Dhampur Bio — Q1 FY26 earnings call

Call held 29 Jul 2025

Management summary

Dhampur Bio Organics Ltd. reported strong top-line growth in Q1 FY26, driven by robust performance in its biofuels, spirits, and country liquor segments, alongside improved sugar realization. However, the quarter saw a significant decline in profitability, resulting in a loss after tax, primarily due to lower sugar recoveries and increased production costs from pest infestation. The company remains optimistic about future performance, banking on its new dual-feed distillery and ongoing cane development initiatives.

Highlights

  • Revenue from operations for Q1 FY26 stood at ₹821 crores, reflecting a growth of 28.75% year-on-year.

  • Biofuels and Spirit segment revenue reached ₹127.66 crores, an 83.55% increase YoY.

  • Country liquor segment gross revenue grew 50.72% YoY to ₹286.34 crores, with EBIT up 72.5% to ₹4.33 crores.

  • Ethanol sales volume increased significantly by 89.32% to 19.33 million liters in Q1 FY26.

  • The conversion of a 100 KLPD molasses-based distillery into a dual-feed facility was completed in June 2025, providing enhanced operational flexibility.

Concerns

  • The company reported a loss after tax of ₹19.37 crores in Q1 FY26, compared to a profit of ₹1.11 crores in Q1 FY25.

  • Gross sugar recovery declined to 11.03% (from 12.01% in Q1 FY25) and net recovery to 9.54% (from 11.73% in Q1 FY25) due to red rot and pest infestation.

  • Sugar prices did not show a substantial increase in the quarter despite lower countrywide production, impacting profitability.

Key financials

  1. Revenue from Operations ₹821 Cr +28.7%YoY
  2. Loss After Tax ₹-19.37 Cr
  3. Average Sugar Realization ₹40.84/kg +4.3%YoY
  4. Ethanol Sales Volume 19.33 million liters +89.3%YoY
  5. Gross Sugar Recovery 11%
  6. Net Sugar Recovery 9.5%

What they filed

Q1 FY27: revenue up 4.5%, net profit up 300.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue466 486 464 530 526 +13%441 −9%472 +2%554 +5%
EBITDA-9 16 98 12 -7 +22%39 +144%80 −18%11 −8%
Net profit-22 -6 40 -19 -16 +27%14 +333%46 +15%38 +300%
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

  • Sugar Segment
    ₹523.49 Cr Revenue95,505 tons Sugar Sold
  • Biofuels and Spirit Segment
    ₹127.66 Cr Revenue₹0.64 Cr EBIT
  • Country Liquor Segment
    ₹286.34 Cr Gross Revenue₹4.33 Cr EBIT
  • Power Segment
    20.37 million units Power Generated9.94 million units Power Exported₹3.44/unit Average Realization

Capital allocation

high confidence
  • Capex Capex disclosed
    So we have pretty much replacement CAPEX or negligible CAPEX. Our overall CAPEX spend will be considerably lower than our net depreciation. I don't think we will have any major CAPEX, we have not planned for any major CAPEXS.
  • Debt Gross ₹975 Cr
    • Repayment Repaid long-term loans during the quarter. ₹15 Cr
    Our long-term loans stood at Rs. 304 crores as on 30th June 2025. Our working capital loan as on 30th June was Rs. 671 crores. As of 30th June 2025, our Long term debt-equity ratio remains at 0.3x.

Guidance & targets

Sugar Production

  • Gross Sugar Production (Industry) Sugar Production · 2025-26 sugar season · Medium confidence 34-35 million tons
    For the upcoming sugar season '25-26, we expect an increase in the gross sugar production to about 34 million tons-35 million tons.

    — Gautam Goel

Crushing Season Start

  • Start of Crushing Season Crushing Season Start · Next season · Medium confidence Right after Diwali
    At least our plant in West UP, which has the same cane as last year with better yield, we think we should be starting that pretty much right after Diwali. This seems to be the plan right now.

