Sharat Industrie — Q3 FY26 earnings call

Call held 18 Feb 2026

Management summary

Sharat Industries reported a strong Q3 and nine-month performance for FY26, driven by diversification, disciplined execution, and increased value-added product contribution. The company achieved significant revenue growth and improved margins despite market volatility. Management outlined strategies for continued growth, focusing on market expansion, operational efficiency, and leveraging favorable government policies and trade agreements, while aiming for double-digit EBITDA margins and higher utilization.

Highlights

  • Q3 FY26 Revenue from operations stood at ₹142.5 crore.

  • Q3 FY26 Operating margin was ₹9.5 crore, reflecting 6.67% of revenue.

  • Q3 FY26 Profit After Tax (PAT) was ₹4.74 crore, with a PAT margin of 3.33%.

  • Nine Months FY26 Revenue from operations increased 42% YoY to ₹407.47 crore from ₹286.63 crore in 9M FY25.

  • Export revenues grew 22% and export volumes increased 6.7% for the nine-month period.

  • Current utilization levels across all divisions are at 65%, with a target to reach 90% over the next 24 months.

  • Management targets a 10% EBITDA margin within the next 24 months.

  • Anticipates over 15% revenue growth if the India-EU FTA crystallizes.

Key financials

2 periods

Q3

  • Revenue from Operations
    ₹142.5 Cr
  • Operating Margin
    ₹9.5 Cr
  • Operating Margin %
    6.7%
  • PAT
    ₹4.74 Cr
  • PAT Margin %
    3.3%

9M

  • Revenue from Operations
    ₹407.47 Cr
    YoY +42%
  • Export Revenue Growth
    22%
  • Export Volume Growth
    6.7%

What they filed

Q1 FY27: revenue up 4.4%, net profit up 16.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue100 96 94 115 150 +49%143 +48%117 +25%120 +4%
EBITDA9 8 4 11 12 +30%10 +22%3 −20%13 +15%
Net profit4 3 1 5 6 +54%5 +80%0 −91%6 +17%
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.

Guidance & targets

Capacity

  • Utilization Level Capacity · next 24 months · High confidence 90%
    Currently, our utilization levels across all divisions stands at an average 65%. So that leaves us with adequate headroom for improvement. We are confident of reaching a figure of closer to 90% over the next 24 months, because besides increased capacity utilization, another key area of focus for us has been an increase in the value-added product contribution, because that has been driving bottom lines better in the recent past.

    — Sharat Reddy, Executive Director

Profitability

  • EBITDA Margin Profitability · next 24 months · High confidence 10%
    There is a fair amount of optimism to work towards an EBITDA margin of about 10%. Having said that, I think there are a lot of contributors to such an end product, primarily raw material prices, which are vastly beyond our control as a processor. That being said, if all conditions remain ideal or optimal in the upcoming 24 months, we do see hope to increase our overall EBITDA to the region of up to 10% in the next 24 months.

    — Sharat Reddy, Executive Director

Revenue

  • Revenue Growth Revenue · if EU-India FTA crystallizes sooner · Medium confidence >15%
    the EU and India-FTA agreement be crystallized sooner, we expect growth in excess of 15% in revenue overall as a conservative estimate because we believe that that will enable us to push further into those regions by rekindling some of our prior customer partnerships.

    — Sharat Reddy, Executive Director

  • Domestic Business Contribution to Revenue Revenue · by FY28 · High confidence 15% or below
    if the ratio currently stands between, let us say, a 70% to 80% exports and a 20% to 30% domestic, as we scale up further or rapidly on exports, we anticipate that the contribution of domestic business might come to in the region of 15% or below by FY'28.

    — Sharat Reddy, Executive Director

  • Q4 FY26 Revenue Outlook Revenue · Q4 FY26 · Medium confidence similar or slightly greater than last year's Q4
    I think we can expect a healthy growth rate and at least be on par with our previous year's fourth quarter or a slight improvement in that front.

    — Sharat Reddy, Executive Director

Export Target

  • Export Revenue Export Target · by FY28 · High confidence ₹1000 crore
    Hi, Sharat. Congratulations on a good set of numbers. I have a three-part question. The first pertains to your number regarding the export target. So, as I understand, you have guided for a Rs. 1000 crore target by FY'28 in terms of export.

