Modi Naturals Limited — Q4 FY26 earnings call

Call held 14 May 2026

Management summary

Modi Naturals Limited delivered strong Q4 and FY26 financial results, driven by significant growth across its divisions, particularly ethanol. The company successfully expanded its ethanol capacity and achieved its FY26 guidance, while also improving operational efficiencies and working capital management. Management outlined plans for value addition in ethanol and continued distribution expansion in the consumer segment, despite acknowledging potential overcapacity risks in the ethanol industry.

Highlights

  • Consolidated revenue for Q4 FY26 grew by 28% YoY to INR243 crores.

  • Consolidated PAT for Q4 FY26 surged by 141% YoY to INR19.7 crores.

  • FY26 EBITDA (excluding exceptional item) increased by 31.2% to INR73.5 crores, with EBITDA margin at 10.2%.

  • Successfully commissioned Phase 2 of ethanol expansion, increasing capacity from 130 KL to 282 kiloliters per day.

  • Return on capital employed improved to 19.9% in FY26 from 18.3% in FY25, reflecting stronger capital productivity.

Concerns

  • Management acknowledged the risk of overcapacity and underutilization in the ethanol segment, though they believe they are well-poised to manage it.

  • One solvent extraction plant in Pilibhit was shut down due to non-viability of operations as part of strategic rationalization.

Key financials

2 periods

Q4 FY26

  • Revenue
    ₹243 Cr
    YoY +28%
  • EBITDA
    ₹24.5 Cr
    YoY +51.8%
  • EBITDA Margin
    10.1%
  • PAT
    ₹19.7 Cr
    YoY +141%

FY26

  • Revenue
    ₹719 Cr
    YoY +8.5%
  • EBITDA (excl. exceptional)
    ₹73.5 Cr
    YoY +31.2%
  • EBITDA Margin
    10.2%
  • PAT
    ₹50.3 Cr
    YoY +62.1%
  • Return on Capital Employed
    19.9%
  • Cash Flow from Operations
    ₹61.1 Cr
  • Working Capital Days
    62 days

What they filed

Q1 FY27: revenue up 0.6%, net profit up 20.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue147 179 190 155 147 +0%174 −3%243 +28%156 +1%
EBITDA13 13 16 18 15 +15%16 +23%24 +50%22 +22%
Net profit8 8 8 10 10 +25%10 +25%20 +150%12 +20%
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

Share of Q4 FY26 Revenue
₹243.1 Cr Total
  • Bulk ₹100 Cr 41.1%
  • Ethanol ₹92.2 Cr 37.9%
  • Consumer ₹50.9 Cr 20.9%

Capital allocation

high confidence
  • Capex ₹20 Cr
    • Value addition project in ethanol byproduct stream ₹20 Cr
    We don't have any large capex envisaged for this financial year. We're looking at investing up to INR20 crores in a value addition project in our byproduct stream in the ethanol division. But other than that, we have no large capex plans.
  • M&A Deal Acquisition · Announced

    Evaluated a few opportunities in the food sector, but nothing firmed up yet.

    We've evaluated a few opportunities in the food sector, but nothing that we have firmed up yet. And we will let the community know as and when.

Guidance & targets

Revenue

  • Ethanol Division Revenue Revenue · FY27 · Medium confidence INR950 crores
    So as far as the guidance is concerned, the top line guidance of an average of INR950 crores is also very conservative in nature. And we have factored in only about 50% capacity utilization of the expansion. So if all goes well, I think, we will far exceed our numbers.

    — Akshay Modi

  • Consumer Division Revenue Growth Revenue · going forward · Medium confidence faster growth

    From 2% last year today

    Consumer division last year is at about 2% revenue growth. But I think going forward, it will grow faster because in Q4 we have grown faster and the momentum is now built.

    — Akshay Modi

  • FMCG Division Revenue Revenue · medium term · High confidence INR500 crores
    So over the last few calls, I have mentioned I don't see any reason why this segment for us should not get to INR500 crores in the medium term. This will be propelled by growth within the oil basket as well as food products. So I think oil can easily grow to about INR300 crores to INR350 crores and add about INR150 crores from food in the medium term.

    — Akshay Modi

  • Consolidated Revenue (Full Ethanol Capacity) Revenue · High confidence INR1,100 crores
    I think with full capacity utilization, our consolidated revenue will cross INR1,100 crores. That's the number we're looking at.