    — Gautam Goel

Market context

  • Global Sugar Production Sugar Production · 2025-26 season · High confidence 189.3 million tons
    Global sugar production is projected to reach around 189.3 million tons in the '25-26 season, up 4.7% year-on-year

    — Gautam Goel

What to watch in Q2 FY26

Overall Company Performance Improvement

Q3-Q4 FY26
Current Q1 FY26 loss after tax of ₹19.37 crores
Target Improved financial performance, especially in Q3-Q4 FY26

Why it matters

Management expects rationalization efforts and the dual-feed distillery to yield better results, crucial for turning around profitability.

all our other sort of rationalization efforts with regards to ethanol, dual feed, all of them have now just about come on stream in June. So we hope this will continue to help give us better performances especially in Q3-Q4.

Risks & concerns

  • Lower Sugar Recovery and Increased Production Costs

    high

    Sugar recoveries were down by 0.7-0.8% in West Central UP due to red rot and pest infestation, leading to higher production costs and impacting profitability.

    Management acknowledged

  • Disappointing Financial Performance

    high

    Analyst expressed concern over the company's continuous disappointing numbers and declining EBITDA margin despite sales growth.

    Analyst acknowledged

  • Lack of Substantial Sugar Price Increase

    medium

    Sugar prices did not show a significant increase in Q1 FY26 despite lower countrywide production, affecting realization.

    Management acknowledged

  • Ethanol Pricing Policy

    medium

    The sugar sector is requesting government revision of ethanol pricing for sugar syrup and B heavy molasses to align with input costs and maintain production incentives.

    Management acknowledged

Q&A highlights

7 direct
Disappointing Q1 FY26 Performance and EBITDA Margin Direct
Our sugar recoveries have taken a beating in two of our factories. Overall, UP, the sugar recoveries have been down by about 0.7% to 0.8% in West Central UP. So the bulk of our cane comes from this region where the red rot infestation and the pest infestation was high which resulted in a lower net recovery which increased the overall cost of production.

Analyst challenged management on the poor financial results despite sales growth, leading to management explaining the root causes (low recovery, high costs, flat sugar prices) and outlining expected improvements in later quarters.

Asked by Niteen Dharmawat

Sugarcane Pests (Black Bug) and New Varieties Direct
But in our area, whatever black bug we did observe very early on was contained with the right amount, the right kind of pesticides were put into place, and the treatments were put into place to keep it contained. So, as of this point of time, we do not have any black bug related damages which has been, that they have all been contained.

Analyst inquired about new pest outbreaks and varietal updates, which are critical for sugarcane health and future yields. Management provided reassurance on containment and current health of varieties.

Asked by Nithin Renjith

Next Sugar Season Production and Recovery Outlook Direct
But what we can tell you is the cane crop is looking really healthy at this point of time, touchwood. We do not see any varietal changes, programs that have been put into place are also beginning to show results. The red rot containment also has been, we do not see any major red rot outbreak.

Analyst sought forward-looking estimates for the crucial sugar season. Management provided an optimistic qualitative outlook based on current crop health and successful containment efforts.

Asked by Nithin Renjith

Ethanol Strategy and Sugar Exports in New OMC Tender Direct
So, with regards to our focus on see our focus will be on value addition, depending on the ethanol prices that the government announces for the current year. We will be in a better position to decide what raw material we will use for ethanol diversion, whether it will be B heavy, C molasses or syrup.

Analyst questioned the company's strategic priorities given market dynamics. Management clarified its flexible, value-addition approach to ethanol feedstock and acknowledged potential sugar export opportunities.

Asked by Nithin Renjith

Cane Acreage and Varietal Shift in UP Direct
So, out of our three units, Mansurpur, which is in West UP, the cane acreage is pretty much similar to last year with the yields seem to be better for sure. For Asmoli and Meerganj, the cane acreage is about say 4% to 5% lower, but we do hope to make that up with enhanced productivity of cane.

Analyst probed on raw material availability and changes in cultivation practices. Management provided specific acreage trends and explained the varietal shift driven by past red rot issues, with expectations for future recovery.

Asked by Udit Gupta

Government's Ethanol Policy Roadmap (E20-E30) Direct
So, the government, there was a recent meeting where the BIS has agreed on an increase of E20 to E22, E25, E27 and E30. But the exact timeframes are yet to be decided. BIS will be releasing the standards in due course of time.

Analyst sought clarity on the long-term ethanol blending policy. Management confirmed the government's intent for higher blending targets, indicating future growth potential for ethanol producers.

