(Nirmal Bang Retail Research)
Outlook: Positive
#Guidance: i) Double digit revenue growth is expected over the medium term, ii) ~500bps operating margin expansion over the next 5 years through operating leverage, portfolio mix improvement and cost discipline, iii) Seeds segment revenue to be ~Rs. 1000 cr over the 5 years
#Exports (B2B) to see the recovery post rationalization of channel inventory post global destocking; however, pricing to remain under pressure due to China led competition
Key Highlights
•\Revenue stood at Rs.623 cr (+19% yoy). EBITDA stood at Rs. 58 cr (+29% yoy). PAT stood at Rs. 2 cr exceptional, which includes a gratuity provision of Rs. 40 cr on account of wage code implementation.
•\Overall volume growth has been 28%, with pricing degrowth by 8%.
•\In Technicals, it is expanding its customer base across the globe with new registrations, which should support for market share gains. Metribuzin and pendimethalin products have performed well during the quarter, while Hexaconazole and acephate volumes had seen challenges.
•\It has launched 9 products in the last 9 months (launched 1 herbicide for wheat in Q3). Also, launched a new brand Nucode under soil and plant health category, which covers biofertilizer, biostimulant and biopesticide.
•\The company continues to enhance competitiveness through strategic partnerships, digital initiatives, and innovation platforms, including herbicide-tolerant rice technology and unified field operations via the Sampark Plus app. It has strengthened its IP portfolio with new Indian and U.S. patents for differentiated herbicide formulations. The near-term outlook remains positive, supported by healthy reservoir levels, higher acreages, and strong domestic and export demand.
•\Segment wise, Crop care segment grew by 18% yoy and seeds segment grew by 46% you led by volume growth. Soil & Plant Health category grew by 16% yoy led by both price and volume growth. Exports, the B2B business, top-line grew by 73% yoy. Domestic B2C business grew by 13% yoy led by 25% volume growth.
•\Gross margins remain under pressure due to product mix and pricing; EBITDA improvement to come mainly from operating leverage, fixed-cost absorption and scale benefits. One-off inventory and quality-related provisions (~₹10 cr+) impacted near-term margins.
•\Multiple patents granted (India & US) and continued focus on new product introductions and alliances.
•\The management indicated that Rabi acreage is marginally higher yoy, and channel stocks are slightly elevated. Official dashboard confirms Rabi acreage is up by ~3% for wheat, oilseed and pulses as of Jan ‘26, first week data, which is supportive for Q4 sell-out and early Kharif placement. Also, Seed category remains a structural 5% to 10% CAGR story.
Stock is trading at P/E of 19x FY27E EPS.
