Thank you. Good morning, everyone.

I am Garima Singla, and it's my pleasure to welcome you on behalf of Garware Hi-Tech Films Limited. Thank you for joining us today for Quarter 2 and first half of financial year '26 earnings conference call.

This call is being hosted by Go India Advisors. Please note that today's discussion may include certain forward-looking statements.

Therefore, they must be viewed in conjunction with the risks that the company faces. Today on the call, we are joined by Mr.

M. S.

Adsul, Director Technical; Mr. Deepak Joshi, Director of Sales and Marketing; and Mr.

Abhishek Agarwal, the CFO. I now invite Mr.

Deepak Joshi to present the company's business outlook and performance, after which we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, and good morning, everyone. It gives me a great pride to speak about a company that has truly stood the test of time, a fundamentally strong organization built over 90 years of innovation, integrity, and resilience.

Garware Hi-Tech Films Limited has consistently evolved with changing times, adapting to new technologies and global shifts while staying true to its core values of quality, trust, and excellence. These pillars have enabled GHFL to not only withstand market cycles, but to emerge stronger with every challenge.

The second quarter of FY26 once again validated the resilience and depth of our business model. The quarter unfolded amid persistent geopolitical volatility and successive tariff action by the US government, which posed significant challenge for the business.

Yet, despite these external headwinds, GHFL not only absorbed the impact of these challenges, but continued to create a long-term value for its shareholders, a true reflection of our agility, discipline, and enduring competitive strength. During the quarter, we navigated through the impact of the revised US tariff structure, which increased duties by up to 50% on all product categories.

Yet, GHFL reported a 15% sequential growth in revenue quarter-on-quarter basis and limited the year-on-year decline marginally to 8.2%, a clear reflection of our operational agility, strong market positioning, and enduring customer trust across global markets. Our EBITDA stood at ₹133 crore, lower by 11.4% year-on-year due to tariff-related impact.

However, our EBITDA margins remained healthy at 23.4%, underscoring our disciplined expense management, proactive cost optimization, and unwavering focus on operational excellence. Exports continues to be the cornerstone of our growth, contributing 77% of total revenues this quarter.

Our Suncontrol films segment witnessed strong demand momentum, while the architectural film business continued its rapid expansion in the US, Middle East, and Indian markets, supported by focused marketing initiatives and the launch of premium products. A key milestone during the quarter was the doubling of our paint protection film capacity to 600 LSF.

This expansion removes the earlier fungibility loss with SCF lines, thereby enhancing manufacturing efficiency and unlocking additional capacity for future growth. Looking ahead, our TPU manufacturing line, which is primarily backward integration for PPF, on track for commissioning by October 2026.

25% of capacity is dedicated to next-generation film solutions. We are also deepening our domestic and direct-to-customer presence through our two strategic platforms, Garware Home Solutions and Garware Application Studios.

The launch of Garware Home Solution marks a significant strategic leap forward, a high-margin D2C vertical aimed at capturing the growing demand for premium architectural films in India. This initiative enables GHFL to directly engage with end consumers and premium real estate developers, thereby enhancing our brand visibility, customer reach, and margin profile.

In parallel, our Garware Application Studios, this network, a direct-to-consumer platform for a premium paint protection and glazing film continues to expand at a robust pace. We are well on track to cross 300-plus studios by the end of FY26, strengthening our presence up to Tier 3 cities and building a strong ecosystem that connects with innovation, service, and brand experience directly with the consumers.

On the global front, we are diversifying. We continue to penetrate deeper into key export markets, expanding our footprint across Europe, the Middle East, and South America.

These regions hold immense potential, and our premium product portfolio backed by strong consumer partnerships positions us well to capture incremental market share and build long-term growth avenues. GHFL continues to innovate.

Innovation is true in our DNA, while continuously improving operational efficiency and expanding its leadership across product segments. Our multi-segment presence spanning automotive, architectural, industrial, and specialty films provides a natural hedge against the sectoral cyclicality and enhances earning stability.

