Detailed Narrative
Q2 and H1 FY26 Financial Performance Overview
Rallis India reported a muted Q2 FY26 with revenue at ₹861 crores, a 7% decline from ₹928 crores in Q2 FY25. Despite this, Profit After Tax (PAT) increased by 4% to ₹102 crores from ₹98 crores, reflecting a 120 basis points margin improvement. EBITDA for Q2 FY26 stood at ₹154 crores, a 7% decrease from ₹166 crores in the prior year. For the first half (H1) of FY26, export revenue showed robust growth, reaching ₹312 crores, a 51% increase compared to ₹207 crores in H1 FY25.
Industry Landscape and Macro Challenges
The quarter was significantly impacted by abnormal and uneven rainfall distribution, leading to substantial crop losses in key states and delayed harvesting. This resulted in limited pest infestation and increased sales returns for agrochemical products. Globally, while there's cautious optimism for recovery in the agrochemical sector, industry margins remain subdued due to rising competition and U.S. tariffs on Chinese imports. The company also highlighted challenges from illegal HTBt varieties affecting organized seed companies, particularly in South and Central India.
Segmental Performance and Drivers
The Crop Care segment experienced a 3% degrowth, primarily due to domestic challenges from excessive rains. The Seeds segment degrew by 29%, with revenue falling from ₹141 crores to ₹101 crores, largely due to supply chain constraints for maize. In contrast, the export business demonstrated encouraging performance, growing by 33% in Q2 and 51% in H1, driven by volume maximization, capacity utilization, and customer base expansion, despite U.S. tariff impacts on some technical and formulation businesses.
New Product Launches and R&D Focus
Rallis India launched new products 'Deeweed' (herbicide) and 'Dodrio' (fungicide) in Q2 FY26, with positive early responses. The company is focused on accelerating its launch pipeline for proprietary research-added varieties with high yield potential, including new cotton, rice, and maize hybrids. Management stated an R&D budget of ₹60-70 crores per year, emphasizing a focused approach on modern breeding tools and securing 9(3) registrations for new products like wheat and rice herbicides for launch next year.
Financial Health and Capital Allocation
As of September 30, 2025, Rallis India maintained a healthy cash and liquid balance of ₹454 crores. The company plans for capex spends of approximately ₹50 crores for the year. Management is committed to improving capital efficiency, both for fixed and working capital, with inventory levels moderating and collections improving, aiming for consistent, competitive, and profitable growth.
Outlook and Strategic Priorities
Management anticipates a slightly better rabi crop due to residual moisture, despite initial fertilizer supply challenges. The company aims to sustain and grow seed business EBITDA margins in the range of 23% to 25%. Strategic priorities include expanding targeted reach, leveraging digital initiatives, rationalizing the portfolio, and sharpening focus across key markets, alongside exploring export opportunities and collaborations with multinational companies for product access and CSM development.