Insecticides (India) Limited — Q3 FY26 earnings call

Call held 30 Jan 2026

Management summary

Insecticides (India) Limited reported resilient Q3 FY26 performance with 8% revenue growth, primarily volume-led, despite a challenging market. For 9M FY26, revenue grew 4.44% and gross profit by 7.27%. However, profitability was impacted by moderated gross margins, higher finance costs, and significant sales returns. The company is focusing on specialty products, new launches, and stricter working capital management, anticipating a muted Q4 but a strong rebound in FY27.

Highlights

  • Q3 growth of 8% driven by proactive market engagement and strategic decisions.

  • 9M FY26 revenue increased by 4.44% to INR 1,714 crores from INR 1,641 crores in 9M FY25.

  • 9M FY26 gross profit improved by 7.27% to INR 546 crores from INR 509 crores in 9M FY25.

  • Strong traction from new product launches (SPARCLE, Centran, Million) and 5 new products launched in 9M FY26.

  • B2C segment contributed 76% of 9M FY26 revenue, with premium products accounting for 59% of B2C portfolio.

Concerns

  • Q3 operating environment was challenging with weak farmer activities, cautious channel behavior, and low pest incidence.

  • Gross margins moderated due to higher B2B share and limited pricing power, with maintaining 35% level in H2 expected to be difficult.

  • EBITDA and PAT reflected mixed impact of Q3 with higher finance and depreciation costs.

  • Sales returns of INR 50 crores in Q3, totaling INR 200 crores for 9M FY26, which is the company's highest ever.

  • Finance cost was higher due to utilization of INR 200 crores from the bank and currency changes.

Key financials

  1. Revenue ₹1,714 Cr +4.4%YoY
  2. Gross Profit ₹546 Cr +7.3%YoY
  3. EBITDA ₹201 Cr
  4. PAT ₹128 Cr

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.

Segment breakdown

SegmentRevenue ContributionVolume Growth (Q3)
B2C Segment (9M FY26)76%3%
B2B Segment (9M FY26)20%15%
Exports (9M FY26)4%—

Capital allocation

high confidence
  • Capex Capex disclosed
    • Dahej plant operationalization
    • Sotanala formulation activities start
    • Sotanala technical plant construction
    So Dahej is expected to be operational by end of this fiscal and Sotanala formulation activities also will be started in next kharif, and I don't think we are going to miss these deadlines.
  • Debt Net ₹150 Cr
    But this INR200 crores, we have already brought down to INR150 crores and I'm quite confident that by the end of this quarter, will minimalize it.
  • Liquidity Liquidity disclosed Liquidity remains comfortable and balance sheet strength continues to be a key focus area.
    Liquidity remains comfortable and balance sheet strength continues to be a key focus area.

Guidance & targets

Revenue

  • Sustainable Growth Revenue · next two to three years · High confidence 8% to 10%
    Clear growth revival road map is there, targeting a return of 8% to 10% sustainable growth over the next two to three years.

    — Rajesh Aggarwal

New Product Launches

  • New Products in Kharif Season New Product Launches · new season (kharif) · High confidence 5-6 launches
    So we have already planned that there are going to be 5, 6 launches in the new season and we are going to start them in the kharif season.

    — Rajesh Aggarwal

  • New Products in Q1 FY27 New Product Launches · Q1 FY27 · High confidence at least 5 launches
    As the time comes, we'll inform you but there will be at least 5 launches in Q1 itself.

    — Rajesh Aggarwal

Profitability

  • Gross Margins in H2 FY26 Profitability · H2 FY26 · High confidence difficult to maintain 35%
    Given these conditions, gross margins are expected to remain under pressure and maintaining 35% level in H2 will be difficult.

    — Rajesh Aggarwal

  • EBITDA Margin for Full Year Profitability · full year · High confidence double-digit margin
    The full year is going to show a double-digit margin. So the target for this year was to have a double-digit margin. We crossed 12%. Now we are at 11.8%. So there will be some decline for sure. How much it is difficult to say now. But of course, we'll be landing with double-digit margins. I still mentioned that.

    — Rajesh Aggarwal

ROCE/ROE

  • ROCE and ROE ROCE/ROE · over three years · High confidence up to 6% to 7%
    and the organization revenue, ROCE and ROE up to 6% to 7% over three years is already visible as talent induction and organizational strength underway

    — Rajesh Aggarwal

International Business

  • Exports Contribution to Margins International Business · beyond immediate quarters · Medium confidence meaningfully beyond immediate quarters
    We expect exports to stabilize first before contributing meaningfully to margins, which is more likely beyond the immediate quarters.

