Dhampur Sugar Mills Limited — Q4 FY25 earnings call

Call held 16 May 2025

Management summary

Dhampur Sugar Mills reported a challenging FY25 with significant drops in profitability, primarily due to lower cane crush and restricted ethanol volumes from sugarcane. However, Q4 FY25 showed signs of recovery with strong revenue growth and improved EBITDA, driven by higher sugarcane crushing in the season and increased potable spirits production. The company is actively addressing cane development and varietal shifts to mitigate the impact of red rot disease, with major improvements expected from FY27.

Highlights

  • Q4 FY25 revenue from operations grew 21.46% YoY to INR810.3 crores.

  • Q4 FY25 EBITDA grew 1.79% YoY to INR102.5 crores.

  • Company crushed marginally higher sugarcane in sugar season '24-'25 compared to '23-'24, implying the worst might be behind.

  • Potable spirits production increased to 8.27 lakh cases in Q4 FY25 from 4.95 lakh cases last year.

  • Power segment's EBIT contribution increased to 49.3% in FY25 from 33% last year.

Concerns

  • FY25 Profit after tax dropped 61.04% YoY to INR52.4 crores from INR134.5 crores.

  • FY25 EBITDA dropped 36.16% YoY to INR187.3 crores from INR293.4 crores.

  • Overall cane crush during FY25 dropped 22% to 28.49 lakh tons, significantly impacting financial performance.

  • Ethanol's contribution to profit mix dropped from 48.2% to 13.3% in FY25 due to lower sales volume and feedstock restrictions.

  • Red rot disease impacted sugarcane yield and recovery, leading to lower gross recovery in Q4 FY25 (11.27% vs 11.73% last year).

Key financials

2 periods

Q4 FY25

  • Revenue
    ₹810.3 Cr
    YoY +21.5%
  • EBITDA
    ₹102.5 Cr
    YoY +1.8%
  • Profit Before Tax
    ₹71.2 Cr
    YoY +3.5%
  • Profit After Tax
    ₹49 Cr
    YoY -5.6%
  • Cash Profit
    ₹77.8 Cr
    YoY +5.7%

FY25

  • Revenue
    ₹2,656.4 Cr
    YoY +0.36%
  • EBITDA
    ₹187.3 Cr
    YoY -36.2%
  • Profit Before Tax
    ₹75.1 Cr
    YoY -60.9%
  • Profit After Tax
    ₹52.4 Cr
    YoY -61%
  • Cash Profit
    ₹124.2 Cr
    YoY -43%

What they filed

Q1 FY27: revenue up 6.0%, net profit up 569.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue421 412 619 521 504 +20%451 +10%491 −21%553 +6%
EBITDA-0 42 101 23 10 +2002%56 +34%85 −16%31 +37%
Net profit-13 15 49 1 -8 +42%27 +75%46 −7%6 +569%
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

SegmentSugarEthanolPowerPotable Spirits
Revenue Mix (FY25)56.5%20.5%9.9%3.3%
Profit Mix EBIT (FY25)28.1%13.3%49.3%9.5%
Revenue Mix (Q4 FY25)51.5%23.2%16.1%2.8%
Profit Mix EBIT (Q4 FY25)31.7%10.4%55.6%4.6%

Capital allocation

high confidence
  • Buyback ₹20 Cr
    The Board of Directors at its meeting held today this afternoon approved the annual financial results of the company and along with that, approved buyback of equity shares of the company up to a total consideration of INR20 crores.

Guidance & targets

Cane Variety Composition

  • CO238 variety percentage in Rajpura Cane Variety Composition · FY26 · High confidence about 48%
    In Rajpura, 238 will be down to about 48% for the year FY '26

    — Gaurav Goel

  • CO238 variety percentage in Dhampur Cane Variety Composition · FY26 · High confidence about 65%
    and at Dhampur, it'll be at about 65%.

    — Gaurav Goel

  • CO238 variety percentage (both areas) Cane Variety Composition · in 2 years from now · High confidence not be more than 10%
    we expect 238 to not be more than 10% in both areas.

    — Gaurav Goel

Sugar Price

  • Ex-factory sugar price Sugar Price · next 6 months · Medium confidence INR40.5 per kg to 41.5 per kg
    I think 40.5 per kg to 41.5 per kg will be the range that I'm seeing for the next 6 months.

