Concall AI

Modi Naturals — Q4 FY25 earnings call

Call held 29 May 2025

Management summary

Modi Naturals delivered a strong Q4 and FY25 performance, achieving significant growth across revenue and profitability metrics, driven by a strategic revival of its business operations. The company successfully met its ambitious targets, with the Ethanol division showing robust progress and the Consumer and Bulk divisions demonstrating recovery and planned growth. Improved operational efficiencies and strategic marketing investments underpinned this strong financial turnaround.

Highlights

FY25 marked a landmark year of reversal, resurgence, and renewed growth, with all ambitious targets for Revenue, EBITDA, and PAT met.
Consolidated Revenue from operations for Q4 FY25 grew 58.5% YoY to Rs. 189.9 crore.
Consolidated EBITDA for Q4 FY25 grew 189% YoY to Rs. 16.1 crore, with EBITDA margins at 8.5%.
Consolidated PAT for Q4 FY25 grew 550% YoY to Rs. 8.2 crore.
For FY25, consolidated Revenue grew 65.8% YoY to Rs. 662.9 crore, and EBITDA grew 517% to Rs. 56 crore (8.4% margin).
FY25 PAT turned positive at Rs. 31 crore, compared to a loss of Rs. 1.4 crore in FY24.
The Ethanol division's first phase (130 KLPD) is operating optimally, and the second phase (180 KLPD) is on track for Q3 FY26 commissioning, bringing total capacity to 310 KLPD.
Net working capital days improved significantly to 66 days in March '25 from 111 days in March '24.

Key financials

3 periods

Headline

Net Working Capital Days (March '25)
66 days

Q4 FY25

Revenue from Operations
₹189.9 Cr
YoY +58.5%
EBITDA
₹16.1 Cr
YoY +189%
EBITDA Margin
8.5%
PAT
₹8.2 Cr
YoY +550%

FY25

Revenue from Operations
₹662.9 Cr
YoY +65.8%
EBITDA
₹56 Cr
YoY +517%
EBITDA Margin
8.4%
PAT
₹31 Cr
Cash Flow from Operations
₹48.8 Cr
ROCE
18.3%
ROE
25.5%
Debt-to-Equity
1.22

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	66	97	105	76	62 −6%	93 −4%	151 +44%	81 +7%
Expenses	63	94	102	72	59	91	145	75
EBITDA	3	3	3	4	3 −6%	2 −35%	6 +95%	6 +39%
Margin	5%	3%	3%	5%	5%	2%	4%	7%
Other income	1	1	1	1	1	1	1	-0
Interest	1	1	1	1	0	1	1	1
Depreciation	0	0	0	0	0	0	0	0
Profit before tax	3	3	2	4	3 +6%	1 −47%	6 +177%	4 +16%
Tax rate	9%	0%	104%	13%	9%	18%	47%	33%
Net profit	2	3	-0	3	3 +6%	1 −57%	3 +3456%	3 −11%
EPS	1.86	1.95	-0.07	2.43	1.98	0.84	2.27	2.16

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 Revenue (Q4 FY25)

₹189.9 Cr Total

Ethanol Division ₹85.3 Cr 44.9%
Bulk Division ₹56.1 Cr 29.5%
Consumer Division ₹48.5 Cr 25.5%

Capital allocation

high confidence

Capex ₹250 Cr Equity part for both phases funded through internal accruals; debt of Rs. 105 crores for Phase 1 and Rs. 88 crores for Phase 2.
- Ethanol plant expansion (Phase 1 & 2) ₹250 Cr
So, as I mentioned, in the first phase, the equity part was funded through internal accruals of Modi Naturals, which invested into a subsidiary, which is Modi Biotech for this division. And in the first phase, we got a debt of about Rs. 105 crores for CAPEX. And in the second phase, again, the equity part is being funded through internal accruals, and we have secured an Rs. 88 crore long-term debt, which has already been disbursed. ... Sure, so our total CAPEX will go up to about Rs. 250 crores and yes, we expect about a 3.4 asset turn after expansion once we start the operation.
Debt 1.2× EBITDA
- New borrowing Secured long-term debt from HDFC Bank for second phase of ethanol expansion, already disbursed. ₹88 Cr
Debt-to-equity stood at 1.22in FY '25 versus 1.87 in FY '24.

Guidance & targets

Revenue

Consolidated Revenue Revenue · FY26 · High confidence ₹850-880 crores

Revenue expected to be in the range of Rs. 850 crore to Rs. 880 crore driven by increased volume across both oil and non-oil portfolios and higher ethanol capacity utilization.

— Akshay Modi

Profitability

Consolidated EBITDA Profitability · FY26 · High confidence ₹80-85 crores

EBITDA expected to be in the range of Rs. 80 crore to Rs. 85 crore, supported by improved product mix, operational efficiencies, and higher margin contributions.

— Akshay Modi
Consolidated PAT Profitability · FY26 · High confidence ₹42-48 crores

And PAT expected to be in the range of Rs. 42 crores to Rs. 48 crores, aided by cost rationalization, margin expansion, and improved working capital management.

