Synopsis: Bhansali Engineering Polymers has scaled back its capacity expansion plan from 200,000 TPA to 100,000 TPA, focusing on in-house funding and specialty products to boost margins and future profitability. Expansion beyond this will be revisited in five years to maintain sustainable growth and avoid debt.
The company, known for manufacturing engineering polymers and specialty grades, has recently taken a strategic step to realign its growth plans. In a significant move, it has decided to halve its proposed expansion capacity, choosing instead to channel resources into high-margin products. This article explores the impact of this decision.
Bhansali Engineering Polymer Limited’s stock, with a market capitalisation of Rs. 2,603 crores, fell to Rs. 104.16, hitting a low of up to 1.15 percent from its previous closing price of Rs. 105.37. Furthermore, the stock over the past year has given a negative return of 34 percent.
Expansion Plans
The company’s management said they decided to increase production capacity from 75,000 TPA to 100,000 TPA, instead of going up to 200,000 TPA, with an investment of Rs. 1,700 crores. They plan to pay for this expansion using the company’s own profits rather than borrowing money.
Management will focus on developing new specialty products and improving marketing, which should help boost sales and earn higher margins. According to internal estimates, after the upgrade, the company expects its yearly profits to double starting from the financial year 2027-28.
The management explained that increasing capacity beyond 100,000 TPA will only be considered after five years, once enough funds are available. They also stated that expanding all the way to 200,000 TPA would have forced the company to borrow money from banks or financial institutions, which goes against their policy. Additionally, if they had expanded to 200,000 TPA, the company would have had to sell more low-margin ABS Natural Grade products, which is not ideal for profitability.
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Management Outlook on Business
The management shared that the company has grown from an initial capacity of 6,000 TPA to the current capacity of 75,000 TPA through acquisitions like Thapar Group and Rajasthan Polymers, and through plant modernization over the years. They emphasized that their products are sold only in the domestic market, focusing on over 300 specialty grades with more than 1,200 colors tailored to customer needs.
The company avoids expanding low-margin sales volumes and instead concentrates on specialty products, which helps improve profit margins. For the last 3 years, they have been operating at optimum capacity, despite the global crisis, as about 50% of their business is formula-based.
From management’s outlook, the company has seen many ups and downs but has been consistently profitable only in the last decade. They are cautious about future decisions to ensure sustainable growth. For the past 16 quarters, they have declared a dividend of Rs. 1 per share, paid a one-time special dividend of Rs. 14 per share (1400%) in FY 23-24, and intend to remain a debt-free company. As of September 12, 2025, the company has 1,20,396 shareholders, reflecting strong investor confidence in their strategic direction.
Q1 Financial highlights
The company reported revenue of Rs. 308 crore in Q1FY26, a decline of 9% YoY from Rs. 340 crore in Q1FY25 and down 11% QoQ from Rs. 345 crore in Q4FY25. Over the past three years, revenue growth has remained flat with a 0% CAGR, indicating no expansion in the topline.
Net profit stood at Rs. 46 crore in Q1FY26, falling 13% YoY from Rs. 53 crore but improving 15% QoQ from Rs. 40 crore. Despite weak profitability trends with a 3-year profit CAGR of -20%, return ratios stayed healthy, with ROE growing at a 17% CAGR over the same period.
Written By Fazal Ul Vahab C H
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