Looking ahead, our strategic priorities remain very clear: strengthening backward integration, accelerating innovation, expanding global reach, enhancing our B2C presence, and deepening domestic market penetration. These initiatives are well designed to deliver sustainable and profitable growth even in the challenging market conditions, while creating long-term value for our shareholders.

Thank you very much. I now hand it over to Mr.

Abhishek Agarwal, CFO, who will be discussing the financial highlights.

Thank you, Deepak, and good morning to everybody. Let me take you through the key financial highlights for the quarter and half year ended September 30th, 2025.

For Quarter 2 of FY26, our consolidated revenue stood at ₹569.7 crore compared to ₹620.6 crore in Q2 of FY25, reflecting a 8.2% year-on-year decline. This was primarily due to the base effect and the tariff-related disruptions.

However, on a quarter-on-quarter basis, revenue grew by 15% over Q1 of FY26. Traditionally, one of our stronger-performing quarters backed by steady demand in our core products.

EBITDA stood at ₹133.3 crore compared to ₹150.5 crore in Quarter 2 of FY25, representing a 11.4% decline year-on-year, while improving by 8.4% quarter-on-quarter. The EBITDA margin stood at 23.4%, driven by cost optimization initiatives and a favorable product mix.

PBT came in at ₹120.4 crore, down by 12.8% year-on-year, but sequentially up by 9.1%. PAT for the quarter was ₹91.2 crore compared to ₹104.3 crore in Quarter 2 of FY25 and ₹83 crore in FY26, an increase of 10% quarter-on-quarter, indicating improving profitability.

On a half-yearly basis, the half-year FY26 revenue stood at ₹1,065 crore, marginally lower by 2.8% year-on-year, while the EBITDA was ₹256.3 crore, down by 8.6% year-on-year. On the balance sheet front, GHFL remains debt-free with a robust cash and liquid investment balance of ₹697 crore as on September 30, 2025.

This strong liquidity position provides ample headroom for our ongoing strategic capex, including the TPU line, as well as future innovation and expansion initiatives. Despite short-term headwinds, GHFL continues to maintain a strong financial foundation and steady operating cash flow generation.

With new capacity addition, continued focus on value-added products, and improved manufacturing efficiency, we expect to gradually enhance our revenue visibility and profitability in the coming quarters. Thank you all.

I now hand it over to the moderator.

Hi, thank you so much, sir, and terrific numbers, despite of very adverse macro environment. Sir, just want to understand how we are managing tariff issue now.

What is the arrangement as of now with the US customers?

Yeah. Thank you for your kind words on the performance.

On tariff situation, we are managing in a way whatever our customers can absorb because they have to sell it to the end consumers in US market. Whatever the number we are able to agree to pass it on with them, we are doing that.

Balance we are absorbing. Having said that, like we explained in the last quarter conference call that the aim is not to lose any customer, because we have a very strong customer base in US market.

We will continue to support them with whatever it takes for us, but with current situation where we are passing on some of the tariff to our customers, and balance we are absorbing. Ultimate aim, not to lose a single customer in the market, which has been built over 25 years of hard work in US market.

Sir, various media reports are talking about there is a possibility of deal between India and USA. If the tariffs which is now in excess of 50% around, if it comes down to around 20%, assuming a 20%, will there be an impact on our margins?

See, 20%, whatever incremental tariff comes as compared to last year or prior to March will have a impact on the margins. The company has taken lot of initiatives where cost savings, energy savings, and the portfolio enhancement of various products.

We will ensure that we maintain the margins of 25% plus-minus 3%. That is the target guideline has been given for the EBITDA margins.

Sure. Sir, last question from my end.

What has been the growth in terms of non-US business, be it domestic or non-US international business?

Yeah. That growth has been quite strong.

Other than US market has grown roughly around 20% as compared to last year.