— Akshay Modi

Capacity

Ethanol Phase 2 Commissioning Capacity · Q3 FY26 · High confidence Commence by Q3 FY26

We are now progressing rapidly with the second phase of our ethanol facility, which is on track to commence by Q3 FY '26.

— Akshay Modi
Total Ethanol Production Capacity Capacity · post Q3 FY26 · High confidence 310 KL per day

This expansion will add 180 KL per day to our current capacity, bringing our total ethanol production capacity to 310 KL per day.

— Akshay Modi

Utilization

New Ethanol Capacity Utilization Utilization · Q3-Q4 FY26 · Medium confidence 50-60% in Q3, 90% in Q4

It's safe to assume around 50-60% utilization in Q3, gradually increasing to around 90% in Q4.

— Akshay Modi

Margin

Ethanol Division EBITDA Margin Margin · full year · High confidence 12-15%

And I have always maintained that given where we are and the way we are operating our Ethanol division, we can maintain between 12% and 15%, and there is a quarterly seasonality on the raw material prices as it is agri-based. So, that is the range that we expect full year.

— Akshay Modi
Branded Division EBITDA Margin Margin · FY26 · High confidence 8.5-9%

And I think in that same range, we intend to continue this financial year at between 8.5% and 9%.

— Akshay Modi

Ad Spend

Above-the-Line Advertising Spend Ad Spend · FY26 · High confidence Double FY25 spend

And in FY '25 we have increased it by almost 30% and we intend to double it in FY '26. So, above the line we had spent I think close to about 4% which has gone up to almost 7% in FY '25 and we intend to maintain that or increase that further in FY '26.

— Akshay Modi

What to watch in Q1 FY26

Ethanol Phase 2 Capacity Commissioning

By Q3 FY26

Current On track for Q3 FY26

Target Commencement of 180 KLPD capacity

Why it matters

This is a significant capacity addition that will drive future revenue and profitability for the Ethanol division.

We are now progressing rapidly with the second phase of our ethanol facility, which is on track to commence by Q3 FY '26. This expansion will add 180 KL per day to our current capacity, bringing our total ethanol production capacity to 310 KL per day.

Risks & concerns

Input cost volatility for Consumer division
medium

Input cost volatility and macroeconomic challenges posed headwinds for the Consumer division in the past.

Management acknowledged
Quarterly seasonality in Ethanol EBITDA due to agri-based raw material prices
medium

Ethanol EBITDA margins are expected to be 12-15%, but with quarterly seasonality due to agri-based raw material prices.

Management acknowledged
Government-imposed oil price reductions and inventory corrections for Bulk division
low

These were past challenges for the Bulk division but are now behind the company, with a strong revival in business activity.

Management acknowledged
Initial operational challenges during ethanol plant rollout
low

The company faced initial challenges during the plant's operational rollout but swiftly addressed them, and the plant is now running at optimal capacity.

Management acknowledged

Q&A highlights

8 direct

Ethanol Plant Utilization & Near-Term Growth Drivers Direct

As far as the capacity utilization goes, we are running at full capacity utilization currently. And with the expansion coming in, we are expecting higher capacities later in the year. ... In the Consumer division, the run rate of growth has increased. So, if you see over the quarters, we have grown Q1 at 3%, Q2 at almost nil, Q3, we started ramping up 7.7 and Q4 at 15.2% growth. And Q1, we are expecting further growth increase.

Clarifies the current operational status of the ethanol plant and outlines the growth trajectory and drivers for the Consumer division in the near term.

Asked by Gunit Singh

Ramp-up Timeline for New Ethanol Capacity Direct

Like I said, we are expecting to commission it by the end of Q2 or maybe early Q3. ... It's safe to assume around 50-60% utilization in Q3, gradually increasing to around 90% in Q4.

Provides specific timelines and utilization targets for the significant new ethanol capacity, crucial for future revenue projections.

Asked by Gunit Singh

Segment Performance Discrepancies (Ethanol vs. Bulk/Consumer) Direct

So, in the Bulk division, we have not fallen back. In fact, we have recovered from FY '24. And FY '25 marks a recovery in the Bulk division. And the Consumer division as well, on a year-on-year basis, we have grown at about 6%. But this was as planned in the first one or two quarters, where we scaled back our ad spends, and then we increased them Q3 and Q4 onwards, and the growth has come back. And that was always the plan.

Explains the strategic rationale behind the performance of different segments, indicating that the Consumer and Bulk divisions are performing as per management's plan despite perceived underperformance.

Asked by Rohit Mehra

ROCE for Branded and Ethanol Divisions Direct

Yes, so Ethanol ROCE is 18.8% and Branded is 31% for FY '25.

Provides key profitability metrics for the company's core growth drivers, highlighting strong returns in the Branded division.

Asked by Rohit Mehra

Ethanol Expansion Plans and Land Bank Direct

We are expanding our capacity from 130 KL to 310 KL. And we have enough land banks, in fact more. And the layout and infrastructure was always planned to expand capacity. So, the expansion is taking place in the same premises and the same layout. ... Not at present.

