Gurunanak Agriculture India Ltd — Q2 FY26 earnings call

Call held 24 Nov 2025

Management summary

GURUNANAK reported a challenging H1 FY26 with revenue decline attributed to monsoon and GST. However, management expressed strong confidence in H2 growth and future prospects, driven by their high-margin harvester business. Capex for capacity expansion is progressing as planned, and the company is leveraging local manufacturing and robust service to compete effectively against imports, aiming for significant growth in harvester sales and overall margins.

Highlights

  • Operating margins increased due to introduction of harvesters and lower raw material costs.

  • Capex for manufacturing capacity expansion is on track, with construction underway and machine orders placed.

  • Strong focus on harvesters, which have higher operating margins and are gaining good market traction.

  • Established financing tie-ups with government banks (SBI, Rajyagrameen, Canara, BOB) for harvesters.

Concerns

  • Revenue declined in H1 FY26 due to extended monsoon season and impact of GST implications.

  • Business remains highly seasonal, leading to uneven manufacturing cycles and high working capital requirements for stocking.

  • Currently importing some key harvester components (rubber track, clear box) due to cost constraints, though localization is planned in 2-3 years.

What they filed

₹ Cr · quarterly
Line itemQ2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue25 19 16 26
EBITDA5 5 3 6
Net profit3 3 2 4
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.

Order book

low confidence
The company's business model involves manufacturing agricultural machinery for sale and stocking, rather than securing large project-based order books. Management discussed sales targets and production capacity rather than a traditional order book.

Source: Inferred

Capital allocation

high confidence
  • Capex ₹24 Cr entirely through IPO money
    • Capacity expansion for harvester manufacturing (targeting 300 units/year per line)
    Nishant Gupta: Got it, sir. And sir, capex for April 26, is it on track that you'll start by April 26 or any delay? Kamaljeet Singh Kalsi: Yes, it's on track. It's not such it's delayed. We have already started like the shed like the construction shed material manufacturing sheds construction and it's underway and the machines orders are underway and everything is going smoothly. ... once the entire 24 crores of the IPO money is utilized so what would be the capacity and what would be your plan to utilize the entire facility... Kamaljeet Singh Kalsi: So with this the manufacturing line that we will manufacture that that we will be we will set up we will be having around 300 harvesters of manufacturing capacity with just one manufacturing line.

Guidance & targets

Sales

  • Top line growth Sales · next 2-3 years · High confidence 30-40%
    Yeah, definitely we can see that in the coming two to three years we will definitely achieve those numbers.

    — Kamaljeet Singh Kalsi

  • Harvester sales contribution to total sales Sales · in a couple of years · Medium confidence 50-60%
    So the percentage in revenue that will like,once the capex is done so the percentage of revenue will definitely increase in year manner and we are expecting to go around 50-60% of sales in harvester in a couple of years

    — Kamaljeet Singh Kalsi

  • Year-on-year growth Sales · full year · Medium confidence growth
    yes on year basis we will definitely show growth in our numbers.

    — Kamaljeet Singh Kalsi

Margin

  • Operating margin sustainability Margin · next 2-3 years · High confidence 30-40%
    Yeah, definitely we can see that in the coming two to three years we will definitely achieve those numbers.

    — Kamaljeet Singh Kalsi

  • Operating margins Margin · upcoming years · Medium confidence increasing order
    So that's why our operating margins increased and in the upcoming years I can assure that our operating margins will be like also in the increasing order.

    — Kamaljeet Singh Kalsi

Capacity

  • Harvester manufacturing capacity per line Capacity · per year, once capex is live · High confidence 300 harvesters
    So with this the manufacturing line that we will manufacture that that we will be we will set up we will be having around 300 harvesters of manufacturing capacity with just one manufacturing line.

    — Kamaljeet Singh Kalsi

Volume

  • Harvester sales volume Volume · in 4-5 years · High confidence 1000 harvesters
    our target is go up to thousand harvesters in numbers like in the coming four to five years we will definitely achieve that with this much capex and everything only.

    — Kamaljeet Singh Kalsi

What to watch in Q3 FY26

H2 FY26 Revenue Growth

next quarter (Q3 FY26 results)
Current Declined in H1 FY26
Target Positive growth in H2 and year-on-year

Why it matters

To confirm management's expectation of recovery and growth after a challenging H1.

Kamaljeet Singh Kalsi: we are very positive that in the second half of the year we will do great business and we will definitely show growth on year-on-year basis and, yes on year basis we will definitely show growth in our numbers.

