KRBL Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

KRBL Limited reported a strong Q2 FY26, with overall revenue reaching INR 1,511 crores, driven by a 70% surge in export revenue. Profitability saw significant improvement, with gross margin expanding to 29.2% and EBITDA margin to 16.6%, attributed to lower basmati input costs. The company also announced a strategic entry into the real estate sector with a INR 403 crore land acquisition in Panipat, aiming to deploy surplus funds for better ROI. While domestic growth was modest, the company remains optimistic about its global rice market leadership and strategic initiatives like Project Akshat and the Uplife brand.

Highlights

  • Strong export performance with 70% YoY growth in Q2 FY26 export revenue to INR 438 crores.

  • Significant gross margin expansion to 29.2% in Q2 FY26, driven by 11% lower basmati COGS.

  • Robust EBITDA margin improvement to 16.6% and PAT margin to 11.2% in Q2 FY26.

  • Successful bid for 125 acres of land in Panipat for INR 403 crores, marking strategic entry into real estate.

  • Cash and bank balances (including treasury investments) increased to INR 2,157 crores as of Sep 30, 2025, from INR 1,272 crores last year.

Concerns

  • Reciprocal tariff of 50% imposed by the United States on Indian rice exports could impact competitiveness, though KRBL's direct exposure is limited.

  • Domestic revenue (excluding power) grew only 6% in Q2 FY26, and declined 2% QoQ.

  • Overall revenue declined 5% QoQ from Q1 FY26 to Q2 FY26, primarily due to an 11% decline in export bulk revenue.

Key financials

2 periods

Headline

  • Total Income
    ₹1,541 Cr
    YoY +18%
  • Export Revenue
    ₹438 Cr
    YoY +70% QoQ -11%
  • Domestic Revenue (excl. Power)
    —
    YoY +6% QoQ -2%
  • Gross Margin
    29.2%
  • EBITDA Margin
    16.6%
  • PAT
    ₹172 Cr
  • PAT Margin
    11.2%
  • Cash & Bank Balances (Sep 30, 2025)
    ₹2,157 Cr
  • Total Inventory (Sep 30, 2025)
    ₹2,279 Cr

H1 FY26

  • Total Income
    ₹3,155 Cr
    YoY +25%
  • Domestic Revenue
    —
    YoY +10%
  • Export Revenue
    —
    YoY +86%

What they filed

Q1 FY27: revenue down 5.6%, net profit up 72.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,270 1,682 1,442 1,584 1,511 +19%1,477 −12%1,526 +6%1,496 −6%
EBITDA123 195 224 193 226 +84%229 +17%229 +2%308 +60%
Net profit103 133 154 151 172 +67%170 +28%155 +1%261 +73%
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

high confidence
  • Capex Capex disclosed from healthy internal accruals and surplus funds
    • Land acquisition in Panipat for real estate ₹403 Cr
    • New real estate projects ₹1,000 Cr
    Built on our strong financial position and healthy internal accruals, KRBL is now set to enter the real estate sector as a strategic step towards long-term value creation. Our core agri-food business continues to generate robust cash flows with minimal future Capex and working capital needs. This gives us the opportunity to deploy surplus funds more effectively moving away from low-yield treasury instruments and leveraging our underutilized bank limits.
  • Debt Debt disclosed Cost 7%
    We have got a bank limits of approx. INR 2,200 crores, which is unutilized, and the bank limit, we can get at 7%. So to get a better ROI, it's always good to have a bank utilization.
  • Liquidity Cash ₹2,157 Cr · Undrawn ₹2,200 Cr Cash and bank balances include treasury investments. Unutilized bank limits available at 7% interest.
    Cash and bank balances, including treasury investments were at INR 2,157 crores as of September 30, '2025, increased from INR 1,272 crores at the same period last year. We have got a bank limits of approx. INR 2,200 crores, which is unutilized, and the bank limit, we can get at 7%.

Guidance & targets

India Rice Production

  • India's rice production estimate India Rice Production · 2025-2026 · High confidence 151 million metric tons

    From 149 million metric tons today

    Our country's rice production for '2025-'2026 is estimated at around 151 million metric tons compared to 149 million metric tons in '2024-'2025 as per USDA.

