Modi Naturals — Q2 FY26 earnings call

Call held 17 Nov 2025

Management summary

Modi Naturals Limited reported a mixed Q2 and strong H1 FY26 performance, driven by robust growth in its Ethanol division and strategic investments in the Consumer segment. While GST-led transitions and increased marketing spend impacted Q2 profitability, the company remains confident in achieving its full-year revenue guidance, anticipating a stronger H2, especially from the bulk division and newly expanded ethanol capacity. The company is also focusing on debt management and long-term growth for its FMCG division.

Highlights

  • Q2 FY26 Revenue from operations stood at INR147 crores, a 0.3% YoY increase.

  • Q2 FY26 EBITDA grew by 14.9% YoY to INR15.3 crores, with margins at 10.4%.

  • Q2 FY26 PAT increased by 32.8% YoY to INR10.1 crores.

  • H1 FY26 Revenue from operations was INR302 crores, up 2.7% YoY.

  • H1 FY26 EBITDA reached INR33 crores, a 24% YoY growth, with margins at 10.9%.

  • Ethanol division's total capacity is expected to increase to 310 KL PD by December '25.

  • The company confirmed FY26 revenue guidance of INR850-880 crores.

  • H1 FY26 marketing and advertising spend was INR9.15 crores, impacting profitability.

Key financials

2 periods

Q2

  • Revenue
    ₹147 Cr
    YoY +0.3%
  • EBITDA
    ₹15.3 Cr
    YoY +14.9%
  • EBITDA Margin
    10.4%
  • PAT
    ₹10.1 Cr
    YoY +32.8%

H1

  • Revenue
    ₹302 Cr
    YoY +2.7%
  • EBITDA
    ₹33 Cr
    YoY +24%

What they filed

Q1 FY27: revenue up 6.8%, net profit down 11.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue66 97 105 76 62 −6%93 −4%151 +44%81 +7%
EBITDA3 3 3 4 3 −6%2 −35%6 +95%6 +39%
Net profit2 3 -0 3 3 +6%1 −57%3 +3456%3 −11%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Q2 Revenue
₹147 Cr Total
  • Ethanol division ₹84.7 Cr 57.6%
  • Consumer division ₹46.3 Cr 31.5%
  • Bulk division ₹16 Cr 10.9%

Capital allocation

high confidence
  • Capex Capex disclosed
    • Ethanol plant expansion to 310 KL PD
    The second phase of the 180 KLPD ethanol plant expansion is currently under trial and is expected to commence operations by December '25. Once completed, our total capacity will increase to 310 KL PD.
  • Debt Gross ₹170 Cr
    At the moment, as of 30th September, we have a long-term debt of INR125 crores and a short-term working capital debt of about INR45 crores, a total of INR170 crores.

Guidance & targets

Capacity

  • Ethanol Production Capacity Capacity · by December '25 · High confidence 310 KL PD
    Once completed, our total capacity will increase to 310 KL PD.

    — Akshay Modi

Revenue

  • FY26 Revenue Revenue · FY26 · High confidence INR850-880 crores
    Yes, that is correct. So, our bulk division contributes significantly in the second half of the year due to seasonality factors. And this year, we expect better performance from that segment owing to volume as well as value growth. And the consumer division will of course contribute to some growth. And the ethanol division as well, once this plant gets commissioned next month, will contribute significantly to growth. So, we are confident of achieving our set of numbers.

    — Akshay Modi

  • FMCG Division Long-term Revenue Revenue · long-term · Low confidence INR500 crores
    We don't see any reason why this division should not get to about INR500 crores number. And contributing from oil as well as foods. So, that is our long-term vision.

    — Akshay Modi

Profitability

  • H2 FY26 Performance Profitability · H2 FY26 · Medium confidence Materially stronger
    However, with fresh crops arriving in Q3 and price normalization underway, we anticipate that the second half of the year will be materially stronger.

    — Akshay Modi

What to watch in Q3 FY26

Ethanol Capacity Expansion & Commercial Operations

by December '25
Current 180 KLPD expansion under trial
Target Total capacity of 310 KL PD operational

Why it matters

Successful commissioning of the expanded ethanol plant is crucial for significant revenue and EBITDA growth in the Ethanol division.

The second phase of the 180 KLPD ethanol plant expansion is currently under trial and is expected to commence operations by December '25. Once completed, our total capacity will increase to 310 KL PD.

Risks & concerns

  • GST transition impact on profitability

    medium

    Temporary impact on quarterly profitability due to GST-led transition, but business has absorbed the change and profitability is stabilizing.

    Management acknowledged

  • Overcapacity in the ethanol sector

    medium

    Analysts raised concerns about overcapacity, but management stated it's a regional issue and highlighted growing fuel consumption, flex-fuel engines, and private OMCs as demand drivers.

