AETHER Q2 FY27 Earnings Call: Targets Rs. 1,000 Cr Baker Hughes Business, First Semiconductor Shipments Begin

AETHER held its Q2 FY27 earnings call on October 30, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

CEM/CRAMS Now the Core Engine; Pharma-Agro Softens Sequentially

• CRAMS and CEM verticals contributed over 65% of sales in Q2 FY 2026-2027 — driven by continued ramp-up of major CEM contracts and newly added CRAMS projects.
• Oil and gas accounted for 33% of sales in Q2 FY 2026-2027 — management expects the sector to attract significant investments over the coming years and remain a key growth driver.
• Pharma and agrochemical revenue declined sequentially in Q2 FY 2026-2027 — CFO Paresh Nagaria attributed this to the plant being re-equipped for CAM projects and focus shifting to material science and oil & gas; pharma and agro are historically the company's LSM products.
• Working capital cycle stood at ~165 days as of Q2 FY 2026-2027 — 3 days above the 31 March 2026 (FY 2025-2026 close) level, mainly due to inventory build-up at newly commissioned sites; management expects quarter-on-quarter improvement.
• Inventory days rose to 172 in Q2 FY 2026-2027 from 151 at March-end FY 2025-2026 — ~Rs.180 crore of additional inventory over six months, attributed mainly to raw-material build for the new Milliken site and Magnum site, plus finished-goods WIP at Milliken; certain raw materials are sourced from the Far East and higher stock is held to avoid production deadlock.
• Macro environment remains volatile — management states it has maintained momentum and is laying the foundation for the next phase of growth.

New Product Set Shipping; ~Rs.750-800 Cr Opportunity Sized

• Commercialized a new set of oilfield industrial chemicals for Baker Hughes in Q2 FY 2026-2027 — shipments executed in the quarter after minor modifications to one production stream at dedicated Site 4 (Strata); the products replace Baker Hughes' existing sourcing from Singapore and will be manufactured in India for the first time, with the entire program covered by the original Strata capex.
• Total Baker Hughes opportunity sized at ~Rs.750-800 crore — the first product set (four-point depressants) market at Rs.400 crore and the new products at another Rs.400 crore (period unspecified).
• Management is targeting more than $100 million (~Rs.1,000 crore) of business with Baker Hughes in the "very near future" (period unspecified) — market studies cited by management estimate the new second-series products market at about $2 billion, with studies indicating a range of $2-2.5 billion; management noted it is a "hidden market" without exact figures.
• Strata asset turns of 3-3.5x indicated at maturity — per Rohan Desai, once the production stream matures (period unspecified).
• Oil & gas margins in line with company margins — the segment is mostly led by CM contracts (CFO); the analyst referenced prior management commentary of 28-30% margins in the CAM segment (period unspecified).
• Order pipeline for these products described as "extremely robust" over the next couple of months — with a good outlook for the oil sector; Baker volumes are all from Site 4 (Strata), with nothing yet started at Site 5 (Magnum), and management does not disclose run rates on specific customers or CM contracts.

14 of 16 Blocks With Line of Sight; European Multinational Deepens

• Line of sight on 14 of 16 production blocks at Magnum — 2 earmarked for LSM products and the remaining 12 for CEM contracts that management expects to commercialize over the next 2 to 3 years.
• Exclusive CEM contract signed with a leading global agrochemical innovator — for a new chemical entity whose customer qualification was completed over the last 12-16 months; production at the fourth production block of the Magnum site starts in Q4 FY27, beginning at 200-250 tons/year with a projected path to ~600 tons/year over time (period unspecified); pricing confidential. Aman Desai pegged the molecule as a blockbuster and declined to disclose whether it is a herbicide, insecticide or fungicide.
• European multinational material science contract to expand — currently covering 1-2 products at Site 3, to be extended to 5-6 products in one 1,000 tonne per annum plant at Site 5 (Magnum) (period unspecified); under the same collaboration, 2 additional plants are being dedicated for a flagship product, with the customer asking for 2 plants in reserve with first right of refusal. In a realistic best case, 5 of 16 Magnum blocks would be occupied by this partner.
• Near-term announcements flagged — an oil and gas major expected to be announced "very soon" for an entire dedicated plant (with first right of refusal on the adjacent plant); a multinational described as one of the largest chemical companies in the world lined up for a special material sciences collaboration across 2 plants (announcement expected over the next few months, plus 2 plants in reserve); another 4 plants being discussed with another customer. If the firm pipeline goes through, only 1 plant at Magnum would remain without a vision — a scenario management framed as a realistic best case, but still a best case.
• Rs.700 crore of CWIP on the balance sheet relates majorly to Site 5 — approximately Rs.400 crore expected to be capitalized into gross block by end of FY 2026-2027; interest capitalization is occurring on the Rs.200 crore of loans already taken, with no H1 FY 2026-2027 capitalized-interest figure disclosed.
• H1 FY 2026-2027 business development — added 16 new customers and completed 20+ customer and certification audits; several contracts under negotiation, with management expecting to conclude a number of them in FY 2026-2027 to fill capacity at Magnum.

