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.