    Analyst downplayed

  • Monsoon-related challenges and seasonal softness

    low

    Q2 was softer due to monsoon-related challenges, limited crop arrivals, and seasonally lower demand, but H2 is expected to be stronger.

    Management acknowledged

  • Raw material price pressure (e.g., maize MSP increase)

    low

    Analyst questioned the impact of maize MSP increase on ethanol margins, but management stated they have options to switch raw materials.

    Analyst manageable

Q&A highlights

5 direct, 1 evasive
Impact of ethanol blending on vehicle components (beetles attracted to rubber hoses) Evasive
Well, it's a policy matter. But all I can say is that a lot of scientific research has been done on this by ARAI and by SIAM And I doubt that insects can really reach the inside of your engine and corrode the hoses. So, I do not think that is a scientific claim.

An analyst raised a specific, potentially negative, side effect of ethanol blending, which management dismissed as unscientific without further explanation.

Asked by Rohit Prakash

Disclosure of volume data for the branded business (oil) Partial
Yes, that point is well understood. However, so far, the management has not been keen to share volume data. So, once the management takes a decision on that, we will share the numbers.

Analyst pressed for volume data to assess the quality of revenue growth, but management indicated it's a decision to be made, not a current practice.

Asked by Rohit Prakash

Overcapacity in food grain-based ethanol and capacity offtake for Modi Naturals Partial
So, as far as our capacity and orders are concerned, our existing facility can go up to roughly INR320 crores and the balance, we have already secured some orders for the first quarter or so for the expanded capacity. And in subsequent cycle tenders, let's say cycle 2, cycle 3, we will try and secure more orders for the full capacity going forward. So, at the same time, your question around overcapacity and all, I think it is a very regional and state-specific issue.

Analyst questioned the company's ability to utilize its expanded ethanol capacity given industry overcapacity, to which management provided a partial assurance based on existing orders and regional dynamics.

Asked by Praveen Sharma

Long-term utilization of 310 KLPD ethanol capacity given E20 and future E100 requirements Direct
Your points are valid. However, please do understand that there is a significant inherent growth in India's fuel consumption... At the same time, I feel that on a long-term basis, there are many other solutions available, I mean consumption areas for ethanol. So, blending itself can increase. Number 2, the government is very keen on flex-fuel engines. Once that comes in, those vehicles will consume 100% ethanol. And then there is also sustainable aviation fuel which is kicking in soon.

Analyst sought clarity on the long-term demand for ethanol beyond E20, and management provided a comprehensive view of future growth drivers.

Asked by Praveen Sharma

Confirmation of FY26 revenue guidance of INR850-880 crores, implying a strong H2 Direct
Yes, that is correct. So, our bulk division contributes significantly in the second half of the year due to seasonality factors. And this year, we expect better performance from that segment owing to volume as well as value growth. And the consumer division will of course contribute to some growth. And the ethanol division as well, once this plant gets commissioned next month, will contribute significantly to growth. So, we are confident of achieving our set of numbers.

Analyst confirmed the ambitious FY26 revenue target and management reiterated confidence, outlining the divisional contributions expected in H2.

Asked by Praveen Sharma

Ethanol EBITDA margin and impact of increased maize MSP Direct
Well, we have options to switch to any raw material that we want. And based on the ability. So, we are confident of achieving a healthy EBITDA margin.

Analyst questioned the sustainability of high ethanol margins given raw material price changes, and management assured flexibility in raw material sourcing.

Asked by Raj Shah

Reasons for slower FMCG growth and steps to improve it Direct
Well, as I mentioned, in the last part of the quarter, there was a disruption caused due to the GST changes. And a lot of primary billings were affected due to that. Yet, I think we have had a flat quarter. We managed to not have a degrowth... And the steps that we are taking have significantly increased our visibility in marketing. And also on new products, other categories that we are focusing on.

Analyst probed into the underperformance of the FMCG division, and management attributed it to GST disruption while highlighting strategic initiatives for improvement.

Asked by Faisal Hawa

Additional operational costs for FY27 from new ethanol capacity Direct
I think in percentage terms, it will go down because we will get operational leverage. So, I don't think it will add incrementally in percentage terms.

Analyst inquired about the future cost structure post-ethanol expansion, and management indicated improved efficiency due to operational leverage.

Asked by Ankit Minocha

3 min read 7 chapters

Detailed narrative

Overall Financial Performance: Q2 and H1 FY26

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.

Consumer Division Performance and Strategic Focus

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.

Bulk Division Transformation and H2 Outlook

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.

Ethanol Division Growth and Capacity Expansion

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.

Marketing and Advertising Investments

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.

Raw Material and Pricing Environment

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.

Debt and Capital Management

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.

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