Insecticides (India) Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Insecticides (India) Limited reported a resilient Q2 FY26 with a 2% revenue growth to ₹638 crores and an 11% gross profit increase, despite adverse weather conditions impacting the agrochemical market. The company launched five new products and maintained a focus on specialty products, contributing to a 13% H1 EBITDA margin. However, PAT declined 3.3% due to higher financial costs and increased goods returns, leading to an inventory build-up.

Highlights

  • Revenue of ₹638 crores, up 2% YoY, demonstrating resilience in a tough market.

  • Gross profit increased 11% YoY to ₹220 crores, driven by product mix.

  • Successfully launched five new products, including patented Altair and Sparcle, enhancing portfolio.

  • H1 EBITDA margin maintained at 13%, indicating focus on profitable growth.

  • Intensified field promotion activities and digitization led to better sales performance compared to peers.

Concerns

  • PAT declined 3.3% YoY to ₹59 crores due to higher financial costs and slow debtor recovery.

  • Goods return increased 50% YoY to ₹150 crores, reflecting market challenges.

  • Inventory levels crossed ₹700 crores against a target of ₹600 crores, potentially tying up working capital.

  • Subdued agrochemical demand in the domestic market due to adverse weather conditions.

Key financials

2 periods

Headline

  • Revenue from Operations
    ₹638 Cr
    YoY +2%
  • Gross Profit
    ₹220 Cr
    YoY +11%
  • EBITDA
    ₹89 Cr
    YoY -1.1%
  • PAT
    ₹59 Cr
    YoY -3.3%
  • Goods Return
    ₹150 Cr
    YoY +50%
  • Kaeros H1 Gross Sales
    ₹70 Cr
  • Kaeros H1 PBT
    ₹7 Cr

H1

  • EBITDA Margin
    13%

What they filed

Q1 FY27: revenue down 11.4%, net profit down 24.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue627 358 359 691 638 +2%385 +8%426 +19%612 −11%
EBITDA90 31 28 85 89 −1%27 −13%25 −11%68 −20%
Net profit61 17 14 58 59 −3%10 −41%12 −14%44 −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.

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Formulation expansion in Dahej
    • New facility in SEZ
    • Plant in Sotanala full expansion
    He will be particularly responsible for all the manufacturing activities, the expansions which we are taking, and also the supply chain management. So, we think we are going to go very professionally. A lot of expansions are in place because in Dahej there is a formulation expansion. We are also thinking of setting up a new facility in SEZ. Then in Sotanala we have a plant. So, that is also in full expansion.
  • Debt Debt disclosed
    reason for PAT is financial cost due to the tough market conditions. The recovery of the debtor is somewhat slow in this period.
  • Liquidity Liquidity disclosed Maintain working capital and cash flow focus.
    maintain working capital and cash flow focus.

Guidance & targets

Revenue

  • FY26 Revenue Growth Revenue · FY26 · Medium confidence double-digit growth
    We are given two targets in the beginning of the year. One is double-digit growth and strong double-digit growth for the Focus Maharatna and Maharatna. So, I still maintain that target because I believe my expectation from my ST is good. So, we should be able to make the recovery. If you look at first half, we have grown by almost 4%. So, I have to make that recovery. I should be able to do that to a larger extent. So, we should be very near to what targets we have kept for this year.

    — Rajesh Aggarwal

Product Portfolio

  • Own Technicals Contribution to FM Range Product Portfolio · next 2 to 3 years · High confidence crossing 70%

    From 65% today

    From 50% odd, we have come to 65% in our FM range. So, they are either from our own technicals or from the technicals of our partners. So, we are going to continuously focus around this. In the next 2 to 3 years, we can expect this crossing 70%.

    — Rajesh Aggarwal

Product Launches

  • New ALS Launches in Technical Segment Product Launches · annually · High confidence 3-4 new Als at least
    In the technical segment, we are going to launch some new Als... So, always in the year, I introduce 3-4 new Als at least. So, they will be coming in.