Confirms the feasibility of the ethanol expansion plans, including land availability and funding, and clarifies the company's current focus on existing locations.

Asked by Rajavi

Funding of CAPEX for Ethanol Expansion Direct

So, as I mentioned, in the first phase, the equity part was funded through internal accruals of Modi Naturals, which invested into a subsidiary, which is Modi Biotech for this division. And in the first phase, we got a debt of about Rs. 105 crores for CAPEX. And in the second phase, again, the equity part is being funded through internal accruals, and we have secured an Rs. 88 crore long-term debt, which has already been disbursed.

Details the funding mix for the significant ethanol capacity expansion, showing a combination of internal accruals and secured debt.

Asked by Shaurya Punyani

Sustainable Margins Across Business Segments Direct

For the Bulk division, I would refrain from commenting as it has a volatile component. ... Branded division, we started off FY '25 with about a 15% EBITDA. And then we came down to an average of about 8.5% for the year. And that was the decision taken by the management to spend aggressively on advertising in this travel. And I think in that same range, we intend to continue this financial year at between 8.5% and 9%. ... Ethanol division, we can maintain between 12% and 15%, and there is a quarterly seasonality on the raw material prices as it is agri-based.

Provides clear expectations for sustainable EBITDA margins in the Branded and Ethanol divisions, explaining the factors influencing them.

Asked by Vaishnavi

FMCG Growth Drivers and Strategy Direct

We are confident of delivering growth on the Consumer division because the sub-categories that we operate in, not only we have completely differentiated product offerings, but we are also leading the categories, and we have the highest share of voice in marketing. As for distribution, we have a wide network across the country and a few neighbouring countries. ... I think growth will come from a 360-degree approach. There will be distribution expansion across categories. There will be core portfolio growth as well as new product development.

Outlines the multi-faceted strategy for driving growth in the Consumer division, focusing on product differentiation, market leadership, distribution, and innovation.

Asked by Vaishnavi

2 min read 6 chapters

Detailed narrative

Strong FY25 Performance and Strategic Turnaround

Modi Naturals reported FY25 as a landmark year, achieving a significant turnaround with consolidated revenue growing 65.8% to Rs. 662.9 crore. EBITDA surged 517% to Rs. 56 crore, resulting in a positive PAT of Rs. 31 crore, a substantial improvement from a loss of Rs. 1.4 crore in FY24. This performance is attributed to the company's agility, relentless focus on operational efficiency, and a favorable demand environment across all divisions, successfully meeting ambitious targets set for the year.

Ethanol Division: Capacity Expansion and Growth Outlook

The Ethanol division is a key pillar of Modi Naturals' long-term growth strategy. The first phase of the ethanol plant (130 KLPD) was commissioned in November '23 and is currently operating at optimal capacity. The company is rapidly progressing with the second phase, which will add 180 KLPD, bringing the total capacity to 310 KLPD, expected to commence by Q3 FY26. Management anticipates 50-60% utilization for the new capacity in Q3, gradually increasing to 90% in Q4, with sustainable EBITDA margins of 12-15%.

Consumer Division: Marketing Investment and Distribution Expansion

The Consumer division demonstrated ramping growth, with Q4 FY25 revenue increasing 15.2% YoY. Modi Naturals significantly enhanced its marketing spend, onboarding Karishma Kapoor as Brand Ambassador, and plans to double its above-the-line advertising in FY26. This, coupled with expanded distribution into modern trade and e-commerce platforms, aims to drive further growth and maintain EBITDA margins of 8.5-9% for the division, aligning with evolving consumer preferences for quality and health.

Bulk Division: Recovery and Improved Profitability

After two challenging years marked by government-imposed oil price reductions and inventory corrections, the Bulk division has shown a strong revival. Q4 FY25 EBITDA turned positive at Rs. 0.9 crore, compared to a loss of Rs. 2.3 crore in Q4 FY24. This recovery is driven by softening commodity prices, improved monsoon, fresh crop inflows, and favorable macroeconomic trends, leading to a marked improvement in EBITDA and sustainable profitability.

Financial Health: Improved Working Capital and Debt Management

Modi Naturals significantly improved its financial health, with cash flow from operations rising to Rs. 48.8 crore in FY25 from a negative Rs. 6.8 crore in FY24. The net working capital days were reduced to 66 days in March '25 from 111 days in March '24, reflecting strict management practices and efficient inventory. The debt-to-equity ratio also improved to 1.22 in FY25 from 1.87 in FY24, with the second phase of ethanol expansion funded through internal accruals and a secured Rs. 88 crore long-term debt.

FY26 Consolidated Guidance and Strategic Focus

For FY26, Modi Naturals projects consolidated revenue in the range of Rs. 850-880 crore, driven by increased volumes across all portfolios and higher ethanol capacity utilization. EBITDA is targeted at Rs. 80-85 crore, supported by improved product mix and operational efficiencies. PAT is expected to be Rs. 42-48 crore, aided by cost rationalization, margin expansion, and improved working capital management, indicating a continued focus on sustainable growth and profitability.

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