    — Anil Kumar Mittal

Non-Basmati Business

  • Turnover from new plants (South) Non-Basmati Business · within next 2 to 3 years · Medium confidence INR 500 crores

    From INR 200 crores today

    You see non-basmati, at present, we are doing around INR200 crores, and we expect to do about INR500 crores within next 2 to 3 years.

    — Anoop Kumar Gupta

Real Estate Investment

  • Total outlay for new real estate projects Real Estate Investment · over the next few years · Medium confidence INR 1,000 crores
    In addition, KRBL will explore new real estate projects with a total outlay of around INR 1,000 crores over the next few years.

    — Anil Kumar Mittal

  • Maximum investment from accruals Real Estate Investment · High confidence INR 1,000 crores
    The management has decided to go up to Rs. 1000 crores only. It all depends upon the opportunity & price.

    — Anil Kumar Mittal

Project Akshat

  • Market share improvement Project Akshat · over the next 18 to 24 months · High confidence 500 basis points
    Akshat is focusing on 4 areas: winning more share in general trade and e-commerce with a clear target of improving market share by 500 basis points over the next 18 to 24 months

    — Ayush Gupta

  • Efficiency in trade and marketing spends Project Akshat · High confidence 2% to 3%
    making every rupee work harder through 2% to 3% efficiency in how we deploy trade and marketing spends.

    — Ayush Gupta

  • E-commerce ROAS improvement Project Akshat · High confidence 15% to 20%
    Thirdly, improving e-commerce economics with a 15% to 20% improve in ROAS, return on advertising spend, driven by better planning and smarter execution

    — Ayush Gupta

Domestic Business

  • Average growth rate Domestic Business · FY26 · Medium confidence 10%
    So on the domestic front, our run rate of H1, our plan is to continue that run rate. And we'd like to close the year at a 10% average growth rate.

    — Ayush Gupta

Uplife Brand Portfolio

  • Category size Uplife Brand Portfolio · next few years · Medium confidence INR 200-300 crores
    it gives us more positivity that we can focus and grow this segment into INR200 crore to INR300 crore category in the next few years.

    — Ayush Gupta

Gross Margin

  • Improvement Gross Margin · FY26 · Medium confidence improvement
    what we had mentioned at the beginning of this year is that in FY '2026, we were expecting an improvement in gross margin for the last year.

    — Ashish Jain

Saudi Basmati Exports

  • Volume target Saudi Basmati Exports · 3-4 years · Medium confidence 1.5 lakh tonnes
    We are confident that it will take 3-4 years to reach around 1.5 lakh tonnes.

    — Anil Kumar Mittal

Market context

  • Global rice production forecast Global Rice Production · 2025-2026 marketing year · High confidence 542 million metric tons
    According to the USDA's latest Rice Outlook report, global rice production for '2025-'2026 marketing year is forecast at 542 million metric tons, broadly unchanged from last year's record level.

    — Anil Kumar Mittal

  • Global rice consumption projection Global Rice Consumption · 2025-2026 marketing year · High confidence 541 million metric tons

    From 534 million metric tons today

    Global consumption is projected to rise to 541 million metric tons, up from 534 million metric tons in the preceding year, primarily driven by stronger domestic demand in India, which alone accounts for nearly a 4.5 million ton increase in consumption.

    — Anil Kumar Mittal

What to watch in Q3 FY26

Saudi Arabia market penetration and office setup

next few quarters
Current Law firm engaged, process initiated for company incorporation and VAT registration
Target Finalization of process, start of on-ground operations and office setup

Why it matters

Saudi Arabia is a key export market, and successful re-entry is crucial for export growth.

In regard to Saudi Arabia, we would like to update that we have engaged a law firm to fulfill our requirement compliance and formalities from the government such as incorporating a company and filing VAT registration, etc. Once this process is finalized, then we can start with working on ground for operating our office, getting visas and gives the practical shape to the entire operation.

