Primo Chemicals FY26 PAT Jumps 4x Driven by Debt Reduction; Plans Solar Pivot for Power Savings

Synopsis: Driven primarily by a 19.6 percent drop in finance costs following active debt repayment, even as power costs rose 6 percent and remain the company’s single largest expense at over 41 percent of revenues.

Shares of North India’s largest Caustic Soda producer came into focus after the company announced its audited financial results for the quarter and full year ended March 31, 2026, at its board meeting held on May 5, 2026.

With a market capitalization of approximately Rs. 611.19 crore, the shares of Primo Chemicals Limited were last seen trading at Rs. 25.22 per share, down 1.21 percent from its previous close of Rs.25.53. The stock trades at a P/E of approximately 58.57.

Consolidated revenue from operations was Rs. 561.69 crore in FY26, marginally ahead of the Rs. 555.56 crore posted in FY25, a 1.1 percent growth that underscores how commoditised and realisation-sensitive the chlor-alkali business remains.

Total consolidated income was Rs. 581.49 crore versus Rs. 576.45 crore. The profit story, however, was materially different from the top line. Standalone PAT came in at Rs. 10.56 crore, up 4.5x from Rs. 2.35 crore in FY25. On a consolidated basis, which includes the company’s 49 percent equity stake in Flow Tech Chemicals Private Limited treated as an associate, net profit reached Rs. 15.37 crore versus Rs. 3.56 crore in FY25, a 4.3x jump. The associate contributed Rs. 4.81 crore to FY26 consolidated profits, up from Rs. 1.21 crore, adding material incremental earnings at no additional operating cost to the parent.

The primary driver was debt reduction. Finance costs on standalone fell to Rs. 18.50 crore in FY26 from Rs. 23.01 crore in FY25, a 19.6 percent decline. The cash flow statement confirms net term loan repayment of approximately Rs. 23 crore during the year. That single line item improvement of Rs. 4.5 crore in interest savings accounts for a substantial portion of the PAT swing.

The concern that offsets this is power costs. At Rs. 232.41 crore in FY26 versus Rs. 218.94 crore in FY25. Power remains by far the dominant cost line, absorbing over 41 percent of revenues. The 6.2 percent increase in power costs in a year of near-flat revenues squeezed margins at the operating level, with pre-exceptional profit before tax rising more modestly from Rs. 15.12 crore to Rs. 17.02 crore standalone.

Q4 FY26 showed clear sequential recovery: standalone revenue grew 3.4 percent quarter-on-quarter to Rs. 144.86 crore, and the quarter delivered PAT of Rs. 5.09 crore against a loss of Rs. 1.12 crore in Q4 FY25. Q3 FY26, at a loss of Rs. 34 lakhs, was the soft patch in an otherwise improving year.

The more forward-looking development sits in the company’s balance of probabilities for FY27. Primo Chemicals has committed to investing approximately Rs. 21 crore for a 26 percent equity stake in an SPV being set up by Sun Photonics for a 50 MW solar power plant. Management has indicated expected annual savings of approximately Rs. 24 crore on power costs once the plant is commissioned. If realised, that saving alone would more than double the current standalone PAT base, a material re-rating catalyst, though the timeline for commissioning has not been publicly specified.

Business Overview

Incorporated in 1975 as Punjab Alkalies & Chemicals Limited and renamed Primo Chemicals Limited in December 2022. It operates chlor-alkali manufacturing facilities at Naya Nangal, Punjab, producing Caustic Soda, Hydrochloric Acid, Liquid Chlorine, Sodium Hypochlorite, Hydrogen Gas, and Aluminium Chloride, with an annual Caustic Soda capacity of 165,000 tonnes. In Q4 FY26, consolidated revenue was Rs. 144.86 crore, up 3.4 percent from Q3 FY26.

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