    — Gaurav Goel

Ethanol Profitability

  • EBIT margins Ethanol Profitability · FY26 · Medium confidence in the same range
    Otherwise, the margins will always be in the same range.

    — Gaurav Goel

Ethanol Production

  • Ethanol production volume Ethanol Production · FY26 · Medium confidence higher
    So in FY '26, for surely, it will be higher because we have got more feedstock than what we had last year and also because we have got the full of maize.

    — Gaurav Goel

Cane Crushing

  • Cane crushing volume Cane Crushing · FY26 · Medium confidence higher
    See in FY '26, for surely, we are expecting a higher crush than what it is in FY '25.

    — Gaurav Goel

Power Tariff

  • Average power tariff increase Power Tariff · effective from 1st April 2024 · High confidence approximately INR0.82
    the UPERC has increased the power tariff effective from 1st April 2024 by approximately INR0.82 average for both our plants.

    — Gaurav Goel

What to watch in Q1 FY26

Ethanol production volume (overall and maize-based)

FY26
Current FY25 production 678.37 lakh liters (303.69 lakh liters from maize)
Target Higher than FY25, with full maize plant operation

Why it matters

Ethanol is a key revenue and profit contributor; increased production is vital for overall performance recovery.

So in FY '26, for surely, it will be higher because we have got more feedstock than what we had last year and also because we have got the full of maize.

Risks & concerns

  • Red rot disease impact on sugarcane yield and recovery

    high

    Red rot disease led to lower gross recovery (11.27% in Q4 FY25 vs 11.73% last year) and lower overall cane crush in FY25, necessitating intensive cane development programs.

    Management acknowledged

  • Lower ethanol volumes and profitability due to restrictions on sugarcane syrup and B-Heavy molasses

    high

    Ethanol's contribution to profit mix dropped from 48.2% to 13.3% in FY25 due to lower sales volume caused by restrictions, partially compensated by maize-based ethanol.

    Management acknowledged

  • Volatility in maize prices affecting ethanol margins

    medium

    Maize prices are fluid and fluctuate significantly (e.g., from INR25.5 to INR22.9), making it hard to predict future ethanol margins from maize-based production.

    Management acknowledged

  • Difficulty in predicting future sugar numbers due to market probabilities

    medium

    Management stated it's 'very, very hard to predict future numbers because of the probabilities which are there. And a lot of them aren't in the company's hands.'

    Management acknowledged

Q&A highlights

4 direct, 1 evasive
Lower EBIT in ethanol business despite higher Q4 production Direct
So basically, that was basically because of change of transfer pricing that has been done because of the lower pol in cane, which is there in sugarcane as of now. So that is the main reason is transfer price of B-Heavy and syrup. So that is why you have seen a lower profit in that.

Management explained the reason for margin compression in the ethanol segment, attributing it to raw material quality and transfer pricing changes.

Asked by Rusmik Oza

Ethanol production target for FY26 Partial
So in FY '26, for surely, it will be higher because we have got more feedstock than what we had last year and also because we have got the full of maize. So the maize plant started only last year. So we will have the full maize, which is running as of now. So our total I cannot give you exact number as of now. But yes, it will be higher than what it was for -- in last year.

Management confirmed higher ethanol production for FY26 due to full maize plant operation and more feedstock, but did not provide a specific quantitative target.

Asked by Rusmik Oza

Sugarcane crushing target for FY26 Partial
See in FY '26, for surely, we are expecting a higher crush than what it is in FY '25. But again, as I said, early days, the planting that has happened is higher than what happened last year. Now we have to just wait for the rainfalls and the as to how the rains happen and what sort of so I think in Q3, I'll be able to give you all a far, far better number on what sort of cane crush we expect for FY '26.

Management expects higher crush but defers specific numbers to Q3 FY26, highlighting dependency on rainfall and early stage of planting.

Asked by Rusmik Oza

Impact of CO238 variety on recovery trends and replacement timeline Direct
In Rajpura, 238 will be down to about 48% for the year FY '26 and at Dhampur, it'll be at about 65%... we expect 238 to not be more than 10% in both areas.

Specific targets were provided for the reduction of the problematic CO238 variety and the timeline for its near-total replacement, which is crucial for future sugar recovery rates.