Sure. Thank you so much, sir.

Thank you.

Good morning, sir. Congratulations on numbers.

I have a follow-up question on the previous participants. You said that non-US business is grown around 20%.

If I'm right, approximately 50% of our annual business last year what we've done is coming from US. We cited two things for the de-growth.

One is the high tariff, second is a high base. Could you just quantify how much was the high base effect in September '24 because given the quarterly trend, it seemed like an abnormally high year.

If you can understand what was that one-off as well, SCF, PPF, and what was the percentage terms?

Yeah. See, high base we have said because that last year Q2 has been the highest ever for us in terms of revenue and bottom line.

This year has been the second-highest performance for us. Now it's mainly the high base is a fact because that was there last year, but major impact has come from tariff only because if you really see from April onwards, we were facing 10% higher tariff, then another 15% was added, and then lastly it was another 25% to make it 50% additional, right?

In Q1 also we had little impact, and Q1 we had quite a big impact. This impact primarily comes from tariff because as you understand that specially in the PPF business where the product value is quite high as compared to Suncontrol, in terms of absolute sales price, right?

So, 50% impact on PPF has been very tough for us in the US market. Window film business has grown, if we compare with last year same quarter, we had around 42% revenue share from window film, which has gone to 50% this year.

There is a big jump into window film, whereas PPF last year the revenue was 31% from PPF. It is slightly gone down to 25%, but it is up as compared to last financial year, which was 20% of PPF.

I would say this was a good quarter for us, but at the same time, the real negative impact has come from the tariff situation.

Sir, given we have our second line of PPF operational, I believe we were working at peak capacity for both our lines in the previous quarters. Do we see that H2 with with this line coming in, H2 will be will help us, grow an annual guidance of 20%-plus on the last year's base of ₹2,100 crore?

Definitely. See we were making the PPF before this new line into a fungible capacity of Suncontrol, which now possible that we will make all PPF into PPF factory only.

There are now two lines. This will give us an operational advantage compared to previous year, and then definitely the natural growth of around 20% would be there in PPF business.

Sir, just last question before I get into queue. Based on last year's base, how much are you expecting our US business to grow this year?

You mean this year's revenue guidelines you are talking?

Purely for US.

Yeah. No, US I think in terms of revenues we will do same or slightly better than last year.

The challenge is this tariff, and we are hearing good feelers from US market, including the courts and the tariff deal between India and USA. If all that happens within this month or by December, I think we should be able to maintain the volume or I would say growth over the last year.

Sir, last follow-up based on this question. Are we seeing that customers are deferring their orders because of the tariff?

Or what is the situation on ground there? If you could help us understand, because if you're saying this tariff would be by December once the clarity comes, post that will we see order coming in?

We are getting regular orders like we used to get. Like I said, our team, including I also personally met all the big customers there, and assured that we will help in terms of mitigating the impact.

That means we are absorbing the maximum portion of this tariff because as I said, as a policy, it has been a long work of creating this customer base. Whatever was comfortable, we have passed on.

Balance, we are absorbing, right? We are getting orders what we normally get, and in fact some higher orders also.

We are keeping them ready, keeping in our inventory, but it will not show it to the sales unless it is absolutely necessary. In that way I can say our customers and distributors are reducing the inventory, which used to be up to 3 months in some cases.

They are going down up to 1, 1 and 1/2 month so that they do not lose the customer, but they take best the advantage of the situation where if any deal happens, we will not have to bear that 50%. Rather, it can be 15%, 20%, whatever the final number comes.

We are managing in a way not keeping the supply chain empty. We are keeping it full, but only clearing goods when it is absolutely necessary by our customers.

That's how we were able to maintain in Q2 a strong quarter, and trying to do the same thing in Q3. If any deal happens, it will be pretty good, and we will rush fast.

Otherwise, we'll have to wait a bit. So, [chuckles] with all patience, we are just maintaining this situation correctly.

