Jain Irrigation

Jain Irrigation reported a robust Q2 FY26, with overall income growing by 20% year-on-year to ₹1,432 crores, up from ₹1,191 crores in the same period last year. This growth was achieved despite a deflationary environment, leading to an estimated 25% growth in quantity terms. The company's EBITDA saw a significant 43% increase, indicating improved operational efficiency and quality of earnings. For the first half of FY26, the company achieved approximately 12% growth, with total revenue nearing ₹3,000 crores and EBITDA reaching ₹400 crores.

The high-tech business was a key driver, growing almost 39% in revenue and 37% in EBITDA during Q2 FY26, maintaining a healthy EBITDA margin of around 19%. The agro-processing segment also performed well, with 15% revenue growth and an improvement in EBITDA margin from low single-digit to double-digit. The plastic division, despite facing deflationary pressures, grew 9.5% in revenue and achieved double-digit EBITDA margins. Exports showed strong momentum, growing 38% in H1 FY26, with Q2 exports at ₹129 crores.

Management emphasized its focus on working capital efficiency, aiming for less inventory and receivables by the end of FY26 compared to the start of the year. The company generated ₹190 crores in net cash from operating activities post working capital change in Q2. Jain Irrigation expects to repay its entire debt of approximately ₹200 crores due in FY27 through internal accruals, having already repaid ₹1,300 crores of debt from normal operations over the last 3.5 years.

A significant portion of the company's receivables, approximately ₹900 crores, is tied to EPC projects with state governments. While management anticipates collecting ₹300-350 crores in old receivables within the next six months, the timeline for the bulk of EPC-related funds has been pushed from FY25 to March 2027. The company expects to complete the remaining 5-10% work on major EPC projects by March 2026, with funds flowing in by March 2027.

Jain Irrigation is expanding into new growth areas, including a beverage bottling unit in its food processing subsidiary, Jain Farm Fresh. The first two lines of this unit are expected to be operational by March 2026, projected to add ₹400-500 crores in incremental revenue in FY27. The tissue culture business, which supplies planting materials like banana and pomegranate, is booming, with demand for banana leading to sold-out capacity. This division is expected to maintain a 20% growth rate, with plans to double capacity over the next three years.

The company highlighted its leadership in the micro-irrigation business in terms of revenue, size, technology, and profitability, maintaining around 19% EBITDA margins. The government's reduction of GST on drip irrigation from 12% to 5% and on solar pumps is expected to boost demand, as the benefits are passed on to end customers. Management believes this, coupled with the end of the monsoon season, will spur demand in Q3 and Q4.