Fairchem Organics shares nosedive 11% on poor Q2 earnings; stock underperforms Nifty YTD

Fairchem Organics is India’s only producer of Dimer acid, which is crucial in the production of paints, inks, and industrial chemicals.

Shares of Fairchem Organics plunged over 11 percent on November 13, extending losses for 5th straight day. The sharp fall today comes after the specialty Oleo chemicals manufacturer reported a disappointing set of earnings for the quarter ended September 30, 2024.

Fairchem Organics reported a 61% year-on-year (YoY) decline in consolidated net profit to Rs 4.01 crore for Q2FY25, with revenue slipping 9% YoY to Rs 138 crore. The company's EBITDA fell 48% YoY to Rs 8.74 crore, and margins contracted to 6.3% from 11.05% in the prior-year period.

Fairchem Organics, previously Adi Finechem Limited, was acquired by Fairfax India Holdings in 2015, signalling a shift in strategy. The company focuses on refining by-products from oil refining mills, isolating key components used across various industries.

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Fairchem is India’s only producer of Dimer acid, which is crucial in the production of paints, inks, and industrial chemicals. It also processes Tocopherol, a key ingredient in Natural Vitamin E, solidifying its position in both industrial and consumer markets.

On a Sequential basis, Fairchem's net profit dropped 71%, while revenue declined 16%. EBITDA decreased by 60% quarter-on-quarter (QoQ), and margins narrowed too 11.02% from 13.2% in the previous quarter.

At 11:14 am, Finechem Organics shares were trading around 11 percent lower at Rs 876.95 on the National Stock Exchange (NSE). The stock has slumped around 31 percent this year, underperfoming Nifty's 9% gain.

Over the past 12 months, the stock has fallen 25%, while Nifty rose 22% during the same period

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