Nath Bio-Genes (India) Q4 FY26 earnings call

Nath Bio-Genes reported a robust Q4 FY26, with total revenue reaching INR 431.6 crores, marking a 19% year-over-year growth. This performance was driven by strong demand across its core and diversified crop segments. The company's strategic focus on growth and market penetration yielded positive results, with key products demonstrating strong farmer acceptance and product superiority.

The cotton-paddy combined portfolio now accounts for 58% of the revenue mix, an increase from 52% in FY25, indicating deeper penetration in core crops. Paddy value grew 37% YoY, while maize emerged as a star performer with volumes surging 54% YoY and value growing 78%, now contributing 10.72% to the top line. This validates the company's deliberate investment in high-potential categories beyond its traditional strengths, reflecting a well-balanced product portfolio.

FY26 marked a historic milestone with the Uzbekistan joint venture contributing INR 15 crores to the consolidated top line for the first time. This achievement signifies a successful step in the company's global expansion journey. Management is cautiously optimistic^💬 about replicating this model in neighboring geographies, with an aspiration for international operations to contribute 10-15% of the top line in the next three to five years, aiming for INR 150 crores if the top line reaches INR 1000 crores.

Gross profit grew 5% YoY to INR 240.3 crores, maintaining a gross margin of 56%, which normalized from an elevated 63% in FY25. EBITDA stood at INR 52.5 crores with a 12% margin, and PAT was INR 38.4 crores with a 9% margin, experiencing an 8% YoY decline partly due to an increased effective tax rate from 5% to 11% and higher finance/marketing costs. EPS improved to INR 23.42, more than doubling from INR 11.3 in FY22, reflecting sustained value creation.

The company maintains an asset-light capital expenditure strategy, primarily investing in land bank and vehicles, while being averse to significant investments in processing plants and storages, preferring rentals for economic viability. Cash and bank balances stood at INR 70.7 crores, providing ample liquidity. Management clarified that a reported negative cash flow of INR 1.3 crores was not a significant concern, given the substantial bank balances and strategic inventory build-up.

Management acknowledged the persistent challenge of erratic monsoons and climate change, including El Nino. Their strategy involves balancing product offerings, sales areas, and production across diverse agroclimatic conditions to mitigate risks and ensure top-line protection. They emphasized their preparedness through advance stock placement to branches, allowing for immediate shifts in case of rainfall changes, aiming to perform better than the industry.

The company strategically increased inventory build-up in FY26, with total assets growing to INR 1,082.9 crores and inventory increasing to INR 444.6 crores, particularly for cotton, anticipating production stabilization and future demand. This approach, while leading to higher finance costs of INR 13.3 crores (up from INR 9.6 crores in FY25) and contributing to a negative cash flow of INR 1.3 crores, is deemed necessary to ensure product availability and meet future sales, with management asserting it will not affect working capital needs.