Risks & concerns

  • US reciprocal tariff on Indian rice exports

    medium

    50% levy could impact India's competitiveness in the US market, but KRBL's direct exposure is limited, and dialogue for a negotiated settlement is ongoing.

    Management acknowledged

  • Basmati crop quality and segregation challenges

    medium

    Heavy monsoon rains in Punjab and Haryana caused localized water logging and higher moisture content, leading to potential reduction in head rice recovery and grading challenges for millers.

    Management acknowledged

  • Competition and loyalty in Saudi Arabian distribution

    medium

    Finding loyal and good distributors in Saudi Arabia is difficult, with many existing distributors not fully trusted, leading KRBL to book orders directly and build its own team.

    Management acknowledged

Q&A highlights

3 direct
Real estate investment strategy and rationale Direct
The basic reason is we are investing this INR1,000 - INR2,000 crores. You see as on today, 30th September, INR 2,100 crores has been deposited in the mutual funds at a rate of 6% to 7%. We are getting just 6% return on the surplus funds. So it is important to get an ROI.

Analysts questioned the strategic shift to real estate given the company's core basmati business. Management clarified it's a capital allocation decision to improve ROI on surplus funds currently earning low returns.

Asked by Naitik (NV Alpha Fund)

Impact of real estate foray on company identity and shareholder value Partial
It will not become a real estate company. We have observed in last couple of years that there are many opportunities in auctions in NCLT or through Supreme Court or through banks for real estate where the value concluded in the auctions were just 40% as compared to the prevailing market prices.

Analyst expressed concern that significant real estate investment might dilute KRBL's identity as a premium basmati company. Management reiterated focus on opportunistic, high-return land acquisitions and potential subsidiary structure.

Asked by Hitesh Goel (Aurigin Capital)

Potential for a demerger of the real estate business Partial
We are articulating within the management to form another company as a 100% subsidiary of KRBL. If agreed, the whole real estate business will be shifted into that subsidiary company.

Analyst suggested a demerger for better focus. Management confirmed internal discussions about forming a 100% subsidiary for real estate, indicating a potential future structural change.

Asked by Hitesh Goel (Aurigin Capital)

Management bandwidth allocation to real estate vs. core business Direct
No. Actually, our new generation has come into the business. So it's not that we'll spend some time. There's not much -- I mean, spending 2, 3 hours in a day is sufficient. I don't think it is much. It is not disturbing to our rice business at all.

Analyst questioned if the real estate venture would divert management focus from the core business. Management assured that the new generation is handling it and it won't impact the rice business.

Asked by Balaji Vaidyanath (NAFA Asset Managers)

Saudi Arabia market recovery and volume targets Partial
We are confident that it will take 3-4 years to reach around 1.5 lakh tonnes. However, since India Gate is consumed by only the elite section of the market, it will be difficult to achieve a big volume out of India Gate alone. We are trying to penetrate the market like earlier times, i.e. a mixed pack of high & low qualities.

Analyst sought specific volume targets for the Saudi market, which was historically a large export destination. Management provided a long-term volume target but highlighted challenges with brand positioning and strategy for broader market penetration.

Asked by Viraj (SIMPL)

New product adjacencies and M&A strategy Direct
It has taken almost 40 years for KRBL to create impressive reserves which shows the strength of your company. We are always open for acquisitions or any good opportunities that will further strengthen our company.

Analyst suggested using surplus cash for sizable acquisitions in adjacent FMCG categories rather than real estate. Management affirmed openness to acquisitions but emphasized caution and investor interest in all investment decisions.

Asked by Viraj (SIMPL)

Gross margin outlook for next 1-2 years Partial
No, I think, see, difficult to predict for the next 2 years, but what we had mentioned at the beginning of this year is that in FY '2026, we were expecting an improvement in gross margin for the last year.

Analyst inquired about the sustainability and trajectory of gross margin improvement. Management confirmed expectations for FY26 but deferred longer-term predictions until after the new season settles.