    — Rajesh Aggarwal

Profitability

  • New Product Margins (Maharatna Segment) Profitability · when launching a product · High confidence 35% plus
    What type of margins do you aim for when you are launching a product? 35% plus, I want to bring it into the Maharatna segment.

    — Rajesh Aggarwal

Sales

  • Kaeros Sales Contribution Sales · FY26 · High confidence ₹100 crore
    targeting Rs 100 crore contribution in FY'26. Yes, it will be. We will cross that target without worries.

    — Rajesh Aggarwal

Order Book

  • Export Order Book Completion Order Book · till March (Q4 FY26) · High confidence complete
    For the export side, I think till March, we have received all the orders. And still, there are fresh orders which are coming. So, they are divided month-wise. So, our order book is complete for the export.

    — Rajesh Aggarwal

What to watch in Q3 FY26

FY26 Revenue Growth Recovery

FY26
Current 4% in H1 FY26
Target Double-digit growth for FY26

Why it matters

Indicates the company's ability to recover from H1 challenges and achieve its annual growth targets, crucial for overall performance.

I still maintain that target because I believe my expectation from my ST is good. So, we should be able to make the recovery. If you look at first half, we have grown by almost 4%. So, I have to make that recovery. I should be able to do that to a larger extent. So, we should be very near to what targets we have kept for this year.

Risks & concerns

  • Challenging monsoon and adverse weather conditions

    high

    Heavy rains and dry spells disrupted agronomic activities, causing crop damage, delayed harvest, and subdued agrochemical demand in the domestic market.

    Management acknowledged

  • Loss of yield in Kharif season

    high

    Farmers experienced significant yield losses in maximum crops during the Kharif season, impacting their income and sentiment.

    Management acknowledged

  • Increased goods returns

    medium

    Goods returns increased by 50% YoY to ₹150 crores, indicating market challenges and impacting sales.

    Management acknowledged

  • Inventory build-up

    medium

    Inventory levels rose to ₹700 crores, exceeding the target of ₹600 crores, potentially tying up working capital, though management views it as necessary for the new season.

    Management acknowledged

  • Increased competition for off-patented molecules

    medium

    Competition for off-patented products now emerges within 6 months, shortening the window for competitive advantage and requiring continuous innovation.

    Management acknowledged

Q&A highlights

8 direct
Volume growth in Focus Maharatna (FM) and Maharatna segments Direct
There is technically no volume growth in the FM and Maharatna segment. Might be a small percentage. So, not big.

Reveals flat volume growth in key premium segments, suggesting revenue growth was driven by price/mix or other segments.

Asked by Bharat Gupta

Quantum of sales return Direct
Specific number, it is in the range of Rs. 150 crores. Last year also was a bad year where it was about Rs. 100 crores. So, you can see that there is an increase in 50% of goods return.

Highlights a significant increase in goods returns, indicating market challenges and potential impact on net sales and inventory.

Asked by Bharat Gupta

Drivers of gross margin improvement vs subdued EBITDA Direct
Bharat, definitely the reason for increase in gross profit is the sale of Maharatna and there is an increase in profit in generic also this time. So, that is why there is an increase in gross profit and EBITDA is definitely there is on the same lines due to increase in some expenses.

Clarifies that favorable product mix (Maharatna, generic) boosted gross margins, but higher operating expenses (like field promotion and forex losses) offset EBITDA.

Asked by Bharat Gupta

New COO's expected contribution and responsibilities Direct
He will be particularly responsible for all the manufacturing activities, the expansions which we are taking, and also the supply chain management... So, we think we are going to go very professionally.

Signals a strategic move to professionalize and scale manufacturing, expansion, and supply chain operations, potentially freeing up MD's time for strategic initiatives.

Asked by Bhargav

Inventory levels vs target Direct
Looks difficult because the inventory levels have crossed Rs. 700 crores now in the middle of the year... So, the inventory from 600 might rise to 800, but that will be normal because we will have to build that inventory for the new season.

Indicates a significant inventory build-up exceeding targets, which could tie up working capital, though management frames it as necessary for upcoming season.