    — Rajesh Aggarwal

Product Mix

  • Premium Products Share in B2C Product Mix · High confidence 70%

    Previously 60% → 70%

    Our vision for this year was to achieve 64% to 65%. We have not grown in this segment and that is pinching me very much because the midterm target is to achieve 70% out of these premium products.

    — Rajesh Aggarwal

What to watch in Q4 FY26

Q1 FY27 Performance and Rebound

Q1 FY27
Current FY26 is a difficult year, Q4 expected to be muted.
Target Resilience performance from Q1 itself, a good year for FY27.

Why it matters

Management expects a strong rebound in Q1 FY27 after a challenging FY26, which is crucial for investor confidence and future growth trajectory.

So '27 should be a year of makeup, and we should show the resilience performance from Q1 itself.

Risks & concerns

  • Weak Farmer Sentiment and Demand

    high

    Q3 was marked by weak farmer activities, cautious channel behavior, weather issues, and low incidence of pests, leading to subdued demand conditions.

    Management acknowledged

  • Gross Margin Pressure

    high

    Gross margins moderated due to higher B2B share and limited pricing power; maintaining 35% level in H2 FY26 is expected to be difficult.

    Management acknowledged

  • High Sales Returns

    medium

    INR 50 crores in sales returns in Q3, totaling INR 200 crores for 9M FY26, which is the company's highest ever, leading to inventory buildup and higher finance costs.

    Management acknowledged

  • Raw Material Price Volatility

    medium

    January saw some raw material price increases, and Chinese New Year could lead to temporary 3-5% cost increases from China.

    Management acknowledged

  • Impact of Banned Products

    medium

    Monocil, a product contributing INR 75 crores in gross sales, is in its final year before being banned, requiring new product launches to compensate.

    Management acknowledged

Q&A highlights

8 direct
Revenue contribution from new products (Altair, SPARCLE) and future launches Direct
Q3, I don't have the exact number, but from these two products, I believe hardly INR2 crores to INR3 crores would have come. ... I see another sale of about INR10 crores coming from these two products in Q4. ... Launches are going to come in the kharif season, if I talk about the rest of launches, but the launches, which are done in FY 26 .I am going to get a sale again because various crops like pulses, vegetables, sugarcane, we are moving to maize targets, and the wheat sales is also going to start because it has rained in the entire North India and there was a cold wave.

Provides specific numbers for the initial impact of new products and outlines the pipeline for future launches, indicating growth drivers.

Asked by Shubham Jain

Impact of banned products (Monocil) and strategy to offset volume loss Direct
The new product, which is going to get banned is Monocil, This is the final year for that product. And that will also go, and that -- when it will go, the gross sales of the product will be around INR75 crores. ... as a strategy, we launch new products to take its place.

Addresses a significant revenue headwind (INR 75 crores from Monocil) and management's proactive strategy to mitigate it through new product development.

Asked by Shubham Jain

Volume growth breakdown for B2C and B2B segments in Q3 Direct
So in the B2B segment in particular, it will be about 15% roughly, B2B. And in the B2C segment, it might be about 3% to 4% growth. So yes, it is more volume led in this quarter.

Clarifies the specific volume growth drivers across key business segments, indicating B2B as a stronger performer in Q3.

Asked by Bharat Gupta

Sales returns in Q3 and 9M FY26 and comparison to industry levels Direct
This quarter number I will just give you. INR50 crores is the number what we have received in this quarter, making the total good return to roughly around INR200 crores. ... Should be in line with the industry. But I understand that it is our highest good return, which we have received in a single year. So it has increased over 2 years, it has doubled from last year.

Highlights a significant operational challenge (INR 200 crores in sales returns) and its impact on working capital and profitability, indicating a need for improved demand forecasting and inventory management.

Asked by Bharat Gupta

Impact of pricing in Q4 and raw material situation (Chinese New Year) Direct
Pricing, since this is a low season actually, so the pricing is not impacted much. But then the discounted prices starts in Q4. So Q4 will have some initial offers of discount because like it's a cyclic business. So here, you have to show the advance schemes and offer some preseason discounts. ... So I believe that somewhere about 5% to 6% discount only will come... Chinese currency has gone up. So there are signals and in many products we are receiving higher cost, 3% to 5% type of increase is visible from China at the current moment, but it can be temporary.

Provides a clear outlook on expected pricing pressure (5-6% discounts) and potential raw material cost increases (3-5%) in Q4, directly impacting future margins.

