Jain Irrigation Systems Limited — Q3 FY25 earnings call

Call held 30 Jan 2025

Management summary

Jain Irrigation reported a stable Q3 FY25 with revenue of ₹1,360 crores, matching the previous year, driven by strong 19-20% growth in the Hi-tech Agri division. The company demonstrated robust cash flow generation, with ₹218 crores from operations in Q3 and ₹560 crores for 9M FY25, enabling significant debt reduction. While the plastic piping business faced degrowth, management anticipates a strong recovery in Q4 FY25 and is bullish on FY26, targeting high-teen revenue growth and improved EBITDA margins.

Highlights

  • Revenue for Q3 FY25 was ₹1,360 crores, almost matching last year's period.

  • Hi-tech Agri division grew by 19-20% YoY in Q3 FY25.

  • Cash flow from operations for Q3 FY25 was ₹218 crores, significantly higher than previous periods.

  • Cash flow from operations for 9M FY25 totaled ₹560 crores.

  • Long-term debt of ₹225 crores was repaid in the first 9 months of FY25.

  • Receivables reduced by ₹120 crores in Q3 FY25.

  • Overall debt reduced from ₹7,000 crores (FY18-19) to ₹3,500 crores currently.

  • Overseas plastic sheet business grew 10% in revenue and 17-18% in EBITDA for 9M FY25.

  • Normal PAT for Q3 FY25 was ₹10 crores, with cash PAT at ₹30-35 crores.

Concerns

  • Dividend restriction

Key financials

3 periods

Headline

  • Revenue
    ₹1,360 Cr
    YoY 0%
  • Total Debt
    ₹3,500 Cr
  • Annualized Interest Cost
    ₹375 Cr

Q3 FY25

  • CFO
    ₹218 Cr
  • Receivables Reduction
    ₹120 Cr
  • Normal PAT
    ₹10 Cr
  • Cash PAT
    ₹30 Cr

9M FY25

  • CFO
    ₹560 Cr
  • Long-term Debt Repaid
    ₹225 Cr

What they filed

Q1 FY27: revenue down 2.5%, net profit down 263.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,192 1,361 1,749 1,546 1,432 +20%1,598 +17%1,824 +4%1,508 −2%
EBITDA139 176 223 201 198 +42%166 −6%236 +6%164 −18%
Net profit-13 -1 28 11 15 +215%-47 −4600%-19 −168%-18 −264%
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

  • Hi-tech Agri Division (India)
    19% Revenue Growth
  • Plastic Division (India)
    — Revenue Growth
  • Food Business (Console)
    3.4% Revenue Growth (Q3 FY25)5% Revenue Growth (9M FY25)
  • Overseas Plastic Sheet Business
    10% Revenue Growth (9M FY25)17% EBITDA Growth (9M FY25)

Guidance & targets

Revenue

  • Q4 FY25 Revenue Growth Revenue · Q4 FY25 · High confidence more significant positive growth
    fourth quarter compared to last year, we should be able to, in fact, have more significant positive growth.

    — Anil Jain, CEO and Managing Director

  • FY25 Full Year Revenue Revenue · FY25 (whole year) · High confidence almost same level
    In terms of revenue for the whole year, FY '25 versus FY '24, the first two quarters, we were minus 25%. I think for the whole year, we are expecting that we would be almost same level.

    — Anil Jain, CEO and Managing Director

Performance

  • Q4 FY25 Overall Performance Performance · Q4 FY25 · High confidence definitely far more positive
    fourth quarter we expect to be definitely far more positive as we move forward.

    — Anil Jain, CEO and Managing Director

Exports

  • Export Growth Opportunity Exports · next few quarters · Medium confidence significant opportunity
    over the next few quarters, we also see significant opportunity to focus on that part

    — Anil Jain, CEO and Managing Director

Sales

  • Maharashtra Sales Sales · Q4 FY25 · Medium confidence stronger
    fourth quarter should be stronger again in Maharashtra.

    — Anil Jain, CEO and Managing Director

Plastic Piping Business

  • Plastic Piping Business Trend Plastic Piping Business · current quarter onwards · Medium confidence reversing the trend
    we think current quarter, we start reversing the trend on the plastic piping business.

