Dharmaj Crop Guard Limited — Q4 FY26 earnings call

Call held 29 May 2026

Management summary

Dharmaj Crop Guard Limited delivered a strong financial performance in FY26, with revenue growing 20% to ₹1138 crores and net profit surging 57% to ₹55 crores. The company's technical plant achieved PBT breakeven, and domestic active ingredient business grew 37%. However, branded formulation growth was muted at 3% due to seasonal factors, and the cash conversion cycle extended to 87 days due to strategic raw material inventory build-up. Management is optimistic for FY27, guiding for 18-20% overall top-line growth and margin improvement.

Highlights

  • FY26 Revenue grew 20% year-on-year to ₹1138 crores.

  • FY26 Net Profit increased 57% year-on-year to ₹55 crores.

  • FY26 EBITDA grew 34% year-on-year to ₹101 crores, with margin expanding to 9% from 8% in FY25.

  • The technical plant achieved PBT level break-even, a key strategic objective for FY26.

  • Domestic active ingredient business demonstrated strong growth of 37% year-on-year for FY26.

Concerns

  • Branded formulation vertical showed muted growth of 3% for the year due to erratic monsoon and elevated channel inventories.

  • Cash conversion cycle extended to 87 days from 67 days in FY25 due to strategic inventory build-up.

  • Continued pressure on technical realizations and rising input costs due to the West Asia crisis.

Key financials

3 periods

Headline

  • Gross Debt-to-Equity (Mar 2026)
    0.29×

Q4 FY26

  • Revenue
    ₹234 Cr
    YoY +11%

FY26

  • Revenue
    ₹1,138 Cr
    YoY +20%
  • EBITDA
    ₹101 Cr
    YoY +34%
  • Net Profit
    ₹55 Cr
    YoY +57%
  • EBITDA Margin
    9%
  • ROCE
    18%
  • ROE
    12%

What they filed

Q1 FY27: revenue up 4.1%, net profit up 15.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue311 175 210 367 347 +12%190 +9%234 +11%382 +4%
EBITDA34 10 4 51 32 −6%7 −30%11 +175%57 +12%
Net profit21 1 -2 33 17 −19%1 +0%4 +300%38 +15%
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

  • Domestic Institutional (Formulation)
    15% Growth (FY26)
  • Branded Formulation
    3% Growth (FY26)
  • Domestic Active Ingredient
    37% Growth (FY26)
  • Technical Plant
    5% EBITDA Margin (Current)20% GP Margin25% GP Margin (Max)
  • B2B
    15% GP Margin20% GP Margin (Max)
  • Branded (B2C)
    35% GP Margin40% GP Margin (Max)
  • Export
    15% GP Margin20% GP Margin (Max)10% EBITDA Margin12% EBITDA Margin (Max)

Capital allocation

high confidence
  • Capex ₹50 Cr
    • New herbicide facility (unit 3rd and unit 2 combined) ₹50 Cr
    In the current year, we will have around Rs. 50 crores CAPEX, in unit 3rd and unit 2, in small units combining together.
  • Debt 0.3× EBITDA
    • Repayment Long-term borrowing reduced from 641 million to 510 million. ₹510 Mn
    • New borrowing Short-term working capital borrowing increased from 514 million to 809 million, commensurate with inventory build. ₹809 Mn
    Our gross debt-to-equity ratio stood at 0.29x as of 31st March 2026, unchanged from last year, supported by a net worth of 4491 million against 3944 million a year ago. Our debt servicing capacity remains robust, supported by an EBITDA of 1005 million and strong operated cash flow.
  • Liquidity Liquidity disclosed Closing inventory increased to 2074 million from 1385 million last year, extending cash conversion cycle to 87 days from 67 days, due to prudent raw material inventory build-up in March 2026.
    On the working capital front, the closing inventory stood at 2074 million, up significantly from 1385 million last year. This was mainly on account of the management taking a prudent call in March 2026 to secure an additional raw material inventory to protect production continuity through the Kharif season, given the uncertainty around input availability and pricing costs due to the West Asia crisis. Our cash conversion cycle extended to 87 days from 67 days in FY'25.

Guidance & targets

Revenue

  • Overall Top-line Growth Revenue · FY27 · High confidence 18% to 20%
    As I look at FY’27, our growth outlook is positive with an expected 18% to 20% overall top-line growth.

    — Ramesh Talavia

  • Branded Formulation Growth Revenue · This year (FY27) · Medium confidence 20% to 25%
    If there is a regular monsoon this year, then our growth will be managed by 20% to 25% on an average of the brand.

