Dharmaj Crop

Dharmaj Crop Guard reported a robust H1 FY26, with revenue reaching INR 715 crores, marking a 26% year-on-year growth. For Q2 FY26, revenue stood at INR 347 crores, reflecting a 12% YoY growth. Net profit for H1 FY26 significantly increased to INR 49.9 crores, up from INR 36.1 crores in H1 FY25. Despite Q2 revenue being sequentially lower than Q1, which is an uncommon trend for the company, management attributed this to an early monsoon preponing Kharif season demand.

The company's formulation business remained a mainstay, with brand formulation growing 17% YoY and domestic institutional formulation growing 21% YoY in H1 FY26. The active ingredient segment scaled up meaningfully, posting 44% YoY sales growth. Export institutional business, which faced challenges last year, returned to growth with a 51% YoY expansion in H1 FY26. Overall, the company achieved a volume growth of 30-35% in H1 FY26, broken down into 30% for technicals and 35% for formulations.

Q2 EBITDA margins moderated sequentially and YoY due to a lower contribution from brand formulation and a higher share of active ingredients and exports, along with increased operational expenses. However, on an H1 FY26 to FY25 comparison, margins improved slightly, driven by higher scale and operating leverage. The technical gross margin for H1 FY26 was 22%, an improvement from 19% in FY25. Management expects overall EBITDA margins to be 9-9.5% for FY26, an increase of 1-1.5% from the previous year.

The Saykha facility's current capacity utilization stands at around 65%, with a target to reach over 70% by FY27. Management indicated that the technical plant is already at EBITDA break-even and is expected to be positive for the full year. Looking ahead, the company is tentatively planning for a technical plant for herbicides, with an estimated CAPEX of INR 75-100 crores. This is driven by the observation that the growth rate of herbicides is higher due to labor shortages and increasing labor costs.

The company's plan for a Brazil subsidiary is currently on hold, with registration expected next year before establishing the subsidiary. For highly regulated countries like Brazil, Poland, and the US, the registration process for technical products can take 2-4 years. However, registrations for 4 technical products in Brazil are in final stages, expected within a year. The company is also focusing on other countries with immediate business opportunities and recently secured registration for a formulated product in Russia, with business expected to start this year.

While insecticides currently dominate the product mix, management noted that the growth rate of herbicides is higher due to labor shortages and increasing adoption by farmers. The company's strategy involves backward integrating and enhancing technical capacity for products with high volume in B2C and B2B formulation, moving away from a primary focus on Pyrethroids to mitigate margin volatility. The company's long-term vision is to achieve INR 2000 crores in business by 2030.

The company received an interest subsidy of approximately INR 3.53 crores in November, pertaining to the period from January 2024 to April 2025. Management stated that debt reduction will proceed as per schedule, indicating no immediate plans for prepayment due to the interest subsidy benefit. Trade receivables grew 30% in H1 FY26, outpacing revenue growth of 26%, which management attributed to industry seasonality and monsoon delays, expecting improvement in H2.