Risks & concerns

  • Seasonality and Weather Dependence

    high

    H1 FY26 revenue drop due to harsh and extended monsoon, which pushed harvesting cycles and delayed sales. Agriculture is a seasonal business.

    Kamaljeet Singh Kalsi: So, regarding the drop in revenue in the first half of this year, this is completely natural for our business. It's not a new thing and this it's because of the weather and the monsoon cycle this year. ... But this year when the monsoon is a bit harsh on some areas then the harvesting cycle becomes really small like the timeline becomes really small and each states come up with the harvesting cycle at the same time. So our sales get concentrated in a couple of months.

    Management acknowledged

  • Regulatory Impact on Sales

    medium

    GST implication introduced by the government pushed sales to later months in H1 FY26.

    Kamaljeet Singh Kalsi: Yeah basically there were a couple of more reasons for the shortfall of turnover in the first half. First was the monsoon reason and the second was the impact of the GST implication which the government came up with, which also pushed our sales a little bit like in the later months rather than in the earlier months.

    Management acknowledged

  • Working Capital Intensity due to Stocking

    medium

    To meet seasonal demand, the company needs to stock products, requiring significant working capital. Capacity expansion aims to reduce inventory requirements.

    Kamaljeet Singh Kalsi: Now to keep that much stock, we need working capital. for that keeping that much stock we need space and we need more manufacturing lines and that was the main reason that we will not be able to expand like for harvesters as well because see we can't if we need to sell a 100 harvesters a year we can't keep a stock of 50-60 harvesters anytime in our in our stockyard so that's why when the capex will be done we will be increasing our manufacturing capacity so that whenever the demand spikes up and during the seasonal We will be able to manufacture more harvesters in a week and we will be able to supply like regularly.

    Management acknowledged

  • Cost Constraints for Localizing Imported Components

    low

    Currently importing rubber track and clear box for harvesters because local manufacturing would be too costly due to low quantity, but plan to localize in 2-3 years.

    Kamaljeet Singh Kalsi: Now the reason to import these two products is because manufacturing like we can start manufacturing here in India but costing will go up really really high because we don't have the quantity numbers yet once ... once we have the mass production numbers we will definitely shift the production here and that's a no that's not a thing that we cannot manufacture it the things can be manufactured but due to the cost constraint we are still buying it from China but in our planning in coming 2-3 years we will stop that also and we will start manufacturing everything in also.

    Management addressing with plan

Q&A highlights

8 direct
H1 FY26 Performance and H2 Outlook Direct
So, regarding the drop in revenue in the first half of this year, this is completely natural for our business. It's not a new thing and this it's because of the weather and the monsoon cycle this year. ... we are very positive that in the second half of the year we will do great business and we will definitely show growth on year-on-year basis.

Addressed the reason for the H1 revenue decline and provided management's positive outlook for H2 and the full year.

Asked by Nishant Gupta

Flat Sales History and IPO Fund Utilization for Growth Direct
the reason for the we are saying that we were having a steady turnover from the last couple of years is because harvesters, main harvesters basically we will book the main growth story based on our harvesters. Earlier than that we were manufacturing threshers, reaper, rotavators and these are quite like products already being manufactured in India and everywhere. So yeah, we were expanding really good with treasures as well, but after that we shifted our focus to harvesters and now like we as we said in the RHP that we want money for expanding our harvester manufacturing capacity and have working capital so that so that we can stock more harvesters where we can sell in the main season.

Clarified the historical sales trend and explained how IPO funds are being strategically deployed to expand harvester capacity, which is the new growth driver.

Asked by Nishant Gupta

Mahindra Co-branding Arrangement Durability Direct
So our Mahindra contract is basically like Mahindra is having his dealerships for tractors all over India as we know. ... the sales will definitely go on as for like the Mahindra contract is renewed after every two years. It's not a like a 10 years contract. Every two years they renew the contract and we keep going working with them.

Provided clarity on the nature and renewal cycle of the co-branding agreement with Mahindra, indicating it's a recurring, not perpetual, arrangement.

Asked by Nishant Gupta

Manufacturing Location Strategy (Jhansi to Raipur) Direct
Ripur is strategically better for manufacturing of agricultural equipments because here the raw material is cheaper than UP and Punjab. Like the unskilled labor is cheaper here and the connectivity to all over the India it's quite good because Raipur is technically central India government incentives were good and electricity costs were less. So basically they setting up a factory here was like a better economic option for us.

Explained the strategic rationale behind the relocation of manufacturing, highlighting cost efficiencies and logistical advantages.

