Manorama Industries Q2 FY26 earnings call

Manorama Industries reported robust H1 FY26 consolidated revenue of INR 612.9 crores, marking an 86.4% year-on-year growth. EBITDA stood at INR 156.6 crores with a 27.2% margin, and PAT was INR 105.5 crores at a 17.2% margin. Driven by strong business momentum, the company revised its annual revenue guidance for FY26 upwards from INR 1,050 crores to INR 1,150 crores plus, reflecting confidence in demand and operational scalability.

The company is undertaking significant capacity enhancements, with plans to upgrade its existing fractionation facilities to increase annual capacity from 40,000 metric tons to 52,000 metric tons by Q3 FY26. Additionally, a total capital expenditure of approximately INR 450 crores is planned over the next two years for other projects, including the acquisition of 20 acres of land for future expansion beyond 52,000 MT. These initiatives are complemented by new ventures in West Africa and Latin America, including establishing subsidiaries and signing MoUs for processing facilities to deepen global presence and secure raw material sourcing.

Manorama Industries emphasized that 70-75% of its sales come from value-added products like cocoa butter equivalents and stearin, which command sustainable pricing due to their unique functional properties (stability, texture, finish) in confectionery and chocolate. Management asserted that their 9-12 month contracts and focus on operational efficiency, premiumization, and disciplined execution would help sustain healthy EBITDA margins, which were 27.2% in H1 FY26 and 27.1% in Q2 FY26, despite fluctuations in commodity prices like cocoa butter.

The company demonstrated efficient working capital management, reducing working capital days from 151 to 97 days, with a target to further bring it down to 75 days. Net operating cash flow for H1 FY25-26 was strong at INR 189.07 crores. The balance sheet remains robust, with a net debt-to-equity ratio of 0.57:1, and the company holds covered FDRs of approximately INR 126 crores, contributing to strong liquidity for funding growth and expansion.

Manorama Industries highlighted its strong competitive position in the specialty fats and butters market, characterized by high entry barriers. These include a unique sourcing network for wastage seeds (Sal, Mango, Shea Nut) involving millions of tribal people, advanced technology for fractionation, and established product approvals with top global MNCs. The company claims to be the largest and leading supplier of these fats and butters globally, particularly for Sal and Mango, and sees no competitors at its scale in the Indian market.

With the expanded capacity of 52,000 metric tons, the company projects a ballpark topline potential of INR 1,800-INR 2,000 crores at 100% utilization. The plant upgradation is expected to be completed by Q3 FY26 (December onwards), and the INR 450 crore CAPEX projects are anticipated to be on stream within the next two years. The operationalization of new Greenfield facilities, including extraction and expelling plants in West Africa, is estimated to take 9 to 18 months depending on the complexity of the processes.