    — Akshay Modi

Margin

  • Ethanol Division EBITDA Margin Margin · long-term · High confidence 12-15%
    And as far as EBITDA margin is concerned, this year, I mean, on previous calls, I have maintained that we will achieve between 12% to 15% EBITDA in this division on a sustainable basis.

    — Akshay Modi

Advertising Spend

  • Total Ad Spend Advertising Spend · FY26 · High confidence INR12 crores
    Yes. Sure. So our total ad spend for this year is INR12 crores.

    — Akshay Modi

What to watch in Q1 FY27

Ethanol Capacity Utilization Ramp-up

FY27 onwards
Current Limited contribution in FY26
Target Operational and financial benefits visible

Why it matters

Key driver for revenue and profitability growth from the expanded ethanol capacity.

We expect the operational and financial benefits of the expanded facility to become more visible from FY27 onwards as utilization levels improve and operations stabilize.

Risks & concerns

  • Overcapacity and underutilization in ethanol segment

    high

    Management acknowledged the risk of overcapacity in the ethanol segment but stated they are well-poised to handle it due to strategic location, plant operations, and value addition.

    Both acknowledged

  • Execution risk in consumer division

    medium

    Management stated that the risk in the consumer division is purely on execution, implying that the strategy and products are sound.

    Management acknowledged

  • Shutdown of solvent extraction plant

    low

    One solvent extraction plant in Pilibhit was shut down due to non-viability of operations, reflecting a disciplined approach to capital allocation.

    Management acknowledged

Q&A highlights

8 direct
Risks and challenges in ethanol and consumer divisions Direct
So in the ethanol segment, I think risk, as has been highlighted in media over the last few months, is that of overcapacity and underutilization. However, I think we are well poised to take care of that because we've already expanded significantly. So the growth is definitely going to come from previous year. And in consumer division, the risk is purely on execution.

Analyst sought clarity on key risks for the company's main growth drivers, and management provided a direct assessment and mitigation strategy.

Asked by Ankit Kanodia

Plans for value-added products in the ethanol division Direct
Yes, so we are already planning on value addition on the product side, which is on the alcohol side. So from ethanol, we could look at either on the portable or the chemical side. So that's something we are already considering. And on the byproduct side, as mentioned on previous calls, we've already done some innovation on value added products.

Revealed specific strategic initiatives to enhance profitability and diversify revenue streams within the ethanol segment beyond basic fuel production.

Asked by Ankit Kanodia

Capacity utilization ramp-up for expanded ethanol facility and order book visibility Direct
So in the ongoing ESY, we will get orders from private OMCs as well as participate in the PSU OMCs tender, the upcoming tenders in the current cycle as well. So right now, only cycle one tender has happened in October. Since then, no new tender has come out, which we expect to come out over the next couple of months.

Provided clarity on the immediate outlook for ethanol demand and how the company plans to utilize its increased capacity, indicating upcoming tender opportunities.

Asked by Manpreet Singh

FY27 revenue target for ethanol division and long-term EBITDA margin Direct
So as far as the guidance is concerned, the top line guidance of an average of INR950 crores is also very conservative in nature. And we have factored in only about 50% capacity utilization of the expansion. So if all goes well, I think, we will far exceed our numbers. And as far as EBITDA margin is concerned, this year, I mean, on previous calls, I have maintained that we will achieve between 12% to 15% EBITDA in this division on a sustainable basis.

Management provided specific financial targets for the key ethanol division, clarifying the basis for their conservative revenue guidance and reiterating long-term margin expectations.

Asked by Chirag Vekaria

Peak potential revenue with full ethanol capacity utilization Direct
I think with full capacity utilization, our consolidated revenue will cross INR1,100 crores. That's the number we're looking at.

Provided a clear long-term revenue potential for the company, highlighting the significant upside from full utilization of its expanded ethanol assets.

Asked by Darshil Jhaveri

Rationale behind the auditor resignation and new appointment Direct
Sure. I mean, so this was always planned. I think this is more of a succession which we started this journey started, I think, two to three years back. So the auditors who have been appointed were already auditing our Modi Biotech results for the last two, three years. And the idea was to transition even MNL to them. So that was already the plan. It's more of a succession in nature.

Addressed a potential red flag regarding auditor changes, clarifying it as a planned succession rather than an issue-driven resignation.

