Jain Irrigation

Jain Irrigation reported Q3 FY25 revenue of ₹1,360 crores, nearly matching the previous year's performance. This stability was primarily driven by a robust 19-20% year-on-year growth in the Hi-tech Agri division. However, the plastic piping business experienced a similar level of degrowth, balancing the overall revenue. The company's earning quality has been improving, and EBITDA for the quarter was higher than the same period last year.

The company demonstrated strong cash flow generation, with ₹218 crores from operations in Q3 FY25 and ₹560 crores for the first nine months of FY25. This enabled a significant reduction in debt, with ₹225 crores of long-term debt repaid in 9M FY25. Overall debt has decreased from ₹7,000 crores in FY18-19 to ₹3,500 crores currently, and annualized interest costs have halved from ₹750 crores to ₹375 crores. Management aims for a debt-to-EBITDA ratio of 2-2.5x by FY26.

Management reported a ₹120 crore reduction in receivables during Q3 FY25 and expects a further reduction of at least ₹150 crores in Q4 FY25. They aim to recover the majority of old receivables by September 2025. Regarding EPC projects, approximately ₹250-300 crores of work remains to be completed over the next few quarters, with most projects being 90% or more complete, including a Pune water supply project at 50% completion.

The company anticipates a 'far more positive' Q4 FY25 compared to the previous year, with expectations of reversing the degrowth trend in the plastic piping business and stronger sales in Maharashtra. For FY25 as a whole, revenue is projected to be at a similar level to FY24, recovering from a 25% decline in the first two quarters. Management is 'quite bullish' on FY26, targeting high-teen sustainable growth and a 20% EBITDA growth if revenues grow 17%.

Jain Irrigation is pursuing new growth avenues, including securing ₹100 crores in solar water pump orders for the next few months and identifying 14-16 large diameter pipe projects for desalination over the next 9-12 months. The food business showed 3.4% growth in Q3 and 5% for 9M FY25, with expectations for better bottom-line performance. The overseas plastic sheet business grew 10% in revenue and 17-18% in EBITDA for 9M FY25, highlighting its profitability.

While debt reduction is a priority, the company is currently unable to issue dividends due to bank restructuring, a point of frustration for shareholders. The plastic piping business in India has been impacted by reduced government spending on initiatives like Jal Jeevan Mission, though a pickup is expected post-elections. Polymer price volatility and a generally slow economy over the past six months were also noted as challenges, requiring new strategies and continued effort.