    — Anil Jain, CEO and Managing Director

Order Inflow

  • Solar Water Pump Orders Order Inflow · next couple of months · High confidence INR100 crores
    to the tune of INR100 crores over the next couple of months.

    — Anil Jain, CEO and Managing Director

Projects

  • Desalination Projects Projects · next 9 to 12 months · High confidence 14 to 16 projects
    there are another 14 to 16 such projects to come up in the next 9 to 12 months across the country.

    — Anil Jain, CEO and Managing Director

Profitability

  • Food Business Bottom Line Profitability · current year (March quarter) and going forward (June, September quarters) · Medium confidence better bottom line performance
    We shall see a better bottom line performance.

    — Anil Jain, CEO and Managing Director

Growth

  • FY26 Outlook Growth · FY26 · High confidence quite bullish
    but for FY '26 we are quite bullish.

    — Anil Jain, CEO and Managing Director

Revenue Growth

  • Overall Sustainable Growth Revenue Growth · next year onwards · Medium confidence high teens
    next year onwards start moving at the high teens in terms of overall sustainable growth.

    — Anil Jain, CEO and Managing Director

Receivables

  • Net Receivables Reduction Receivables · Q4 FY25 · High confidence at least INR150 crores plus
    we are expecting another reduction of at least, I would say INR150 crores plus on net basis, including the new business which we do for completion of projects. On a net basis, minimum that level of reduction will happen in the current quarter.

    — Anil Jain, CEO and Managing Director

  • Old Receivables Recovery Receivables · by September '25 · High confidence majority of old receivables should be with us
    by September '26, majority of old receivables should be -- sorry, September '25 majority of the old receivables should be with us.

    — Anil Jain, CEO and Managing Director

Debt

  • Debt Reduction Debt · FY26 · High confidence another INR300 crores
    Next year, we should bring down the debt by another INR300 crores.

    — Anil Jain, CEO and Managing Director

  • Net Debt to EBITDA Debt · annualized in '26 · High confidence 2, 2.5x

    Previously 6 or 7x → 2, 2.5x

    On annualized basis, we plan to bring it to about 2, 2.5x in terms of debt-to-EBITDA.

    — Anil Jain, CEO and Managing Director

  • Term Debt Repayment (JISL Parent) Debt · 12 to 18 months · High confidence entire term debt should get done
    almost entire term debt in the main parent company, JISL should get done, as I said, maybe 12 to 18 months.

    — Anil Jain, CEO and Managing Director

  • Term Debt (Main Company) Debt · March '26 · High confidence 0
    So March '26, the entire term debt of the company will become 0, except the 0% NCDs

    — Anil Jain, CEO and Managing Director

  • 0% NCDs Reduction Debt · by March '26 · High confidence at least another INR500 crores plus
    they should be down by at least another INR500 crores plus during that period of time.

    — Anil Jain, CEO and Managing Director

Funding

  • Growth Funding Funding · going forward · High confidence funded through internal accruals
    we don't anticipate to borrow because that growth will be funded through internal accruals as the remainder of the receivables also come through.

    — Anil Jain, CEO and Managing Director

Strategy

  • Strategic Plan Development Strategy · FY25 to FY30 · Medium confidence path for next 5 years
    working with some external consultants also for the company to create a path for next, I think, 5 years between FY '25 to FY '30

    — Anil Jain, CEO and Managing Director

Business Structure

  • Business Structure Update Business Structure · next call (April, May) · Medium confidence share what we are looking for
    maybe on the next call, April, May, some of our internal work would have been done where we can share with you what we are looking for in terms of going forward in terms of structure of the company

    — Anil Jain, CEO and Managing Director

Guidance

  • FY26 Guidance Timing Guidance · once the March quarter is over · High confidence more firmer guidance
    I think we will give more firmer guidance once the March quarter is over

    — Anil Jain, CEO and Managing Director

Revenue & EBITDA Growth

  • FY26 Revenue and EBITDA Growth Ratio Revenue & EBITDA Growth · FY26 · Medium confidence if revenues grow 17%, EBITDA will grow 20%
    if revenues grow 17%, it is most likely that EBITDA will grow 20% in that ratio

    — Anil Jain, CEO and Managing Director

EPC Projects

  • Remaining EPC Project Completion EPC Projects · next few quarters · High confidence INR250 crores, INR300 crores
    the total we still need to do to complete the project might be close to INR250 crores, INR300 crores.