Asked by Udit Gupta

Economics of Grain-based Ethanol vs. Sugar Sector Direct
I also believe there is some discussions with regards to, I mean, if you see all the press cuttings, and if you see some of the discussions on what we have been given to understand through associations and otherwise, that there is a thought that probably we don't want to, the maize areas more than the desired level because it's eating into edible oils, it's eating into other pulses and other necessary food items.

Analyst questioned the competitive landscape for ethanol feedstock. Management hinted at a potential policy shift favoring sugar-based ethanol over grain due to food security concerns and softening maize prices, which could benefit the company.

Asked by Udit Gupta

Sustainable Aviation Fuel (SAF) from Ethanol Partial
Yes, so on the diesel front, there's been some talk but nothing concrete. A lot of discussions are going on both at national and international stage like with the Japanese government and stuff like that. For the SAF, sustainable aviation fuel. Some companies are seriously looking at it.

Analyst explored new market opportunities for ethanol. Management confirmed ongoing discussions and interest in SAF but indicated it's still in early stages with significant work needed on policy and compliance.

Asked by Udit Gupta

3 min read 6 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Dhampur Bio Organics Ltd. reported a revenue from operations of ₹821 crores for Q1 FY26, marking a significant 28.75% year-on-year growth from ₹638 crores in Q1 FY25. This growth was primarily fueled by improved sugar realization and higher sales volumes in the ethanol and country liquor segments. However, the company faced a challenging quarter on the profitability front, recording a loss after tax of ₹19.37 crores, a stark contrast to the profit of ₹1.11 crores in the corresponding period last year.

Sugar Segment Challenges and Realization Improvement

The sugar segment contributed ₹523.49 crores to revenue, growing 22.1% YoY. Despite a slight increase in sugar sales volume to 95,505 tons, the company experienced a decline in sugar recoveries. Gross sugar recovery fell to 11.03% from 12.01% in Q1 FY25, and net recovery dropped to 9.54% from 11.73%. This reduction was attributed to red rot and pest infestation in West Central UP, leading to higher production costs. Average sugar realization, however, saw a 4.31% improvement, reaching ₹40.84 per kg.

Robust Growth in Biofuels and Spirits

The biofuels and spirits segment demonstrated strong performance, with revenue surging 83.55% YoY to ₹127.66 crores. Ethanol production increased by 58.17% to 21.67 million liters, and ethanol sales volume grew by an impressive 89.32% to 19.33 million liters. A key development was the completion of the conversion of a 100 KLPD molasses-based distillery into a dual-feed facility in June 2025, enabling the processing of both molasses and grain-based feedstock and aligning with government ethanol blending targets.

Country Liquor Segment Expansion and Capital Structure

The country liquor segment also showed robust growth, with gross revenue increasing by 50.72% to ₹286.34 crores and EBIT rising by 72.5% to ₹4.33 crores. The company aims to maintain this momentum, focusing on value addition and leveraging its distillery capacity. Regarding capital structure, long-term loans stood at ₹304 crores and working capital loans at ₹671 crores as of June 30, 2025. The company repaid ₹15 crores of long-term loans during the quarter and anticipates negligible capital expenditure going forward.

Sugarcane Outlook and Pest Management Initiatives

Management provided an outlook for the '25-26 sugar season, expecting an increase in gross sugar production to 34-35 million tons for the industry. While Mansurpur's cane acreage is stable, Asmoli and Meerganj saw a 4-5% decline, which the company hopes to offset with enhanced productivity. Aggressive cane development and pest management activities, including containing black bug outbreaks, are expected to improve yields and recovery, with a projected increase in sugarcane acreage in UP in 2025-26.

Ethanol Policy and Future Feedstock Strategy

The government is actively considering increasing ethanol blending targets beyond E20 to E22, E25, E27, and E30, though specific timelines are yet to be decided. Dhampur Bio's dual-feed distillery provides flexibility in choosing between B heavy molasses, C molasses, or syrup for ethanol production based on government pricing and input costs. Management also noted discussions suggesting a potential shift back to the sugar sector as a predominant ethanol supplier if maize prices remain soft and food security concerns persist regarding grain-based ethanol.

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