    — Sharat Reddy, Executive Director

What to watch in Q4 FY26

Utilization Level Progress

next 24 months
Current 65%
Target Progress towards 90%

Why it matters

Tracking utilization is key to assessing operational efficiency and capacity leverage, directly impacting profitability.

Currently, our utilization levels across all divisions stands at an average 65%. So that leaves us with adequate headroom for improvement. We are confident of reaching a figure of closer to 90% over the next 24 months...

Risks & concerns

  • Volatility across trade, demand, and raw material cycles

    medium

    The sector continues to see volatility across trade, demand, and raw material cycles, requiring resilience through diversification.

    Management acknowledged

  • Raw material price fluctuations

    medium

    Raw material prices can move up and down, and realizations may realign depending on market conditions.

    Management acknowledged

  • Unstable global environment due to geopolitical events and tariffs

    medium

    FY26 has been challenging due to unexpected tariffs and geopolitical events, creating an unstable global environment.

    Management acknowledged

  • Increased competition in the Russian market

    medium

    2026-27 is expected to see slightly more competition in Russia due to additional approved facilities from India and imports from other countries.

    Management acknowledged

  • Uncertainty regarding final terms of US tariff relief and other duties

    medium

    While 25% penal tariffs have been reduced, clarity is still awaited on further reductions and the impact of existing anti-dumping and countervailing duties.

    Management acknowledged

  • Seasonality impacting Q4 performance

    low

    Q4 is historically a softer quarter due to seasonality, lower raw material availability, and higher prices.

    Management acknowledged

  • Hurdles in Indian frozen shrimp market practice

    low

    Challenges exist in understanding the appropriate price point for frozen shrimp for the average Indian consumer due to market practices.

    Management acknowledged

Q&A highlights

7 direct
Impact of budget policies on top-line growth Direct
One of the key facts that we felt would contribute towards improved revenue or profitability for the seafood sector is the increase for the duty-free import limits from 1% up to 3% of prior year FOB exports, with India increasingly taking a stance towards further value-added products.

Analyst sought clarity on how recent government policies, specifically duty-free import limits and credit facilities for MSMEs, would translate into tangible top-line growth for the business.

Asked by Deepti

Outlook for Q4 FY26 and next two years Direct
I think we can expect a healthy growth rate and at least be on par with our previous year's fourth quarter or a slight improvement in that front. For the next year, ma'am, I think the initiatives that we have taken so far, along with all the positive news that we have been receiving, especially with respect to the reduction in tariffs, the India-EU free trade agreement, we remain bullish with respect to growth prospects.

Analyst probed for specific forward-looking guidance on revenue and profitability, especially given the strong performance in the first nine months and the impact of external factors.

Asked by Ishita Bhatt

Current utilization levels and roadmap to double-digit EBITDA margins Direct
Currently, our utilization levels across all divisions stands at an average 65%. So that leaves us with adequate headroom for improvement. We are confident of reaching a figure of closer to 90% over the next 24 months... There is a fair amount of optimism to work towards an EBITDA margin of about 10%.

Analyst questioned the company's progress on previously stated utilization targets and sought confirmation on the timeline for achieving double-digit EBITDA margins, linking it to value-added products.

Asked by Harsh Beria

Economics of merchant exports, particularly margins from China Partial
Overall, I would suggest that the Chinese market's average EBITDA would be on par with the industrial EBITDA if you are focusing only on Black Tiger. If it is a blend of vannamei and Black Tiger, the Chinese market's EBITDA would be significantly lower than Western regions.

Analyst sought to understand the profitability and working capital implications of the company's merchant export strategy, especially for the China market, and how these margins compare to corporate averages.

Asked by Harsh Beria

EU certification and customer base for the EU market post FTA Direct
Yes. So, our plant has a certification to export to the EU, and we intend to leverage this in the upcoming quarters in the next fiscal. At present, we are still waiting for the finalization of these terms so that the updated net nil tariffs can come into effect...

Analyst inquired about the company's readiness and existing market presence in the EU to capitalize on the potential India-EU Free Trade Agreement, which is a significant growth driver.

