Dhampur Bio — Q4 FY25 earnings call

Call held 5 May 2025

Management summary

Dhampur Bio Organics reported mixed results for Q4 and FY25. While revenue saw healthy growth, profitability was significantly impacted by lower sugar production, reduced recovery rates, and a decline in the Biofuel & Spirits segment. The Country Liquor segment, however, delivered strong performance. The company is focusing on agronomical practices and expects its grain distillery to commence operations soon, diversifying its ethanol production.

Highlights

  • Strong revenue growth for FY25 (14.96%) and Q4 FY25 (17.98%) driven by key segments.

  • Country Liquor segment demonstrated exceptional growth in both revenue (FY25: +55.72% YoY) and EBIT (FY25: +55.56% YoY).

  • Sugar segment EBIT grew 37.97% YoY in FY25 to INR 109 crores, despite production decline.

  • Average sugar realization improved by 2.52% YoY to INR 39,317 per ton in FY25.

  • Grain distillery expected to start operations by early June 2025, diversifying ethanol feedstock.

Concerns

  • Full Year FY25 PAT declined significantly by 75.51% YoY to INR 12 crores.

  • Full Year FY25 EBITDA declined 11.11% YoY to INR 144 crores.

  • Sugar production for FY25 decreased 26.71% YoY to 3.1 lakh tons.

  • Net recovery rate fell to 9.8% in FY25 from 10.32% in FY24 due to disease and pest issues.

  • Biofuel & Spirits segment revenue declined 34.2% YoY in FY25 to INR 343 crores, with EBIT down 80.36% YoY to INR 11 crores.

Key financials

2 periods

Headline

  • Revenue
    ₹2,714.4 Cr
    YoY +15%
  • EBITDA
    ₹144 Cr
    YoY -11.1%
  • PAT
    ₹12 Cr
    YoY -75.5%

Q4

  • Revenue
    ₹702 Cr
    YoY +18%
  • EBITDA
    ₹100 Cr
    YoY +14.9%
  • PAT
    ₹40 Cr

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

Share of FY25 Revenue
₹3,016 Cr Total
  • Sugar Segment ₹1,748 Cr 58.0%
  • Country Liquor Segment ₹925 Cr 30.7%
  • Biofuel and Spirits Segment ₹343 Cr 11.4%

Capital allocation

high confidence
  • Capex Capex disclosed
    for the foreseeable future, we don't have any major capex planned this year.
  • Debt Gross ₹1,153 Cr
    Long-term borrowings as on 31st March '25 stood at INR 309 crores as compared to INR 241 crores as on previous year, while short-term borrowings of the company are at INR 844 crores as compared to INR 806 crores as of previous year.
  • Dividend ₹1.25/share (final)
    The Board has approved a dividend of INR 1.25 per share for the current year.

Guidance & targets

Ethanol Production (Grain Plant)

  • Supply from grain ethanol plant Ethanol Production (Grain Plant) · Coming year (FY26) · High confidence 25.5 lakh liters
    We have about 25.5 lakh liters, which we will be supplying from our grain ethanol plant.

    — Gautam Goel

  • Distillery capacity utilization for grain ethanol Ethanol Production (Grain Plant) · Coming year (FY26) · Medium confidence 25% to 30%
    In the coming year, we do anticipate being using at least 30% or 25% to 30% of our distillery capacity to supply ethanol with grain.

    — Gautam Goel

Country Liquor Market Share (UP)

  • Market share in UP Country Liquor Market Share (UP) · Coming year (FY26) · Medium confidence 5% to 6%
    We hope to get to 5% to 6% in the coming year is what our internal target are.

    — Gautam Goel

Country Liquor Growth

  • Year-on-year growth Country Liquor Growth · Coming year (FY26) · Medium confidence 30% to 40%
    We at least get a 30% to 40% year-on-year growth.

    — Gautam Goel

Country Liquor Market Position (UP)

  • Ranking in UP market Country Liquor Market Position (UP) · Implied FY26 · Medium confidence 5-7
    As of now, we are, I think, number 7. I think we should be 6, between 5-7 we should remain in that level.

