Rallis India

Rallis India delivered an encouraging Q3 FY26, with revenue growing 19% year-on-year to ₹623 crores from ₹522 crores in Q3 FY25. This growth was predominantly driven by a significant 28% increase in volumes, despite an 8% de-growth in pricing. EBITDA for the quarter rose 29% to ₹58 crores. However, Profit After Tax (PAT) saw an 81% decline to ₹2 crores, primarily due to an exceptional gratuity provision of ₹40 crores related to wage code implementation, which impacted profitability.

The Crop Care segment recorded an 18% growth, reaching ₹580 crores in Q3 FY26, fueled by volume expansion and new product promotions. The Seeds business demonstrated robust performance, with revenue soaring 46% to ₹43 crores, driven by healthy product placements in paddy, mustard, and wheat. The Soil & Plant Health category also grew 16% to ₹73 crores, benefiting from both price and volume increases and successful in-house production migration. Exports (B2B) showed strong momentum with a 73% topline growth to ₹129 crores, while Domestic (B2C) grew 13% to ₹391 crores.

The domestic agrochemical market continues to face challenges, with weak demand attributed to weather issues and low crop prices, leading to an industry-wide volume decline. Farmer interest in high-value products has waned, as kharif crops traded 9-30% below Minimum Support Prices. Globally, the agrochemical market is projected to grow at a CAGR of ~5.5% to reach $75 billion by 2025, with herbicides being the largest category. Rabi acreage, however, is up ~3% YoY in wheat, oilseeds, and pulses, offering some support for Q4.

Rallis India is actively pursuing strategic initiatives to enhance its market position. During Q3 FY26, the company launched one new herbicide, 'Fateh Nxt,' contributing to a total of nine new product launches (seven herbicides and two fungicides) in the first nine months of FY26. A new biologicals platform, 'NuCode,' was introduced under the Soil and Plant Health category. Digital initiatives like 'Sampark Plus app' and the 'Idea2impact' open-innovation platform are being leveraged to improve demand generation, farmer engagement, and accelerate innovation.

Management outlined ambitious long-term aspirational targets for its key businesses. The company aims to grow its seed business to approximately INR1,000 crores and the Soil & Plant Health business to INR700-800 crores (a 4x increase from INR225 crores) within the next five years. These segments are identified as relatively high-margin businesses. Furthermore, Rallis India targets an overall blended margin expansion of 500 basis points over the next five years, driven by operating leverage and a focus on profitable growth, aspiring for double-digit revenue growth overall.

The international business environment remains uncertain, with global competition from China continuing to exert pressure on realizations. China supplies a significant portion of key technicals globally, and the upcoming discontinuation of Chinese VAT rebates from April is a new development that could lead to price increases and industry consolidation. Management acknowledged the 'very uncertain environment' regarding international trade policies and geopolitical context, stating their dependence on technical procurement from China is still more than 40%.