Godavari Biorefineries Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

Godavari Biorefineries reported a strong recovery in Q2 FY26, with significant revenue growth and narrowed EBITDA losses, driven by strategic shifts towards high-value bio-based chemicals and improved ethanol performance. The company is advancing key sustainability initiatives like the CO2 to DME project and progressing its drug discovery efforts. While the outlook for the sugar season is positive with supportive government policies, the lack of ethanol price revision remains a concern.

Highlights

  • Q2 FY26 revenue from operations grew 34% YoY to INR430.8 crores, indicating a strong topline rebound.

  • Q2 FY26 EBITDA shortfall narrowed significantly to INR4.4 crores from INR31.5 crores loss in Q2 FY25.

  • Q2 FY26 gross margin expanded by 4.5% to 21%, reflecting a better product mix.

  • Biobased chemicals portfolio segment EBITDA jumped 60% in Q2 FY26, driven by better realization and increased share of specialty crops.

  • Ethanol segment EBITDA turned positive at INR4.7 crores in Q2 FY26 from a loss of INR2.9 crores YoY, reflecting improved blending economics and off-take.

Concerns

  • A countervailing risk remains the lack of revision in ethanol procurement prices by oil marketing companies.

  • Practical hurdles are foreseen in integrating Dimethyl Ether (DME) into the existing LPG or diesel ecosystem.

  • An exceptional item of INR7.7 crores was recorded in Q2 FY26 due to retrospective revision of harvesting and transport charges, though management views it as a one-off.

Key financials

2 periods

Q2

  • Revenue from Operations
    ₹430.8 Cr
    YoY +34%
  • EBITDA
    ₹-4.4 Cr
  • Gross Margin
    21%

H1

  • Revenue from Operations
    ₹964 Cr
    YoY +14%
  • EBITDA
    ₹2.1 Cr
  • Gross Margin
    20%

What they filed

Q1 FY27: revenue up 3.6%, net profit down 23.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue316 445 576 523 423 +34%457 +3%562 −2%542 +4%
EBITDA-34 37 110 5 -9 +74%43 +16%86 −22%-2 −140%
Net profit-76 6 70 -17 -43 +43%8 +33%52 −26%-21 −24%
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

  • Biobased Chemicals (Q2 FY26)
    60% Segment EBITDA Growth
  • Ethanol (Q2 FY26)
    ₹4.7 Cr Segment EBITDA
  • Jivana Brand
    ₹108 Cr Revenue (FY25)₹65 Cr Revenue (H1 FY26)

Capital allocation

medium confidence
  • Capex Capex disclosed
    • 200-kilo litres per day fungible grain-based distillery commissioning
    • Biobutanol program engineering and customer commitments
    • Deep debottlenecking and addition of some chemicals in chemical plants
    In this context, we are on track to commissioning of our 200-kilo litres per day fungible grain-based distillery in Q4 FY 2026. (Samir Somaiya) We are continuing the work on doing the engineering for this project and we are also looking at the customer commitments for undertaking this project. (Samir Somaiya) We are planning de-bottlenecking and addition of some chemicals and this will show its effect over the next 2-3 years (Samir Somaiya)

Guidance & targets

Capacity

  • Grain-based ethanol distillery capacity Capacity · Q4 FY26 · High confidence 200-kilo litres per day
    In this context, we are on track to commissioning of our 200-kilo litres per day fungible grain-based distillery in Q4 FY 2026.

    — Samir Somaiya

Production

  • Annual ethanol production from grain-based facility Production · Annual basis (post Q4 FY26 commissioning) · High confidence 60 million liters
    The capacity we know the capacity will be about 60 million liters on an annual basis.

    — Samir Somaiya

Drug Discovery

  • Preliminary efficacy trial assessment timeline Drug Discovery · Next two years · High confidence Two years
    Our assessment of the preliminary efficacy trial will be in the range of two years.

    — Samir Somaiya

  • Out-licensing candidate for anti-cancer drug Drug Discovery · Next two to three years · High confidence Find candidate
    Our aim, I'm just saying provided preliminary efficacy is successful, our aim would be to find an out-licensing candidate in the next two to three years. That would be our aim.

    — Samir Somaiya

Overall Business

  • Revenue and EBITDA growth Overall Business · Next two to three years · Medium confidence Growth
    We are definitely looking at over the next two to three years a growth in revenue and a growth in the EBITDA.

