Ester Industries’ film recovery outpaces specialty polymer weakness

Film profitability returns as volumes improve

Ester Industries’ polyester films segment returned to positive operating profit in Q2 FY27, providing the clearest evidence of an improving core business. Segment revenue rose 39.6% year on year to Rs 414.5 crore, while EBIT turned positive at Rs 34.5 crore from a loss a year earlier. Value-added and specialty film volumes increased 25.8% and reached 26% of total film volumes, a mix shift that supported margin expansion. Segment EBIT margin improved from negative 2.1% to 8.3%.

Ester FilmTech also moved into profit, reporting PAT of Rs 2.2 crore in Q2 FY27 against a loss previously, while capacity utilization improved to 85.3% in the first half. These results indicate improving utilization and profitability, although the evidence does not establish how long the stronger margins will persist.

Feedstock volatility is being passed through

Management said raw-material cost increases are passed through to customers, insulating the business from feedstock volatility in the last two quarters. The CEO also said Indian demand was growing 8%–10% annually and that two new polyester film lines would be required each year, although no capacity had been added in the preceding year and only two to three additions were expected over the next two years.

The company expects overcapacity not to recur for the next eight to ten quarters. That is management’s assessment rather than a guarantee; the same commentary acknowledges industry cyclicality and leaves capacity additions dependent on demand.

Specialty polymer weakness remains the counterweight

Specialty polymers revenue fell 49% year on year to Rs 29.3 crore in Q2 FY27. The reported cause was demand erosion in a key high-margin product following a customer process change. Ester Industries expects difficulty in reaching the prior year’s specialty polymer revenue and profitability levels in FY27, with recovery largely dependent on new product approvals over the next six to eight quarters.

That makes product approvals the principal near-term test for the weaker segment. The reporting does not identify the affected product or disclose the approval pipeline, so the timing and scale of recovery remain uncertain.

Elite JV offers upside but remains conditional

The proposed Elite joint-venture project has received in-principle term-loan approval and identified Nike as an anchor customer. The project is expected to generate EBITDA margins of 40%–45%, and its debt is not to be consolidated. Those are prospective project characteristics, not realized results.

The in-principle financing approval and anchor-customer designation support the project’s commercial relevance, but they do not confirm final financing, construction, production, deliveries or margin outcomes.

Exports recover while balance-sheet pressure builds

Exports represented 37% of revenue, with US exports reviving as tariff-related disruptions were largely resolved. The improvement adds support to the film recovery, though the reporting does not quantify the US contribution separately.

Balance-sheet pressure moved in the opposite direction. Consolidated EBITDA declined sequentially to Rs 45.1 crore in Q2 FY27 from Rs 58.9 crore in Q1, while trade receivables rose to Rs 264.3 crore and inventories to Rs 245.2 crore as of September 2026. Total borrowings reached Rs 748.8 crore, and net debt to EBITDA was 3.0–3.25 times, above the company’s 2–2.25 times target.

The next observable checkpoints are specialty-polymer product approvals, sustained polyester-film utilization and margins, and finalization and operating progress on the Elite JV. The reviewed reports do not establish specific dates for those milestones.