Thank you so much, sir. I'll get back in queue.

All the very best.

Thank you.

Hi. Thanks for the opportunity and congratulations on a good set of numbers despite the tariff headwinds.

Sir, my first question is, would you be able to quantify what percentage has been absorbed by us and what is kind of passed on to the end customer?

See, this is bit confidential because this is information which, there are many customers, and it depends on many factors, you understand. We can't divulge that information like how much we are doing not, because that creates a conflict among our customers.

Sure, sure. No issues, sir.

The second thing, sir, added 25% tariff, the last bit of tariff was implemented in end of August. How is the channel inventory at our client level?

Was there any kind of overstocking we saw in month of August at the fag end of August, basically? That's the second question.

This tariff, we were aware of the first 25% that it is coming since April. We were preparing for that.

There may be a situation where we'll have to go for 25%, 15% to 25%. This 50% came as pretty quick, and the timeline given was also pretty short.

Still we tried to get as much as possible. Our lines were already running full because of the season.

It was quite good season. Whatever possible we could send material, we could.

Where we built better inventory or higher inventory that it normally is. That's how we got the operational benefit in that case.

Understood. Channel inventory is normal at the customer level or that is what you are trying to imply?

At that time, we made it higher when the tariff implemented, and right now I would say it's lowest because we are trying to make it a very flexible one to take advantage. At the time when the tariff started, it was good inventory.

They had 2, 3 months inventory. Not to everyone, I'm talking of some key customers.

As we speak right now, we are maintaining the minimum, because now everything has been flushed out of system whatever was earlier lower tariff situation. Right now customers are keeping minimum, and we are keeping good inventory.

Sure. This is helpful.

Last two questions. One, in your opening remarks, you mentioned that 25% of the TPU capacity will be for the new product solutions.

Will you be able to shed more light what exactly those products would be?

See, the thing is I think TPU is a product which has got lots of potential, very high-technology product, which goes into various segments, including architectural and some others, maybe medical and all. We are working, but for the sake of competitive advantage, we would not like to share the exact product names.

Our R&D is working, and before the plant starts, we would be ready with that product line so that it takes minimum to penetrate the market and take advantage of that. In very clear statements, we can say that 25% has been kept for new products, which might lead to a further expansion of this segment.

75% will be utilized for PPF and 25% for the new products. That's the strategic call the management has taken as of now.

Sure. Last question on the guidance, on margins you have guided 22% to 25% we are comfortable with for the '26, FY26.

In the PPT, you have highlighted revenue CAGR of 15%-20% for FY26 and beyond. How should one read it?

Like FY26 also we are confident of 15% given that we have marginally declined in the first half of this year? That's the last question.

Like I said, we have been pretty clear. Last 3 years before we have given good guidelines and always maintained that.

Current situation, it depends on the tariff. If everything goes well in November or December, in that case, I think we should be able to meet the guidelines of 25% plus-minus 3% for the year, right?

As I said, as of now the situation is volatile. The growth or in terms of inventories, we have maintained and filled the supply chain so that we can take advantage of the situation if the tariff goes down.

We are prepared for that kind of situation, but ultimately hinges around the decision on the tariff.

Sure, sir. This is helpful and best wishes for coming quarters.

Thank you. Thank you very much.

Thanks for the opportunity, and congratulations to entire team. [Coughs] Wonderful set of numbers in a very tough environment.

Deepak, just to clarify. The 22% to 25% margins which you have said today, and where the tariff is already at 50%, are we saying ki as we speak today and with the kind of arrangements which we have already done with the buyers at 50% tariff, you are saying that at that level we will be able to be in that margin range of 22% to 25% if there is no change in tariffs?

No. I said because what happened in Q1, we had 10% tariff more or less.

Q2, we had around 25% and some impact of 50%. Full impact of 50% is not seen yet.