    — Gautam Goel

Grain Distillery Operations

  • Start of grain distillery Grain Distillery Operations · Q1 FY26 (implied June 2025) · High confidence End of month, early next month
    Now we are contracted to supply the Q3 cycle of FCI rice. So I think we should be starting a grain distillery by end of the month, early next month.

    — Gautam Goel

What to watch in Q1 FY26

Grain Distillery Commercial Operations

Next quarter (early June 2025)
Current Ready for operation, awaiting start
Target Commercial operations commenced

Why it matters

Diversifies ethanol feedstock, reduces reliance on sugar, and contributes to Biofuel segment revenue, impacting overall profitability.

Now we are contracted to supply the Q3 cycle of FCI rice. So I think we should be starting a grain distillery by end of the month, early next month.

Risks & concerns

  • Lower Sugar Production & Recovery

    high

    Sugar production declined to 3.1 lakh metric tons (vs 4.23 lakh tons last year), and net recovery fell to 9.8% (vs 10.32% last year) due to disease and pest-related issues.

    Management acknowledged

  • Impact of Red Rot Disease

    medium

    Red rot is a waterborne disease impacting cane yield and recovery; management hopes measures taken will mitigate impact next year.

    Both acknowledged

  • Lack of Price Linkage for Sugar/Ethanol/FRP

    medium

    Industry continues to advocate for price linkage between sugar, ethanol, and FRP to improve long-term stability, but no firm policy changes yet.

    Management acknowledged

  • Farmer Shift to Other Crops

    low

    Farmers shifting to other crops like corn or poplar could impact cane availability, though Dhampur Bio has minimized this impact in its operating areas.

    Analyst acknowledged

Q&A highlights

6 direct
Outlook for sugar realizations (domestic and export) Direct
On the domestic front, I think the prices should remain firm. They have been holding steady. The closing stock is manageable and the FRP increase should also help keep the prices stable to firm.

Provides management's view on future sugar pricing, a key revenue driver for the company.

Asked by Niteen Dharmawat

Anticipated changes in government policies (sugar MSP, price linkage) Partial
We have been asking about a linkage as an industry that there should be a linkage of sugar prices and ethanol prices with the cane price. But as of now, we don't have anything firm to suggest.

Highlights an ongoing industry advocacy point that could significantly impact profitability if implemented, indicating regulatory uncertainty.

Asked by Niteen Dharmawat

Current debt level and capex plan for 1-2 years Direct
So there's no change in that. There should be marginal capex on of any substantial wear and tear. I think, the work as we mentioned, will be on cane development and increasing the cane quantities either by better yields or better planting. But for the foreseeable future, we don't have any major capex planned this year.

Confirms an asset-light strategy and focus on internal efficiencies and cane development rather than large capital outlays, impacting future growth drivers.

Asked by Niteen Dharmawat

Country Liquor segment market size in UP and company's share Direct
I think it's about INR 100 crores, yes. So UP is broken into 2 parts. One is the grain UPML and Country Liquor. If my memory serves me correct, it was about 100 lakh cases, like you said.

Provides crucial context on the scale of the Uttar Pradesh country liquor market and the company's competitive positioning within it.

Asked by Nitin Awasthi

Outlook on ethanol production given sugar prices and dual feed plant Direct
Our grain plant is pretty much ready for operation. We have got the call that the latest tender with the OMC is released with FCI rice. We have about 25.5 lakh liters, which we will be supplying from our grain ethanol plant.

Details the strategy for ethanol production, leveraging the new grain-based plant and government tenders, indicating a shift in feedstock strategy.

Asked by Vikram Suryavanshi

Impact of red rot disease on next year's recovery Partial
But if all the measures that all of us are taking, including the farmers, we hope the impact will be lesser this year.

Addresses a key operational challenge that impacted the current year's recovery and profitability, with management expressing cautious optimism for the future.