Asked by Bhargav

Reasons for outperformance compared to peers Direct
So, generally we keep 750 to 800 CAs in the field and this year the number was touching almost 1,500 during the peak season... So, we got some sales better than our competition.

Management attributes relative outperformance to increased field activities, digitization, and focus on specialty products, highlighting operational intensity.

Asked by Bhargav

Kaeros contribution and margins Direct
The margins what we have got from Kaeros are PBT we have in the first half is about 7 crores. And the sales which has come out of Kaeros is to the tune of about 70 odd crores gross... targeting Rs 100 crore contribution in FY'26. Yes, it will be. We will cross that target without worries.

Provides specific financial details for a new product, confirming its H1 contribution and confidence in achieving the full-year target, indicating successful new product commercialization.

Asked by Kunal Tokas

Impact of extended monsoon on Q3/Q4 and Rabi season outlook Direct
So, the extended rainfall has now given a good opportunity for the Rabi season or the second season because there is a lot of moisture available in soil and a lot of farmers are going to go for sowing of different crops in the area... I mean, that H2 is going to be better than usual H2, right? And that is what we are seeing because of... Yes.

Management provides a positive outlook for the Rabi season, expecting it to be better than usual H2, which is crucial for offsetting Kharif losses and achieving full-year targets.

Asked by Sanjay

2 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Amidst Challenging Monsoon

Insecticides (India) Limited reported a 2% year-on-year revenue increase to ₹638 crores for Q2 FY26, up from ₹627 crores in Q2 FY25, demonstrating resilience despite a challenging monsoon season. Gross profit saw an 11% growth, rising from ₹199 crores to ₹220 crores. However, EBITDA slightly declined from ₹90 crores to ₹89 crores, and PAT decreased by 3.3% from ₹61 crores to ₹59 crores, primarily due to higher financial costs and slower debtor recovery.

Strategic Product Launches and Portfolio Premiumization

The company successfully launched five new products in Q2 FY26, including patented offerings like Altair (pre-emergent herbicide) and Sparcle (broad-spectrum insecticide), along with Amuse, Centran SC, and Brahmos. Management emphasized a strategic shift towards a specialty portfolio, with own technicals and partner technicals now contributing 65% to the Focus Maharatna range, targeting over 70% in the next 2-3 years. This premiumization strategy aims for 35%+ margins on new products.

Market Headwinds and Inventory Management

The monsoon season was characterized by initial positive signs followed by heavy rains and dry spells, disrupting agronomic activities, causing crop damage, and leading to subdued agrochemical demand. This resulted in a 50% increase in goods returns, reaching ₹150 crores compared to ₹100 crores last year. Inventory levels rose to ₹700 crores, exceeding the target of ₹600 crores, which management attributed to building necessary stock for the upcoming Rabi season.

Enhanced Market Engagement and Operational Leadership

To navigate market challenges, the company intensified its field promotion activities, increasing the number of crop advisors from 750-800 to 1,500 during peak season, currently maintaining 1,200. These efforts, coupled with digitization and a focus on specialty products, helped the company achieve better sales compared to peers. The appointment of Mr. Devendra Ray as COO is expected to professionalize and scale manufacturing, expansion, and supply chain management.

Outlook for Rabi Season and FY26 Targets

Despite the Kharif season's challenges, management expressed cautious optimism for the Rabi season, citing adequate soil moisture from extended rainfall and anticipating increased wheat and pulse sowing. They expect a better-than-usual H2 performance, crucial for offsetting Kharif losses. The company maintains its target for double-digit revenue growth for FY26 and aims for ₹100 crores contribution from its new product, Kaeros, by year-end, having achieved ₹70 crores gross sales in H1.

Continuous Innovation and Backward Integration

The company is committed to continuous innovation and backward integration, developing technologies from basic stages to enhance competitiveness. Management acknowledged the challenge of increased competition for off-patented molecules, with new entrants now appearing within 6 months, necessitating continuous innovation and novel formulations to maintain market share and profitability. They aim to launch 3-4 new active ingredients (Als) annually in the technical segment.

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