    — Samir Somaiya

What to watch in Q3 FY26

Grain-based ethanol facility commissioning

Q4 FY26
Current On track
Target Commissioned

Why it matters

Crucial for diversifying feedstock, mitigating policy risk, and increasing ethanol production capacity.

In this context, we are on track to commissioning of our 200-kilo litres per day fungible grain-based distillery in Q4 FY 2026.

Risks & concerns

  • Lack of revision in ethanol procurement prices by oil marketing companies

    medium

    A countervailing risk remains the lack of revision in ethanol procurement prices, particularly for sugarcane juice and B heavy routes.

    Management acknowledged

  • Uncertainty regarding sugar export policies and their impact on the Indian industry

    medium

    There is a lot of uncertainty in the Indian industry regarding whether exports are allowed, not allowed.

    Management acknowledged

  • Practical hurdles in integrating Dimethyl Ether (DME) into existing LPG/diesel infrastructure

    low

    DME has strong potential as an alternative clean fuel, but integrating it into the existing LPG or diesel ecosystem may come with several practical hurdles.

    Analyst acknowledged

  • Higher operating cost in sugar segment due to competition for harvesting labor

    low

    A retrospective revision of harvesting and transport charges was made to secure cane, but management views this as a one-off event.

    Analyst downplayed

  • Seasonality risks in business operations

    low

    Seasonality risks are being mitigated through a sharpened focus on bio-based specialty chemicals, debottlenecking, and multi-feedstock ethanol capacity.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Challenges in integrating Dimethyl Ether (DME) into existing LPG/diesel infrastructure. Direct
The second thing is, for our process, we have partnered with ICT. The work has been completed in the lab and we have just earlier this week, inaugurated our pilot plan for which we will do our studies that will help us understand and optimize the process conditions needed to design a good scale-up. So, this is a good step in the process of doing DME and it integrates well to supplement and blend with LPG or diesel.

Addresses a key practical challenge for a new sustainable product, highlighting the company's methodical approach from lab to pilot scale-up.

Asked by Richa Shah

Drivers for the 60% EBITDA jump in the bio-based chemicals segment. Direct
This reflects the increase in the ratio of bio-based specialty chemicals versus what we are saying non-specialty chemicals which we are referring to as ethyl acetate. As that ratio improves, automatically, you will start seeing that reflect into better EBITDA. The ratio has changed from to 63% compared to 57% earlier.

Provides specific operational detail on how the company is improving profitability in a key segment by shifting product mix towards higher-value specialty chemicals.

Asked by Richa Shah

Outlook on sugar prices and ethanol realizations given government export policy. Partial
The Centre has proposed the allowing of exports of 1.5 million tons of sugar for the 2025-2026 season starting October and removing a 50% export duty on molasses to boost the trade and support industry competitiveness. Measures that, if finalised, are expected to positively impact mills' revenues and help align domestic supply with global markets.

Discusses the potential positive impact of government policy on the sugar and ethanol business, but also highlights the risk of unrevised ethanol procurement prices.

Asked by Vivek Gupta

Explanation of exceptional items in Q2 FY26. Direct
What has happened in the last few weeks, the neighboring mills of Karnataka, in order to ensure harvesting labor for the cane supplies in this season, decided that they will give their harvesting labor the prices for that 2023-2024 period retrospectively. In to secure our own cane supplies and to ensure that we are competitive to get them, we have decided to match and made a provision for the same in our books.

Clarifies a one-off cost, assuring investors it's not a recurring operating cost trend.

Asked by Vivek Gupta

Progress on the biobutanol program and deep debottlenecking of chemical plants. Direct
in the biobutanol so biobutanol is not de-bottlenecking. Biobutanol would be a new investment. We are continuing the work on doing the engineering for this project and we are also looking at the customer commitments for undertaking this project.

Provides an update on a strategic new investment area and clarifies its status (engineering, customer commitments) vs. debottlenecking efforts.

Asked by Ashish Shah

Capital outlay for anti-cancer efficacy trials and the proposed US subsidiary. Evasive
We will be able to now give this to you in the next quarter and give you good estimates for what we think the conclusion, I mean how much it would cost to do the preliminary efficacy trials. And we are right now proposing to set up the US-facing subsidiary. We will also have a greater clarity of what that would entail by the next meeting.

Highlights a lack of immediate financial clarity on a significant R&D investment, pushing the information to the next call.