Asked by Nishant Gupta

Operating Margin Expansion and Sustainability Direct
So the margins that went up because they were primarily because of two reasons. The first is because of the introduction to harvesters because harvesters we have a good like operating margin in that product... and the second reason was quite like a generic one was the that the raw material costs went down... So that's why our operating margins increased and in the upcoming years I can assure that our operating margins will be like also in the increasing order.

Detailed the drivers behind the higher operating margins (harvester product mix, lower raw material costs) and provided a positive outlook for future margin expansion.

Asked by Harshit Gupta

Market Share Vision and Harvester Growth Plan Direct
So if we talk about harvesters currently also we have a monopoly in harvesters in our product range which we manufacturer. You can easily say like in a state like Chhattisgarh we have a really really good market share... our target is go up to thousand harvesters in numbers like in the coming four to five years we will definitely achieve that with this much capex and everything only.

Outlined the company's ambition for market leadership in harvesters and quantified the long-term sales target for this key product segment.

Asked by Harshit Gupta

Customer Conversion and Competitive Advantage for Harvesters Direct
So you will definitely buy less spare parts and you will not have the complete technical knowledge so that if anything happens you can go and get it sorted in the field only. So that's the main problem. Now here are come like here what we provide the solution to the farmer is we manufacture harvesters with all indigenous parts like the engine we are using is from Eicher. ... So yeah because of our easy maintenance of the harvester and durability and the quality that we provides those are the main factors that keep the farmers like attached to us.

Articulated the key differentiators and value proposition for their harvesters, emphasizing local manufacturing, spare parts availability, and service as critical factors for farmer adoption.

Asked by Harshit Gupta

Capex Progress and Factory Commissioning Timeline Direct
So as our plan like currently as I've told earlier that the manufacturing sheds are already started, like under construction and we will you will start like the result like the positive results and the result the impact in numbers you will start to see in the next financial year.

Confirmed that the capex is on schedule and provided a timeline for when the financial benefits of the expanded capacity will become visible.

Asked by Harshit Gupta

2 min read 6 chapters

Detailed narrative

H1 FY26 Performance and Outlook

The company experienced a revenue decline in H1 FY26, primarily due to a prolonged and harsh monsoon season that delayed harvesting cycles and the impact of new GST implications. Despite this, management expressed strong confidence in a significant recovery in H2 FY26, projecting year-on-year growth for the full financial year. They anticipate sales to concentrate in a couple of months due to the compressed harvesting cycle this year.

Strategic Focus on Harvester Business

GURUNANAK is strategically shifting its focus towards harvesters, which are identified as the main growth driver for the coming years. The company aims to achieve 30-40% top-line growth and margin sustainability in the next 2-3 years, with harvesters contributing 50-60% of total sales within a couple of years. The long-term target is to sell 1000 harvesters annually within the next 4-5 years, leveraging their current 'monopoly' in certain regions like Chhattisgarh for their specific harvester range.

Manufacturing and Supply Chain Strategy

The company's manufacturing base in Raipur offers strategic advantages such as cheaper raw materials, unskilled labor, good connectivity, government incentives, and lower electricity costs compared to other regions. While most mechanical parts are manufactured in-house, some components like the engine are sourced from Eicher, and a few (rubber track, clear box) are imported from China. The plan is to localize the manufacturing of imported parts within 2-3 years to reduce cost constraints, once mass production numbers are achieved.

Operating Margins and Cost Structure

Operating margins saw an increase, attributed to two main factors: the introduction of harvesters, which carry higher operating margins, and a reduction in raw material costs, particularly for mild steel, post-COVID. Management expects operating margins to continue increasing in the upcoming years, driven by a favorable product mix and improved manufacturing strategies.

Customer Engagement and Financing

The company emphasizes its competitive advantage through locally manufactured products, offering superior durability, easy availability of spare parts (using common components like JCB parts and Eicher engines), and in-house service and training. For high-value products like harvesters (₹25-26 lakhs), GURUNANAK has established financing tie-ups with government banks (SBI, Rajyagrameen, Canara Bank, BOB, PNB, Access Bank) to facilitate purchases, avoiding NBFCs due to higher interest rates and documentation.

Capex and Capacity Expansion

The ₹24 crores raised from the IPO are being utilized for capacity expansion, which is currently on track. Construction of manufacturing sheds is underway, and machine orders have been placed. Once commissioned, the new facility will add capacity to produce approximately 300 harvesters per manufacturing line annually. The positive results and impact on the company's numbers from this expansion are expected to be visible in the next financial year.

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