Asked by Suraj Khaitan

Ethanol EBIT margins recovery in FY26 Partial
So basically, I don't believe that there will be too much of a rise in the margins as such because we've also started maize. In maize, the margins were lower. And as I also said earlier, that the transfer price has changed... If there's any major change in price in FY '26 for the year FY '26, that will change the margins. Otherwise, the margins will always be in the same range.

Management indicated that ethanol margins might not significantly improve due to lower margins from maize and changed transfer pricing, unless there's a major price change.

Asked by Rusmik Oza

Profitability target (INR150 crores) for FY26 Evasive
I think it's early days, but yes, FY '26, a lot of probabilities, working hard, but I think INR150 crores will be a bit of a stretch. But let's see. I cannot say much about the future as of now because, as you know, in sugar, there are so many probabilities.

Management expressed doubt about achieving the INR150 crores profit target for FY26, citing uncertainties in the sugar business.

Asked by Rusmik Oza

Power tariff increase and its retrospective effect Direct
the UPERC has increased the power tariff effective from 1st April 2024 by approximately INR0.82 average for both our plants... Yes. That is right.

Confirmed a retrospective increase in power tariff, which will positively impact the power segment's profitability for FY25 and FY26.

Asked by Rusmik Oza

Farmers shifting from sugarcane to other crops Direct
No. So yes, I have also heard the same, but thankfully, that isn't happening in both our areas.

Management reassured that the trend of farmers shifting away from sugarcane, observed elsewhere, is not impacting Dhampur Sugar's command areas, ensuring raw material availability.

Asked by Udit Gupta

2 min read 5 chapters

Detailed narrative

Overall Financial Performance and Q4 Recovery

Dhampur Sugar Mills reported a challenging FY25 with consolidated revenue from operations at INR2,656.4 crores, a marginal increase of 0.36% YoY. However, profitability saw a significant decline, with PAT dropping 61.04% to INR52.4 crores and EBITDA falling 36.16% to INR187.3 crores. This was primarily due to a 22% drop in overall cane crush and restricted ethanol feedstock. The fourth quarter (Q4 FY25) showed signs of recovery, with revenue growing 21.46% YoY to INR810.3 crores and EBITDA increasing 1.79% to INR102.5 crores, indicating a potential turnaround.

Sugar Segment Performance and Cane Development

The sugar segment crushed 28.49 lakh tons of sugarcane in FY25, a 22% decline from the previous year, mainly due to red rot disease and lower yields. Despite this, the sugar season '24-'25 saw a marginal increase in crushing compared to '23-'24, suggesting the worst is over. Sugar contributed 56.5% to FY25 revenue and 28.1% to EBIT. The company is undertaking intensive cane development programs, including varietal shifts, to improve yields, with major impacts expected from FY27. The problematic CO238 variety is targeted to reduce to 48% in Rajpura and 65% in Dhampur by FY26, and below 10% in both areas within two years.

Ethanol Business Challenges and Maize Diversification

The ethanol segment faced significant headwinds in FY25, with its contribution to the profit mix plummeting from 48.2% to 13.3%. This was largely due to lower sales volumes caused by government restrictions on using sugarcane syrup and B-Heavy molasses for ethanol production. Total ethanol production for FY25 was 678.37 lakh liters, with 45% coming from maize. For FY26, the company expects higher ethanol production, leveraging its full maize plant operations to compensate for sugarcane-based feedstock limitations. However, management noted that margins from maize-based ethanol are lower, and transfer pricing changes have also impacted profitability.

Power and Potable Spirits Growth

The power segment demonstrated robust growth, with its revenue contribution increasing from 8% to 9.9% in FY25 and its EBIT contribution rising from 33% to 49.3%. This performance is set to improve further with a retrospective power tariff increase of approximately INR0.82 per unit effective from April 1, 2024. The potable spirits business also saw strong growth, with production increasing to 8.27 lakh cases in Q4 FY25 from 4.95 lakh cases last year, driven by the commissioning of two new tetra pack lines. Potable spirits' contribution to EBIT rose from 2.6% to 9.5% in FY25.

Capital Allocation and Future Outlook

Dhampur Sugar Mills announced a buyback of equity shares up to a total consideration of INR20 crores, signaling a commitment to shareholder returns. The company has no major capex plans for FY26, as its plants are fully set up. Management expressed caution regarding the FY26 profitability target of INR150 crores, deeming it a 'stretch' due to inherent uncertainties in the sugar business. The company's focus remains on cane development and improving recovery rates, with the full benefits of these initiatives anticipated from FY27.

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