    — Ramesh Talavia

Capacity

  • Technical Plant Capacity Utilization Capacity · Next year (FY27) · High confidence around 75%
    Going forward, this time, our capacity utilization was 70%. It was 65% to 70%. And next year, it will be around 75%.

    — Vikas Agarwal

  • New Herbicide Facility Commissioning Capacity · Q3 FY27 · High confidence Commissioned
    Our new dedicated herbicide facility near our formulation site in Kerala GIDC, Ahmedabad is progressing in line with plans and is expected to be commissioned in Q3 FY’27.

    — Ramesh Talavia

Margin

  • Technical Plant EBITDA Margin Improvement Margin · Next 2-3 years (annually) · High confidence 0.5 to 0.75 percentage points
    EBITDA margin, on an average, every year we will keep on improving. There will be an improvement in the range of 0.5 to 0.75, in the coming next two three years.

    — Ramesh Talavia

  • Technical Plant EBITDA Margin (Long-term) Margin · 4-5 years · Medium confidence 10%
    It can be up to 10%, but it will take time, it will take four, five years, only then we will reach to 10%, only technicals.

    — Ramesh Talavia

  • Overall EBITDA Margin Improvement Margin · FY27 · High confidence 0.5% to 0.75%
    In FY'27, our EBITDA margin which is currently at 9%. There will be 0.5% to 0.75% improvement in that.

    — Ramesh Talavia

Operating Expenses

  • Employee Expenses Growth Operating Expenses · Next year (FY27) · High confidence 5% to 8%
    That will grow around 5%. It will grow between 5% to 8%. Around 5%.

    — Vikas Agarwal

Capex

  • Total CAPEX Capex · Current year (FY27) · High confidence Rs. 50 crores
    In the current year, we will have around Rs. 50 crores CAPEX, in unit 3rd and unit 2, in small units combining together.

    — Ramesh Talavia

What to watch in Q1 FY27

Branded Formulation Growth

Next quarter (Q1 FY27)
Current 3% for FY26
Target 20-25% growth

Why it matters

Recovery in branded formulation is crucial for overall revenue growth and indicates normalization of seasonal headwinds.

If there is a regular monsoon this year, then our growth will be managed by 20% to 25% on an average of the brand.

Risks & concerns

  • Muted Branded Formulation Growth

    medium

    Branded formulation vertical grew only 3% in FY26 due to erratic monsoon and elevated channel inventories, but management expects normalization in FY27.

    Management acknowledged

  • Raw Material Price Volatility

    medium

    Rising input costs due to the West Asia crisis and geopolitical situation are being monitored, with management implementing pre-planning and price pass-through strategies.

    Management acknowledged

  • El Nino Impact on Monsoon

    medium

    Potential for uneven rainfall distribution due to El Nino could affect demand, but management notes high prediction rates and improved water levels, expecting no major impact if rainfall is evenly distributed.

    Analyst downplayed

  • Cash Conversion Cycle Extension

    low

    Cash conversion cycle extended to 87 days from 67 days due to a strategic inventory build-up in March 2026 to secure raw materials, expected to ease as inventory is consumed.

    Management acknowledged

Q&A highlights

5 direct
Branded Formulation Performance and B2B/B2C Split Direct
Last year, I told the reason that due to the rain in August-September, because of the monsoon, we were not able to grow. The consumption was not there. So, if there is a regular monsoon this year, then our growth will be managed by 20% to 25% on an average of the brand.

Analyst questioned the muted 3% growth in branded formulations (B2C) and its impact on margins, prompting management to explain seasonal factors and outline a clear growth target for the segment.

Asked by Praneet

Technical Plant Profitability and EBITDA Margin Discrepancy Partial
Our EBITDA margin is around 5% for technicals. ... No, in the current year, it is positive at PBT. EBITDA will be around 22% to 25%. So, on PBT level, it was breakeven.

Analyst pressed on the technical plant's EBITDA, highlighting a contradiction between management's earlier statement of 5% and a later statement of 22-25%, indicating potential confusion or miscommunication regarding margin definitions (EBITDA vs. GP).

Asked by Rajat Sethia

Impact of Geopolitical Situation and El Nino on Demand Direct
As you said, the raw material price will be up and there will be uncertainty. We have pre-planned it since March. There is neither an issue at our end and nor it will come. And the second thing you are saying is the effect of El Nino. In El Nino, there is a rainfall prediction of 90%, 92% till 95%. So, if the rainfall is evenly distributed and comes at a timely interval, then there will be no effect on this season.