Asked by Ankit Minocha

Advertising spend and strategy for the consumer division Direct
Yes. Sure. So our total ad spend for this year is INR12 crores. It's about 6.5%. This is what I think we had projected anyway. So yes. This is purely only advertising. We are not talking about other below the line advertising. This is purely above the line advertising. ... So we believe that our core TG is actually, let's say, female audience, for instance. So they may see the ads, but you may not. So having said that, we are advertising in a big way on platforms like Jio Cinema, Hotstar, and all to the female audiences in our core TG.

Provided specific details on marketing investment and strategy, indicating a targeted approach using digital platforms rather than broad-based TV ads.

Asked by Ankur

Ability to pass on raw material price increases in edible oil business Direct
So we have passed it on to some extent. For example, there's a huge increase in packaging material costs. So that we have passed on. Raw material wise, in the food category, we don't see as much inflation. On the edible oil side, while rice bran prices have gone up, olive oil prices have come down. So, it's not hurting us as much. We've passed on in some of our SKUs. So I think we are managing just fine.

Addressed concerns about input cost inflation and pricing power, indicating the company's ability to manage margins through a mix of price adjustments and offsetting commodity movements.

Asked by Praveen Sharma

3 min read 7 chapters

Detailed narrative

Strong Financial Performance & Strategic Milestones

Modi Naturals reported robust Q4 FY26 results with consolidated revenue up 28% YoY to INR243 crores and PAT surging 141% YoY to INR19.7 crores. For the full FY26, revenue grew 8.5% to INR719 crores and PAT increased 62.1% to INR50.3 crores. The company successfully commissioned Phase 2 ethanol expansion, increasing capacity from 130 KL to 282 KLPD, and achieved its FY26 guidance across key financial metrics, including revenue, EBITDA, and PAT.

Ethanol Division: Capacity Expansion & Future Outlook

The company's expanded ethanol facility commenced commercial operations in the latter part of FY26, with management expecting operational and financial benefits to become more visible from FY27 as utilization levels improve and operations stabilize. For FY27, the ethanol division targets INR950 crores in revenue, a figure considered conservative based on only 50% utilization of the expanded capacity. Management believes long-term EBITDA margins for this division will be in the range of 12-15%.

Ethanol Order Book & Capacity Utilization

Modi Naturals has secured an order of INR400 crores for 47.9 KL for the ongoing Ethanol Supply Year (ESY), which runs until October 31, 2026. The company anticipates receiving more orders from private OMCs and expects fresh tenders for the ongoing ESY to be released by the end of June. Management expressed confidence in fully utilizing the 282 KLPD capacity, noting their strategic location and ability to supply across the country.

Ethanol Value Addition & Diversification

The company is actively pursuing value addition initiatives within the ethanol segment, focusing on both the alcohol side (portable/chemical) and byproduct side. One innovation has already been implemented, contributing to improved EBITDA margins, and a second value-added product is currently underway, expected to be completed within a few months. This strategy aims to enhance profitability and mitigate risks associated with potential overcapacity in the core ethanol business.

Consumer Division: Growth Drivers & Distribution Strategy

The consumer division recorded its highest-ever quarterly revenue of INR50 crores in Q4 FY26. Growth is being propelled by new product launches, such as hing, and the strong performance of categories like pasta on quick commerce platforms. The company is expanding its distribution reach across tier 1 and tier 2 cities, covering approximately 50,000 direct outlets and maintaining a channel mix of 50% modern trade, 40% general trade, and 8-10% army channel. E-commerce is expected to ramp up faster, while general trade remains underpenetrated.

Operational Efficiency & Capital Discipline

Modi Naturals implemented several initiatives to enhance operational discipline, improve procurement efficiencies, and reduce inventory intensity. These efforts resulted in an improvement in working capital days to 62 days as of March 31, 2026, down from 66 days last year. Cash flow from operations increased to INR61.1 crores in FY26, up from INR48.8 crores in FY25. As part of strategic rationalization, one solvent extraction plant in Pilibhit was shut down due to non-viability of operations.

Advertising Strategy & Market Positioning

The company's total advertising spend for FY26 was INR12 crores, representing approximately 6.5% of revenue. Management emphasized a targeted advertising approach, utilizing digital platforms like Jio Cinema and Hotstar to reach their core female audience, rather than relying solely on mass television. This strategy aims to build brand awareness and accessibility while segmenting the audience effectively. The company also received an insurance claim of INR4.9 crores in Q4 FY26 for business interruption in FY24.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Fast Moving Consumer Goods earnings calls