Asked by Nilay Kulkarni

Timeline for the anti-cancer drug to reflect in sales. Direct
Our assessment of the preliminary efficacy trial will be in the range of two years. And we would be attempting to and of course, this has to be successful. The preliminary efficacy trial has to be successful. And parallel to this effort of preliminary efficacy trial, we are proposing to set up the U.S.-facing subsidiary. So in parallel, it will then start talking to potential out-licensing candidates so that we keep them informed of the progress and find if there is interest, how we can do the out-license.

Sets realistic expectations for the long development cycle of drug discovery and the company's strategy to out-license after preliminary efficacy.

Asked by Raaj

Explanation of the Dimethyl Ether (DME) innovation and its potential to replace other fuels. Direct
Dimethyl ether is a clean burning fuel that can effectively replace conventional energy sources such as liquefied petroleum gas(LPG) and diesel, contributing to reduced emissions, improved environmental performance and decarbonization -- de-fossilization. The initiative reflects our commitment to clean energy and offering sustainable solutions.

Explains the strategic importance and potential applications of a key sustainability initiative, highlighting its role in decarbonization.

Asked by Prasoon Pankaj

3 min read 8 chapters

Detailed narrative

Q2 & H1 FY26 Financial Performance Overview

Godavari Biorefineries showed clear signs of recovery in Q2 FY26, with revenue from operations growing 34% year-on-year to INR430.8 crores. The EBITDA shortfall significantly narrowed to INR4.4 crores from a loss of INR31.5 crores in Q2 FY25. Gross margin expanded by 4.5% to 21% in Q2 FY26. For H1 FY26, revenue grew 14% to INR964 crores, and EBITDA turned positive at INR2.1 crores from a loss of INR41 crores in H1 FY25, with gross margin expanding 5% to 20%.

Strategic Focus on High-Value Bio-based Chemicals

The company's strategy to prioritize higher-value bio-based specialty chemicals contributed significantly to profitability. The biobased chemicals portfolio saw a 60% jump in segment EBITDA in Q2 FY26, driven by better realization and an increased share of specialty crops. Management noted that the ratio of bio-based specialty chemicals to non-specialty chemicals (ethyl acetate) improved to 63% from 57%, directly translating into better EBITDA.

Ethanol Business Recovery and Future Outlook

The ethanol segment returned to positive EBITDA of INR4.7 crores in Q2 FY26, compared to a loss of INR2.9 crores a year earlier, due to improved blending economics and stronger off-take. The company is on track to commission its 200-kilo litres per day fungible grain-based distillery in Q4 FY26, which is expected to produce about 60 million liters annually, aiming to mitigate feedstock and policy risks.

Government Policy and Sugar Industry Dynamics

The outlook for the 2025-2026 sugar season is positive, with above-average monsoons and improved cane yields. The government's proposal to allow exports of 1.5 million tons of sugar and remove a 50% export duty on molasses is expected to positively impact mills' revenues and support industry competitiveness. However, the lack of revision in ethanol procurement prices by oil marketing companies remains a concern.

Sustainability Initiatives: CO2 to Dimethyl Ether (DME) Project

Godavari Biorefineries launched a pilot CO2 to DME project in collaboration with ICT Mumbai. This breakthrough technology converts industrial CO2 emissions into dimethyl ether, a low-emission, eco-friendly energy carrier that can replace LPG and diesel. The project is currently in the pilot phase after successful lab work, with implications for decarbonization and clean energy solutions, especially for fermentation facilities and power plants.

Drug Discovery and Bioplastics

The company is progressing with its drug discovery efforts, having completed safety trials for an anti-cancer molecule. An application for preliminary efficacy trials is being prepared, and a U.S.-facing step-down subsidiary is planned to find out-licensing partners. The preliminary efficacy trials are expected to take two years, with out-licensing targeted within two to three years. While exploring a range of bio-based chemicals, bioplastics are not a current focus.

Jivana Brand Expansion

The Jivana brand, initiated to ensure better price resilience and market acceptance for sugar and associated products, has grown significantly. Revenue from the Jivana brand increased from INR28 crores a few years ago to INR108 crores in FY25, with H1 FY26 revenue at INR65 crores. The company plans to expand the brand's offerings to include other food items like brown sugar, jaggery, and turmeric through its wide retail presence.

Exceptional Items and Cost Management

The company reported an exceptional item of INR7.7 crores in Q2 FY26 related to a retrospective revision of harvesting and transport charges for cane supplies. This was done to match neighboring mills in Karnataka and secure cane, and management views this as a one-off event rather than a signal of higher ongoing operating costs. The company remains focused on cost optimization and strategic investments to improve cash flow.

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