Analyst raised concerns about external factors like geopolitical tensions affecting raw material prices and El Nino impacting monsoon, prompting management to detail their proactive measures and assessment of risks.

Asked by Sanjay Ladha

New Herbicide Facility CAPEX and Strategic Rationale Direct
Our strategy is that we are separating the entire location of Herbicide. Right now, we have different units on the same location. So, there we have an issue of space. There is a lot of problem in movement of material. That is why we have chosen an entire separate location of herbicide. We will shift the existing product of herbicide to a different location. And there will be some capacity improvement.

Analyst sought clarification on the Rs. 50 crores CAPEX, leading management to explain the strategic shift of herbicide production to a new facility to resolve space issues, improve efficiency, and convert existing capacity for other products.

Asked by Yogansh Jaswani

Overall EBITDA Margin Outlook for FY27 Direct
In FY'27, our EBITDA margin which is currently at 9%. There will be 0.5% to 0.75% improvement in that.

Analyst directly asked for the FY27 overall EBITDA margin guidance, which management provided as an improvement of 0.5% to 0.75% from the current 9%.

Asked by Disha

Impact of Paraquat Herbicide Ban Direct
The state government of Andhra Pradesh has banned paraquat. We will not have a volumetric effect. Other products are available instead of it. It is not like that if paraquat will be banned then business will suffer loss. It has a lot of alternatives.

Analyst inquired about a potential regulatory risk (Paraquat ban), and management clarified its limited impact, stating it was a state-level ban with available alternatives, resulting in less than 1% effect.

Asked by Nitin Prajapati

2 min read 6 chapters

Detailed narrative

Robust FY26 Financial Performance

Dharmaj Crop Guard Limited reported a strong financial year for FY26, with revenue growing 20% year-on-year to ₹1138 crores. Net profit saw an even more significant increase of 57% year-on-year, reaching ₹55 crores. The company's EBITDA also demonstrated robust growth of 34% year-on-year, totaling ₹101 crores, which led to an expansion of the EBITDA margin to 9% from 8% in FY25. This performance was achieved despite a volatile operating environment.

Mixed Trends in Formulation Business Segments

Within the formulation business, the domestic institutional segment delivered a healthy 15% year-on-year growth for FY26. However, the branded formulation vertical experienced muted growth of only 3% for the year. This was primarily attributed to erratic monsoon patterns in Q2 FY26, particularly in late August and September, which led to subdued agrochemical demand and elevated industry channel inventories. Management expects these seasonal factors to normalize in FY27, projecting a 20-25% growth for the branded segment.

Technical Plant Achieves PBT Breakeven and Growth

The active ingredient (technical) business marked a significant milestone in FY26 by achieving PBT level break-even, a key strategic objective. The domestic active ingredient business grew 37% year-on-year, operating ahead of its internal capacity utilization targets, which currently stand at 65-70%. The technical plant's current EBITDA margin is around 5%, with management aiming for an annual improvement of 0.5-0.75 percentage points over the next 2-3 years, potentially reaching 10% in 4-5 years.

Strategic CAPEX for Herbicide Capacity Expansion

Dharmaj Crop Guard Limited is investing approximately ₹50 crores in CAPEX during the current year for a new dedicated herbicide facility. This facility, located near its Kerala GIDC site, is expected to be commissioned in Q3 FY27. The strategic move aims to address space constraints, improve material movement, and enhance capacity for the herbicide portfolio. The existing herbicide production unit will be converted to manufacture insecticide and fungicide, supporting the major formulation segment.

Positive FY27 Outlook and Margin Improvement Targets

The company maintains a positive growth outlook for FY27, anticipating an overall top-line growth of 18% to 20%. Management also projects an improvement of 0.5% to 0.75% in the overall EBITDA margin for FY27, building on the current 9%. This growth and margin expansion are expected across all verticals, supported by strategic initiatives like new product launches and brand ambassador engagement.

Working Capital and Debt Management

The cash conversion cycle extended to 87 days in FY26 from 67 days in FY25, primarily due to a strategic increase in closing inventory to ₹2074 million (from ₹1385 million last year). This inventory build-up in March 2026 was a prudent measure to secure raw materials amidst geopolitical uncertainties. Despite this, the company maintained a healthy balance sheet, with the gross debt-to-equity ratio remaining unchanged at 0.29x as of March 31, 2026, supported by a net worth of ₹4491 million.

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