Asked by Ankit Minocha

Reason for lower ethanol segment margin Direct
It was again because of lower, you know, the impact of recovery. Therefore, there was lower sugar available in the molasses. We diverted syrup also. The impact of recovery, which increases the cost of production of sugar, also increases the cost of production of ethanol, especially when you're making it with syrup of B-heavy.

Explains the profitability pressure in the ethanol segment, directly linking it to the broader sugar recovery issues and feedstock choices.

Asked by Ankit Minocha

Dividend as capital allocation strategy vs. debt reduction/buyback Direct
So dividend is, you know, as per our dividend policy, a certain percentage of our profits. We do hope to give and our debt equity ratio is fairly comfortable... So at this point of time, once again, like we said, let's bring our debt down and let's get the numbers and then we'll look at buyback post that.

Clarifies the rationale behind the dividend, while also indicating a future focus on debt reduction as a precursor to potential buybacks, signaling future capital allocation priorities.

Asked by Ankit Minocha

3 min read 7 chapters

Detailed narrative

Q4 & FY25 Financial Performance Overview

Dhampur Bio Organics reported a 14.96% YoY revenue increase for FY25, reaching INR 2,714.40 crores, primarily driven by growth in sugar and country liquor segments. Q4 FY25 revenue also saw a robust 17.98% YoY increase to INR 702 crores. However, profitability was challenged, with FY25 EBITDA declining 11.11% YoY to INR 144 crores and PAT falling significantly by 75.51% YoY to INR 12 crores, indicating margin pressures despite revenue growth.

Sugar Segment Performance & Challenges

The sugar segment's revenue grew 10% YoY to INR 1,748 crores in FY25, with EBIT increasing 37.97% YoY to INR 109 crores. Despite this, sugar production declined by 26.71% YoY to 3.1 lakh tons, and the net recovery rate dropped from 10.32% in FY24 to 9.8% in FY25, attributed to disease and pest issues. Average sugar realization improved by 2.52% YoY to INR 39,317 per ton, which helped mitigate some of the production challenges.

Biofuel & Spirits Segment Dynamics

The Biofuel & Spirits segment faced headwinds, with FY25 revenue decreasing 34.2% YoY to INR 343 crores and EBIT plummeting 80.36% YoY to INR 11 crores. Ethanol production also saw a significant decline of 34.43% YoY to 60.98 million bulk liters. Management attributed lower margins to reduced recovery, less sugar available in molasses, and syrup diversion, which increased the cost of ethanol production.

Country Liquor Segment: A Growth Driver

The Country Liquor segment emerged as a strong growth driver, with FY25 revenue surging 55.72% YoY to INR 925 crores and EBIT growing 55.56% YoY to INR 14 crores. Q4 FY25 revenue for this segment increased by an impressive 79.05% YoY to INR 265 crores. The company aims to achieve 5-6% market share in UP and 30-40% YoY growth in the coming year, indicating continued focus on this segment.

Capital Allocation & Shareholder Returns

The Board approved a dividend of INR 1.25 per share for FY25. The company reported long-term borrowings of INR 309 crores and short-term borrowings of INR 844 crores as of March 31, 2025. Management stated there are no major capex plans for the foreseeable future, with focus on marginal capex for wear and tear and cane development. They also indicated that after debt reduction, they would consider a buyback.

Outlook on Sugar & Ethanol Markets

Management expects domestic sugar prices to remain firm due to manageable closing stock and the recent FRP increase. For ethanol, the new grain distillery is expected to commence operations by early June 2025, supplying 25.5 lakh liters from FCI rice. The company anticipates utilizing 25-30% of its distillery capacity for grain-based ethanol in the coming year, diversifying its feedstock strategy.

Agronomical Initiatives & Recovery Focus

To address the decline in sugar production and recovery, Dhampur Bio Organics is committed to improving agronomical practices. This includes working closely with farmers to adopt high-yielding varieties and addressing internal bottlenecks. The company is actively replacing cane varieties, with a sizable 30-35% of plant cane replaced this year, hoping for stronger recovery in the coming years and mitigating the impact of diseases like red rot.

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