First Semiconductor Shipments Made; Dow Silicones Program Advances

• First commercial semiconductor shipments started in Q2 FY 2026-2027 — volumes currently modest but growing month-on-month; the new semiconductor production block at the Magnum site is on track for commercial production from Q4 FY 2026-2027.
• Rs.300-400 crore of semiconductor top line targeted at maturity, by 2029 — per the stated ~2-2.5 year gradual ramp; management also said it is looking at 300-400 tons of sales by FY29 across the various molecules already launched, for which the average market price is $45-50 per kg. No current shipment volumes or FY27/FY28-specific semiconductor guidance was disclosed.
• Semiconductor applications span silane coupling agents, copper clad laminates and low-dielectric formulations — for high-speed printed circuit boards and 5G/next-generation chipsets; no extensive re-approvals are needed when supply shifts to the dedicated Magnum block, as the product is not fab-to-finish and has no PPB-level impurity controls.
• Dow silicones program progressing — the multi-year research program with Dow (announced 31 July 2026) is moving from scientific exploration toward a commercially viable technology platform; the immediate goal is to design, build and operate a pilot unit whose data will inform a multi-kiloton to multi-tens-of-kilotons commercial plant.
• 65+ projects in R&D and the pilot plant — new CRAMS engagements started in Q2 FY 2026-2027 with an automotive ancillary major, a global mining company and a different oil and gas major; R&D operations moved from 24/6 to 24/7 in Q2 FY 2026-2027, a first for the company.

EBITDA Guidance Held at 30% Despite Upside Bias; FY27 Capex Contained

• Gross margins settling higher as mix shifts toward CEM and CRAMS — improvement visible over the last few quarters through Q2 FY 2026-2027 (CFO Paresh Nagaria).
• EBITDA margins expected to ultimately exceed the standing 30% guidance (period unspecified) — but guidance remains conservative for risks such as war situations and pricing effects, with a "good leap" in EBITDA margins expected in the near future as operating leverage kicks in.
• FY27 capex budgeted at Rs.350 crore, expected at Rs.350-370 crore — "not more than that" per the CFO, versus the Rs.300-350 crore indicated in the company presentation for FY 2026-2027; civil work is largely complete on the first four blocks and the other four blocks, and equipment will be ordered only when required. No separate FY28 capex figure was provided; capex outflow will rise again when third-phase civil work begins (timing not specified).
• Management declined multi-year growth guidance — responding to analyst Ajay Ahuja (Kalen Capital) on TAM and share over the next 2-3 years (roughly FY 2027-2028 through FY 2029-2030), Paresh Nagaria said a single figure across pharma, agro and material science sub-sectors is impractical and explicitly stated the company does not give future growth guidance over that horizon.
• Deal selectivity is active — Aman Desai said Aether declines inquiries/RFQs "at least once every other day" with a no/maybe response within 2 days worldwide; focus remains on the 8x8 core chemistry/technology framework and strategic partnerships (Baker Hughes and Milliken publicly announced, plus 10 others); chemistries Aether will not pursue: HF, F2 and H2S, on safety and competency grounds.
• Key-person risk addressed via a flat R&D organization of 12 group leaders — 8 research group leaders (PhDs) and 4 chemical engineering group leaders, each with 10+ years tenure and access-controlled labs; Aman Desai stated he and Rohan Desai intend to run the company "for the next 30 years."

CEM to "Overshadow" LSM; Pharma-Agro to Grow Slower Than Oil & Gas

• 12-15 LSM projects currently underway in R&D as of Q2 FY 2026-2027 — with a plan to launch a minimum of 2 LSM products every year, subject to any of these projects not being diverted toward the CEM side (period unspecified).
• LSM will grow on an absolute basis but CEM will "always overshadow" LSM opportunities — per Rohan Desai; a new molecule intermediate launched at the Magnum site with two production blocks is expected to generate a good amount of revenue over the next two years (through FY 2028-2029), while CEM contracts are expected to grow at a much faster pace on the Magnum side. No specific quarter was indicated for LSM volume re-acceleration.
• Pharma and agro will contribute but not grow as fast as oil & gas and material science — despite launching an LSM product and the agrochemical CM contract from Magnum production blocks, management believes oil & gas and material science will grow much faster over the next couple of years; the CFO's stated end game is 25% of revenue coming from oil & gas, material science, pharma, agro and other sectors (period unspecified).
• New agrochemical intermediate announced in Q2 FY 2026-2027 for a leading agrochemical company of the world — Rohan Desai expects good growth in the agrochemical segment in the years to come, with new molecules to be introduced in a strategic manner.
• LSM site allocation constrained — LSM launches will use a combination of existing sites and Site 5, but management does not see LSM in the other 12 production blocks (for which it has clear line of sight) and does not see more than 4 LSM products in Site 5 (period unspecified).
• Inventory expected to normalize — the elevated raw-material inventory was a strategic build for the Milliken project (a couple of raw materials imported from the US with lead times); since it is contract manufacturing, any future price increase will be passed through, and inventory should come down to considerably lower levels once production and sales are full-fledged. The CFO declined to give forward guidance on inventory days, including for March-end FY 2026-2027, and no CEM-vs-LSM inventory split is possible since raw materials overlap.