Asked by Anubhav Mukherjee (Prescient Capital)

4 min read 7 chapters

Detailed narrative

Global and Indian Rice Market Outlook

The global rice market for 2025-2026 is projected to remain stable, with production forecast at 542 million metric tons, largely unchanged from the previous year. Global consumption is expected to rise to 541 million metric tons, up from 534 million metric tons, primarily driven by a 4.5 million ton increase in India's domestic demand. India's rice production for 2025-2026 is estimated at 151 million metric tons, surpassing China for the second consecutive year. While basmati acreage held firm, heavy monsoon rains in parts of Punjab and Haryana led to localized water logging and higher moisture content, necessitating quality segregation for the 2025 crop.

Q2 FY26 and H1 FY26 Financial Performance

KRBL reported a strong Q2 FY26 with overall revenue of INR 1,511 crores, driven by a 70% year-on-year growth in export revenue to INR 438 crores. Domestic revenue (excluding power) grew 6%. Gross margin significantly expanded to 29.2% from 23.7% in Q2 FY25, primarily due to an 11% reduction in average basmati COGS. This led to an EBITDA margin of 16.6% and a PAT of INR 172 crores (11.2% margin). For H1 FY26, total income grew 25% to INR 3,155 crores, with domestic revenue up 10% and export revenue surging 86%.

Strategic Entry into Real Estate Sector

Leveraging its strong financial position and healthy internal accruals, KRBL is strategically entering the real estate sector. The company was declared a successful bidder for 125 acres of land in Samalkha District, Panipat, for INR 403 crores. Additionally, KRBL holds significant land reserves in Ghaziabad (approx. 110 acres), currently valued at INR 2,500 crores, with potential to rise to INR 4,000 crores post-development. The company plans to invest around INR 1,000 crores in new real estate projects over the next few years, focusing on NCLT/court auctions for attractive land parcels to achieve better ROI on surplus funds.

India Business Updates and Project Akshat

In H1 FY26, KRBL's consumer pack business saw a shift in channel saliency, with general trade contributing 63%, modern trade 14%, and e-commerce growing to 23%. The company launched 'Project Akshat,' an 18-24 month commercial transformation program aimed at improving market share by 500 basis points, achieving 2-3% efficiency in trade/marketing spends, and improving e-commerce ROAS by 15-20%. This initiative focuses on building a stronger commercial engine for the next decade, supported by refreshed brand communication with Amitabh Bachchan, which has enhanced consumer confidence and brand positivity.

New Non-Basmati Plant Expansion

KRBL is expanding its non-basmati rice production capabilities with new plants in South India. The Gujarat plant (Kandla) has been operational for over 1.5 years, contributing to both export and domestic markets. The Gangavathi plant in Karnataka, delayed by rains, is expected to be completed by December 2025, with a projected capacity of 30,000-40,000 tons per annum of branded non-basmati rice. A plant in Mariyalghoda, Andhra Pradesh, is also being set up, aiming for 10,000-15,000 tons of branded non-basmati rice. The Madhya Pradesh plant is in the pipeline. The company expects non-basmati turnover to grow from the current INR 200 crores to INR 500 crores within the next 2-3 years.

Uplife Brand and Adjacency Strategy

KRBL's health and wellness brand, Uplife, continues to make steady progress, achieving a 5.5% market share in stores where it is available. The brand's positioning is focused on functional nutrition, with edible oil being the first category due to its high household penetration. The company is evaluating other value-added staples like low-sodium spice masalas, value-added rice, and atta, as well as lifestyle products such as Sattu and Makhana, to expand the Uplife portfolio. The goal is to grow the Uplife brand portfolio into an INR 200-300 crore category in the next few years.

Inventory Management and Liquidity

As of September 30, 2025, KRBL's total inventory stood at INR 2,279 crores, lower than the previous year due to reduced per-unit cost and quantity. Paddy inventory was INR 123 crores (33,000 MT) and rice inventory was INR 1,995 crores (304,000 MT). The company plans to build up inventory this year, expecting to purchase 700,000 tons of paddy, up from 0.5 million tons last year, taking advantage of comfortable paddy prices. Cash and bank balances, including treasury investments, increased to INR 2,157 crores, providing ample liquidity and enabling strategic investments.

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