Modi Naturals

Modi Naturals reported a 0.3% year-on-year increase in Q2 FY26 revenue to INR147 crores, with EBITDA growing 14.9% to INR15.3 crores, resulting in a 10.4% EBITDA margin. PAT for the quarter rose 32.8% to INR10.1 crores. For the first half of FY26, revenue from operations grew 2.7% YoY to INR302 crores, and EBITDA increased 24% to INR33 crores, with margins at 10.9%. PAT for H1 FY26 was INR20.6 crores, up 36.7% YoY, indicating a strong overall half-year performance despite Q2 headwinds.

The consumer division's Q2 FY26 revenue was INR46.3 crores, slightly down from INR46.6 crores in Q2 FY25, and EBITDA was INR3.3 crores, compared to INR4.6 crores in the prior year. For H1 FY26, revenue grew to INR90.7 crores from INR86.6 crores, though EBITDA declined to INR7.2 crores from INR10.6 crores. This was attributed to a temporary impact from GST changes and increased marketing investments of INR6.3 crores in Q2 and INR9.15 crores in H1. The company is expanding its distribution network, growing quick commerce presence, and successfully launching new products like Hing, with pasta performing exceptionally well.

The bulk division's Q2 FY26 revenue was INR16 crores, down from INR19.6 crores in Q2 FY25, but it achieved an EBITDA turnaround, recording INR0.4 crores compared to a loss of INR0.3 crores in Q2 FY25. For H1 FY26, revenue was INR47.2 crores, and EBITDA turned positive at INR1.2 crores, compared to a loss of INR1.5 crores in H1 FY25. This improvement is a result of shifting to a lower inventory business model, tighter inventory management, and disciplined procurement. Management anticipates a materially stronger second half of the year for this division due to seasonality and favorable commodity prices.

The ethanol division delivered strong performance, with Q2 FY26 revenue at INR84.7 crores and EBITDA at INR12.1 crores, achieving an EBITDA margin of 14.3%, an improvement of 198 basis points YoY. H1 FY26 revenue was INR164.1 crores, with EBITDA of INR25.7 crores and a margin of 15.6%, up 337 basis points YoY. The second phase of the 180 KLPD ethanol plant expansion is under trial and expected to commence operations by December '25, increasing total capacity to 310 KL PD. The company has secured orders for 49,700 KL worth INR400 crores for the next ESY and expects further orders.

Modi Naturals made a focused investment of INR6.3 crores in marketing and advertising during Q2 FY26 to strengthen brand visibility and consumer engagement. This, combined with the GST-led transition, impacted quarterly profitability. The total marketing and advertising spend for H1 FY26 was INR9.15 crores, significantly higher than INR6.4 crores in the same period last year. Management views these investments as strategic for building long-term brand strength and expects the impact to be mitigated by growth in Q3 and Q4.

The company noted that fresh crops are arriving in Q3, and price normalization is underway, which is expected to benefit margins. Management also highlighted that maize prices have come down. For the ethanol division, the ability to switch raw materials provides flexibility to manage input costs and maintain healthy EBITDA margins. The environment clearance fast track for dedicated ethanol plants has sunsetted, which may pose a bottleneck for future capacity enhancements in the industry.

As of September 30, 2025, the company reported a long-term debt of INR125 crores and short-term working capital debt of INR45 crores, totaling INR170 crores. The cost of debt for term loans is approximately 4.5% due to a 50% interest subvention, while working capital debt is around 8.5%. Management expects strong internal approvals over the next 12 to 18 months to manage debt, with options to pay early or raise capital, indicating a proactive approach to capital structure.