IOL paracetamol plant running at 55%, below its own target
Management reaffirmed FY27 growth targets but disclosed a key capacity-utilization miss on its expanded paracetamol line. The stock trades at a discount to its own execution promises.
— 3 earlier stories on IOL Chemicals And Pharmaceuticals Ltd. →What's new
- Paracetamol capacity utilization is at 55%, missing the prior March 2026 target of 65%.
- Management targets 70-75% utilization by FY27 and 100% by FY28 on the same line.
- Ibuprofen demand recovered to 85-95% utilization after a destocking cycle.
Why this matters
The paracetamol line is the core of IOL's recent capacity expansion. Running it at 55% when the plan was 65% means the ramp is lagging, which delays the revenue and margin benefits the expansion was supposed to deliver. The revised path to 100% by FY28 is a long runway from a low starting point.
What we're watching
- Whether paracetamol utilization hits the 70-75% target by FY27 end.
- Progress on the ₹1,200-1,400 cr greenfield capex plan over four to five years.
- Non-ibuprofen portfolio gains from new European CEP certifications.
The full read
IOL Chemicals reaffirmed its FY27 guidance of 15-18% revenue growth and a 14% EBITDA margin. The key disclosure in the concall was that its expanded 10,800-tonne paracetamol plant is running at only 55% utilization, well short of the 65% target for March 2026. Management sketched a path to 70-75% by FY27 and 100% by FY28. The ibuprofen line recovered to 85-95% utilization after destocking, and the non-ibuprofen portfolio is gaining share through European CEP certifications. Separately, IOL detailed a ₹1,200-1,400 crore greenfield expansion over four to five years, funded internally. The paracetamol shortfall is the number to watch. It is the central asset of the recent expansion, and its ramp will determine whether the guided 14% EBITDA margin is achievable.
Questions answered
- Why is paracetamol utilization below the 65% target?
- The concall summary does not specify the reason for the miss. Management disclosed the 55% utilization figure and outlined a path to 70-75% by FY27 and 100% by FY28, but did not explain the current shortfall against the prior guidance.
- How does this affect the FY27 financial targets?
- Management reaffirmed a 15-18% revenue growth target and a 14% EBITDA margin for FY27. The paracetamol ramp is a key driver of both, so the current 55% utilization creates a gap to close over the next two quarters.
- What is the status of the ibuprofen business?
- Ibuprofen demand recovered to 85-95% utilization after a destocking cycle, indicating that part of the business has normalized. This provides a offsetting positive against the paracetamol underperformance.
- What is the scale of the planned greenfield investment?
- IOL outlined a ₹1,200-1,400 crore greenfield capex plan over four to five years, to be funded through internal accruals. This represents a significant step-up in investment from the company's current scale.
Story so far
All notes on IOLCP →- 22 May 2026 · 4:31 PM IST IOL paracetamol plant running at 55%, below its own target
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