We have seen into couple of cases, but not to the full quarter, right? If there is no deal or reduction on the tariff, then it will be really challenging to maintain the 22% to 25%, right?

As I said, the inventory supply chain is quite strong now with healthy inventory. If any situation comes where it drop in November and December, then we will be definitely be able to maintain this guideline which we have given just now, right?

Else, we have made some arrangements already where it will take maybe another quarter. Let's say by Q4, we and our technical team, we have worked how do we navigate if the 50% remains forever as a worst-case scenario.

We are prepared for that also. As of now, if this deal happens, we are good for 22%-25%.

If that does not happen, we might have stopgap of Q3 where we might have to suffer a bit, but on overall annual basis, we will be able to maintain what we have guided.

Sure. That is quite helpful.

I'm assuming that at 25% tariff, we are talking about EBITDA margins of 22% to 25%. Beyond that, it's a lot of threat, right?

That's really nice. Okay.

Sir, within the segments, our next level of growth when we spoke about a year back, we were talking about high growth in architectural films. Somewhere around we had reached last year around ₹50 crore on a quarterly basis, ₹200 crore, and we were targeting in next 2, 3 years to take it to ₹500 crore.

Also we had taken steps in terms of a team building in US apart from India. Europe is already doing well.

If you could share some more details in terms of architectural films, where we stand today and how do we see the growth in this particular segment?

Like you said, we have dedicated teams in US market, in Europe, and in India. They are taking care of the architectural business, and the growth has been really good, right?

The current status, we are on track for achieving the growth which we have predicted. Again, slight disruption on margins, not on the sales, from USA because of the tariff.

We got good orders, and we are catering to that. This impact of this sales might come in Q4 because of whatever the tariff decision comes, right?

We have been able to get good orders and good traction into that segment. That is for the USA.

Europe market is growing with 20% to 25% CAGR on architectural business. India, we are even faster.

The growth has been faster, though 3 years back we can say the base was small, but we continuously improved that. We almost doubled last year as compared to previous year, and this year again we are moving with the rate of 30% to 40% in India market.

In all together we are on track, and this is one of the key vertical for us, because the company is working into various verticals like one of the strongest was PPF, then automotive window films, and the IPD. These three are which we already doing, but on top of that architectural window film is one of the fastest growing.

Then Garware Home Solution will be another fast growth area, and lastly TPU from next year will be another one. The company is now focusing into different verticals for the next phase of growth for it.

One question on TPU. You have mentioned in the current PPT margins of 20% to 25% for FY26 onwards.

I understand this is as we speak today without any benefits from TPU backward integration. What kind of benefits could accrue to us post the TPU commencement in terms of margins improvement?

We estimated that around one In the current sales scenario, around between 2,000 to 2,500, we estimated this EBITDA margin will improve by 1.5% to 2% average.

For the company.

Yeah.

That's quite helpful, sir. Really very decent work being done by the entire team at your end.

Congratulations and best wishes. One last suggestion, sir.

Earlier our presentations used to have much more information in terms of Suncontrol contribution, PPF contribution, IPD contribution, and also the exports and geography-wise exports. Used to have a map in the presentation, which was quite helpful, sir.

If at least whatever information we were giving in earlier presentations around 2, 3 quarters back, my request would be if we can start including that again, that would be really helpful.

Yeah. Thank you for the encouragement in the performance.

The this thing is noted. Only thing is which tried to do is the company is growing in every segments, and there has been some competitive issues with us where the competition is also trying to map the exact same manpower, both numbers and everything.

That's how we have tried to make it more concise. Of course, but we'll try to see what can be done on that.

However, I have clearly shared the numbers segment-wise, only geography-wise we have not shared. Segment-wise, like I said, window film has grown it is the best ever, maybe 50% in this quarter.

I've shared all those things already in the previous questions.

Yes, yes. That I do understand.

Sure, sir. Thanks.

Thank you, Mr. Jain.

Thank you.

Thank you.