    — Anil Jain, CEO and Managing Director

Inventory

  • Inventory Reduction Inventory · Q4 FY25 · High confidence significant reduction
    I think you would see a significant reduction on inventory in the fourth quarter

    — Anil Jain, CEO and Managing Director

Geographic Expansion

  • PVC Pipes Market Expansion Geographic Expansion · as we speak / going along · Medium confidence stronger in Tamil Nadu, AP, Telangana; selling more in Rajasthan, UP; targeting Odisha, West Bengal
    We are becoming much stronger in Tamil Nadu, AP, Telangana as we speak. And we have recently started selling more, let's say, in Rajasthan, UP in Northern region. So continuous effort is to now some of the areas like Odisha, West Bengal, etcetera we are almost not existent.

    — Anil Jain, CEO and Managing Director

Market context

  • PAT Momentum Profitability · from FY '26, positive in current quarter (Q4 FY25) · High confidence positive
    I think the momentum on PAT also we think is going to be positive from FY '26, but already you will see the impact -- positive I think, number in the current quarter.

    — Anil Jain, CEO and Managing Director

Risks & concerns

  • Dividend restriction

    high

    Under the bank's restructuring, management is currently unable to give any dividends, frustrating shareholders.

    Management acknowledged

  • Government spending slowdown (Jal Jeevan Mission)

    medium

    Less government spend on piping business over the last 2-3 years due to elections, but expected to sort out post new government/budget.

    Management acknowledged

  • Polymer price volatility

    medium

    Rupee depreciation can increase polymer prices, which are linked to dollar international prices.

    Management acknowledged

  • Government payment delays for new initiatives

    medium

    Government has new initiatives but has been delaying payments and release of subsidies, leading the company to focus on direct farmer sales.

    Management acknowledged

  • Slow economy

    medium

    Things have been generally slow in the economy over the last 6 months, requiring significant work on new strategies.

    Management acknowledged

Q&A highlights

2 direct
Old Receivables Recovery and Debt Reduction Direct
overall receivable as I said have come down and actually INR120 crores receivables have come down in this third quarter... fourth quarter we are expecting another reduction of at least, I would say INR150 crores plus on net basis... by September '25 majority of the old receivables should be with us.

This addresses a long-standing concern about the company's working capital and ability to recover old dues, directly impacting cash flow and debt reduction targets.

Asked by Rahul Kapur

Rivulis Stake Sale and Debt-to-EBITDA Target Partial
In terms of selling Rivulis stake we got into that March '23... that is not something we are looking at that right now. But as and when timing is right, valuation is right, we may look at that opportunity as well... On annualized basis, we plan to bring it to about 2, 2.5x in terms of debt-to-EBITDA.

Analysts are pushing for a Rivulis sale to accelerate debt reduction, but management is prioritizing valuation and organic debt reduction, setting a clear debt-to-EBITDA target while deferring a decision on Rivulis.

Asked by Rahul Kapur

Flattish Performance and Future Growth Drivers Direct
Our Hi-tech Agri business in India grew 19% this quarter. So that growth has come back. Where we got hit was the piping and the plastic business growth did not come through... for the whole year, we are expecting that we would be almost same level [as FY24].

Addresses investor frustration over stagnant growth despite strong segments, clarifying the impact of the plastic piping business and setting expectations for FY25 and future recovery.

Asked by Pankit Bansal

2 min read 6 chapters

Detailed narrative

Q3 FY25 Performance Overview

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.

Strong Cash Flow and Debt Reduction

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.

Receivables Management and EPC Project Progress

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.

Outlook for Q4 FY25 and FY26

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%.

Strategic Growth Initiatives and Business Diversification

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.

Challenges and Shareholder Concerns

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.

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