Kriti Industries (India) Q4 FY26 earnings call

Kriti Industries reported a strong Q4 FY26, with revenue growing 3% YoY to INR 142 crores. EBITDA saw a significant improvement, reaching INR 18 crores compared to INR 20 lakhs in the prior year, leading to an EBITDA margin of 12.91%, an expansion of 1276 basis points. The company also returned to net profitability in Q4 with INR 4 crores. For the full year FY26, despite a 19% YoY revenue decline to INR 587 crores and a 13% decline in overall sales volume to 58,630 metric tons, EBITDA grew 23% YoY to INR 35 crores, and the company achieved a net profit of INR 1 crore, reversing a loss from the previous year.

In Q4 FY26, the agriculture segment grew 12% YoY in volume to 10,288 metric tons, and the building product segment grew 7% YoY to 2,683 metric tons. However, the industrial segment experienced a steep 65% decline in volume to 606 metric tons. For the full year, all segments saw volume declines, with agriculture down 11%, building product down 16%, and industrial down 29%. Management highlighted that building products offer better margins (14-18%) compared to agriculture (8-10%) and will be the 'major growth driver' for the company, with a focus on expanding CPVC capacities due to better margins.

The company engaged in strategic inventory building in Q4 FY26, accumulating INR 72 crores worth of inventory, in anticipation of the main agriculture season starting in April. While some inventory gains were realized, management noted that volatility in petrochemical prices due to geopolitical events (Iran-Iraq war) makes predicting Q1 FY27 inventory gains challenging. The Government of India has temporarily withdrawn import duty on PVC and other polymers until July 1st, which could impact raw material costs.

Kriti Industries has put CAPEX plans on hold, having already invested in existing developments. Future capacity expansion or diversification of locations will be decided after observing the performance of the first two quarters of FY27. The company is expanding its dealer base, particularly in regional areas closer to existing territories and in the building material space, but is not planning major expansion of its core sales team, instead adding 'soldiers' as demand activates.

The demand for agriculture and building products, initially impacted by raw material price increases due to geopolitical events, has now settled to almost average normal levels. The competitive environment remains aggressive with national players present in their key markets like MP, Rajasthan, and Maharashtra. Kriti Industries holds a 'fairly large' and 'majority' market share in MP, a 'significant' share in Rajasthan, but is still developing in Maharashtra with a sub-10% market share.

The company is targeting INR 1000 crore revenue and a 10% margin by FY28, actively working towards these goals. Trade receivables saw a significant decline from INR 48 crores to INR 28 crores, attributed to a reduction in institutional sales as per company projections, indicating improved working capital management.