses.
  2. Food Grade Phosphoric Acid Plant: A 33,870 TPA plant at Dahej, costing an estimated ₹560 Crores. This facility is projected to contribute up to ₹350 Crores in additional annual revenues.
  3. Caustic Soda/Potash Enhancement: Internal relocation of electrolysers and an enhancement of Caustic Potash (KOH) production capacity from 120 TPD to 200 TPD at Vadodara, at an estimated cost of ₹80 Crores. This is expected to add approximately ₹130 Crores in net annual revenue.

The company also approved availing a ₹250 Crores Line of Credit facility from Gujarat State Financial Services Ltd (GSFS) to support its growth initiatives.

🚩 Risks & Outlook

The primary focus remains on operational efficiency, cost control, and leveraging digitization via Project "Ahvaan". The significant capital expenditure on expansion projects signals a strong growth outlook, particularly in higher-value products like Phosphoric Acid and expanded KOH capacity. Investors will need to monitor the execution timeline and cost-effectiveness of these new projects. The impact of the inventory valuation adjustment on consolidated financials and the future normalization of standalone PAT will be key watchpoints in the coming quarters. While revenue growth was modest, the substantial EBITDA and PBT expansion, coupled with strategic capacity additions, paint a picture of operational strength, albeit with accounting nuances requiring careful investor interpretation.

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