Asked by Bharat Gupta

Strategy for premium vs generic products and target proportion Direct
When I say premium business it is the new generation of generics, the mixture or the products of our partners, which are relatively new generation products. So we are working hard on it. We have achieved 60%. ... Our vision for this year was to achieve 64% to 65%. ... the midterm target is to achieve 70% out of these premium products. ... I am increasing the value of the specialty. So I'm keeping the same number of generics intact and I am increasing the value of the specialty.

Details the company's strategic shift towards higher-margin premium/specialty products, outlining current status (60%) and future targets (70%), which is crucial for long-term profitability.

Asked by Praneeth

Reason for higher finance cost and receivables/inventory situation Direct
We have been a zero debt company since last 2 years. This year, yes, we have utilized about INR200 crores of the bank. so there is visible some finance cost in there, which is coming. And it is also coming due to the currency change because the currency is increasing continuously. ... But this INR200 crores, we have already brought down to INR150 crores and I'm quite confident that by the end of this quarter, will minimalize it.

Explains the increase in finance costs due to bank utilization and currency fluctuations, and management's efforts to reduce the utilized amount, impacting overall profitability.

Asked by Praneeth

Threat from hybrid seeds reducing need for agrochemicals Direct
No technology is a threat to anything. ... If the farmer is getting the seeds for free... there is zero value. ... But if he's paying INR1,000 or INR2,000 or INR5,000 per acre, then to protect that, he's going to spend money. So these hybrid seeds in any form are going to increase the market for crop protection products, not to decrease.

Addresses a potential long-term industry concern, with management providing a counter-intuitive but logical explanation that hybrid seeds actually increase the need for crop protection due to higher farmer investment.

Asked by Kunal

3 min read 6 chapters

Detailed narrative

Q3 & 9M FY26 Performance Overview

Insecticides (India) Limited reported resilient Q3 FY26 performance with 8% revenue growth, primarily volume-led, despite a challenging operating environment. For the nine months ended December 31, 2025, revenue from operations increased by 4.44% to INR 1,714 crores from INR 1,641 crores in the prior year. Gross profit for the nine months improved by 7.27% to INR 546 crores, while EBITDA stood at INR 201 crores and PAT at INR 128 crores, remaining flattish.

Margin Pressure and Outlook

Gross margins moderated in Q3 due to a higher share of B2B sales and limited pricing power, with management noting that maintaining a 35% gross profit level in H2 FY26 will be difficult. EBITDA and PAT were impacted by higher finance and depreciation costs. The company expects Q4 to remain muted with continued margin pressure, but views this as a temporary, not structural, erosion, anticipating profitability improvement in coming periods through a focus on specialty products and operating leverage.

Product Mix and New Product Strategy

The company's product mix in 9M FY26 saw B2C contributing 76% (59% premium, 41% generic), B2B 20%, and exports 4%. A key strategic decision is to increase the premium/specialty product share to 70% from the current 60%, by increasing specialty value rather than reducing generic value. New product launches like SPARCLE, Centran, and Million showed strong traction, and the company plans another 5-6 launches in the upcoming kharif season, with at least 5 scheduled for Q1 FY27, including 1 9(3) product and 2 exclusive products.

Sales Returns and Working Capital Management

The company reported significant sales returns of INR 50 crores in Q3, bringing the total for 9M FY26 to INR 200 crores, which is described as the highest ever for IIL, doubling from the previous year. This was attributed to a market situation where herbicides were particularly affected. The sales returns led to inventory buildup and contributed to higher finance costs, as the company utilized INR 200 crores from the bank, which has now been reduced to INR 150 crores. Management is reworking its strategy to prevent recurrence, focusing on tighter credit limits and periods.

Capacity Expansion and Operational Efficiency

The Dahej plant is expected to be operational by the end of FY26, and Sotanala's formulation activities will commence in the next kharif season. The technical plant at Sotanala is projected to take another year, targeting 2027 for full operation, with its formulation facility starting in Q1 FY27. The technical synthesis at Sotanala is expected to increase power and oil bills by INR 30-40 crores annually. The company is focused on disciplined capital allocation, with capex aimed at capacity creation and maintenance, and improving ROCE/ROE to 6-7% over three years.

Market Conditions and Raw Material Outlook

The market environment remains challenging with subdued demand and uneven recovery across regions and crops. Q4 is expected to see pricing pressure with 5-6% discounts due to preseason offers. Raw material prices, while generally stable, saw some increases in January, and the upcoming Chinese New Year could lead to temporary 3-5% cost increases from China. However, management believes prices are near their bottom and the market is stabilizing, with proactive buying strategies in place.

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