Asked by Harsh Beria

US market outlook after tariff changes and key challenges Direct
Firstly, the indication regarding the reduction of tariffs is a welcome change for the sector. As of now, we have clarity that the 25% penal tariffs have been reduced, and we are awaiting further confirmation regarding any possible further reduction in the tariffs.

Analyst asked for management's assessment of the US market given recent tariff changes and other duties, and the potential for increased access and sales.

Asked by Disha Shah

Contribution from own farms to overall business Direct
Our own farms have an overall capacity of producing anywhere between 1,500 tonnes to 2,000 tonnes annually... currently, our farms are contributing to roughly about 12% of our overall export quantums. And this is at a capacity utilization of approximately 50% at the farm level.

Analyst sought quantification of the contribution from the company's own farms and plans for scaling this segment, which is a key part of their backward integration strategy.

Asked by Harsh Beria

Demand forecast and market scenario in Russia Direct
At present, we have seen a steady demand from our customers, who we have been working with for the last few years. We anticipate that 2026-27 would see slightly more competition in the Russian market, due to additional facilities being approved from India, as well as certain additional imports coming in from other countries.

Analyst inquired about the demand trends and competitive landscape in the Russian market, which is a significant export geography for the company.

Asked by Nitin

3 min read 6 chapters

Detailed narrative

Market Diversification and Resilience Strategy

Sharat Industries is actively building resilience through diversification across markets, product mix, and sourcing, given the sector's inherent volatility. The company has strategically expanded into multiple geographies, strengthening customer relationships, particularly in non-U.S. markets like Russia and China. This has resulted in a well-diversified export mix, reducing dependence on any single region and positioning the company to navigate global trade fluctuations effectively.

Q3 & 9M FY26 Financial Performance Overview

For Q3 FY26, Sharat Industries reported revenue from operations of ₹142.5 crore, with an operating margin of ₹9.5 crore (6.67%) and a PAT of ₹4.74 crore (3.33%). The nine-month period ending December 31, 2025, saw revenue from operations increase by a significant 42% to ₹407.47 crore, up from ₹286.63 crore in 9M FY25. Export revenues grew 22% and export volumes increased 6.7% over the same period, driven by value-added products and improved quality compliance.

Strategic Growth Drivers and Operational Efficiency

The company's growth momentum is supported by increasing value-added product contribution, adherence to global quality standards, and robust operational and cost control. Key strategic pillars include building a balanced, higher-value export mix (e.g., premium black tiger shrimp), improving utilization through contract farming and merchant export initiatives, and scaling operations in an asset-light manner. Current utilization stands at 65%, with a target to reach 90% within 24 months, alongside a goal of achieving 10% EBITDA margins.

Impact of Government Policies and Trade Agreements

Recent government initiatives, such as the increase in duty-free import limits for the seafood sector from 1% to 3% of prior year FOB exports, are expected to improve operating margins by reducing costs for key ingredients. The proposed India-EU Free Trade Agreement is viewed as a structurally positive development, with management anticipating over 15% revenue growth if the agreement crystallizes sooner. These policies are seen as enhancing India's competitiveness and strengthening the long-term outlook for seafood exports.

Market Specific Strategies and Outlook

Sharat Industries maintains a strong presence in Russia, accounting for 50% of exports with a 90% customer retention rate. China, a newer market for black tiger shrimp, has a 60% retention rate. The US market, historically volatile, is being approached cautiously, though recent tariff reductions are directionally positive. The company plans to re-engage with the EU market, leveraging its certified plant and past connections once the FTA terms are finalized. For 2026-27, increased competition is anticipated in the Russian market, prompting a focus on value-added products like cooked and blanched shrimp to improve margins.

Domestic Market and Own Farm Contribution

While the domestic business, currently dominated by feed production, is expected to diminish its contribution to overall revenue to 15% or below by FY28 as exports scale, the company is actively exploring strategies to enhance its presence in the frozen shrimp segment domestically. The company's own farms contribute approximately 12% to overall export volumes, operating at about 50% capacity utilization. Plans are in place to further utilize farm capacity, though the proportional contribution might remain stable due to significant export volume growth.

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