EID Parry Q1 FY27 earnings call

The global sugar market is transitioning from a surplus to a more balanced outlook, with a projected surplus of 2.24 MMT in 2025-26, driven by better global production of 182 MMT. London white sugar prices have recovered to $471 per ton by July 2026. In India, SY 2025-26 gross production is estimated at 31 MMT, with 3 MMT diverted to ethanol. Net sugar production is about 28 MMT, up from 26 MMT in the previous year, supported by Maharashtra and Karnataka. Current sugar prices are high (₹45-46/kg) but may correct post-crushing.

The Sugar segment saw revenue increase to ₹410 crores (up from ₹347 crores YoY) due to higher sales volume of 0.89 LMT (vs 0.56 LMT YoY), despite a lower crush of 1.47 LMT (vs 2.12 LMT YoY) and slightly lower recovery at 7.95%. Co-gen operations generated 180 LU (down from 221 LU YoY), but the average power tariff realized significantly improved to ₹4.89 per unit (from ₹3.67 per unit YoY). The Distillery segment's production and sales volumes were lower YoY, with average price realization at ₹63.49 per liter. Nutra segment revenue grew to ₹6.22 crores, while CPG revenue declined to ₹94 crores from ₹188 crores YoY.

The significant fall in CPG revenue to ₹94 crores is intentional, part of a model recalibration focusing on margin-accretive products. Management aims for quarterly breakeven in 4-5 quarters. New product launches, including jaggery and brown sugar, are a key focus. A new jaggery plant in Karnataka, to be commissioned in 6 months, will double current capacity and is expected to contribute closer to ₹100 crores in turnover from jaggery once both plants are operational. Distribution expansion, particularly in general trade in the Southern market, is also a priority.

Growth in the Nutra segment, which achieved ₹6.22 crores in revenue, is largely driven by the Valensa business, benefiting from product development and organizational restructuring. The company is targeting a steady-state EBITDA margin of 12-15% for the Nutraceuticals segment. Efforts are underway to build scale, resolve past certification issues in Europe, and strengthen the balance sheet.

The PSRIPL refinery ceased operations on March 31, 2026, with all bank liabilities fully settled. EID Parry infused ₹610 crores to meet these obligations, plus an additional ₹55 crores loan, totaling ₹665 crores this quarter. The net financial impact for the quarter related to PSRIPL was a fresh impairment of ₹18 crores. The company is in the process of debonding the SEZ unit and expects to close the exit by September 30, 2026, with asset liquidation in progress, subject to regulatory approvals.

Management is focused on efficient working capital management and leveraging debt costs. The company reported approximately ₹150 crores in long-term debt and ₹980 crores in short-term debt as of June 30. Initiatives include monetizing non-performing assets to improve cash flow and reduce debt levels, as well as improving current ratios. The goal is to achieve a stronger balance sheet over the next 4-6 quarters, supported by cost reduction programs across all businesses.

Cane availability in Tamil Nadu and Andhra Pradesh remains a concern, as farmers are shifting to more lucrative crops. Management is implementing measures to make operations more economically feasible for farmers and is evaluating the scenario, noting recent government announcements on state support for sugarcane. The government's incentive to increase sugarcane cultivation is a direct benefit transfer to farmers, with no impact on the company's working capital, and initial feedback from farmers is optimistic.