Regaal Resources Q1 FY27 earnings call

Regaal Resources Limited reported Q1 FY27 operating income of Rs. 202 crores, an 18% YoY decrease, primarily due to a deliberate reduction in low-margin trading activity. Despite this, value-added revenue grew significantly by 30.3% YoY to Rs. 80.53 crores, with its margin expanding to 39.8% from 25.1% in Q1 FY26. Operating EBITDA rose 26.6% YoY to Rs. 30.98 crores, with EBITDA margin expanding 540 basis points to 15.3%. Profit After Tax (PAT) grew 47% YoY to Rs. 13.33 crores, and PAT margin improved 291 basis points to 6.6%.

The company completed a major phase of capacity commissioning, doubling its maize crushing capacity from 825 to 1650 metric tons per day. New facilities for liquid glucose (180 tpd) and maltodextrin powder (50 tpd) were also added. As of June 30, 2026, Rs. 552 crores of the Rs. 664 crore project outlay had been incurred. Q1 FY27 capacity utilization stood at 71.4%, impacted by planned shutdowns for integrating the expanded plant. Management expects utilization to progressively improve from Q2 FY27, aiming for 90-95% within the year.

Regaal is strategically strengthening and diversifying its value-added product portfolio. Value-added products are targeted to contribute 20-22% of total turnover in FY27, a significant increase from 3% last year. The new liquid glucose capacity is already operating at about 70%. Maltodextrin powder is expected to reach its target level within 2-3 months as new customers are developed. The company also plans to enter high-value derivatives such as Dextrose Anhydrous, Monohydrate, and Hydrol during FY27.

The company's international presence is growing, with export contribution more than doubling to 10.4% in Q1 FY27 from 4.9% in Q1 FY26. This growth reflects increasing acceptance of Regaal's products in international markets. Management is actively exploring new geographies, deepening existing relationships, and building a more geographically diverse revenue base, with teams visiting new markets and attending international fairs.

Net debt stood at Rs. 735.32 crores as of June 30, 2026, primarily funding the expansion program and seasonal raw material procurement. The interest cost for Q1 FY27 was approximately 7.9%. The company benefits from Bihar's Industrial Investment Promotion Policy, which subsidizes term loan interest. While the subsidy limit was amended from Rs. 20 crores to Rs. 40 crores per project, final clarity from the government is still awaited. The net interest cost for FY27 is projected to be Rs. 39-40 crores after subvention.

Maize crushing volume increased by 7.59% YoY to 69,689 metric tons in Q1 FY27. Regaal procures approximately 80% of its inventory during the Rabi season (April-July) and maintains a substantial stock for the entire year. Management expressed confidence in mitigating maize price volatility, stating that their procurement strategy and inventory levels ensure that price fluctuations are not a significant concern. Bihar maize is preferred for its superior quality, higher recovery rates, and lower logistics costs.

The cash conversion cycle stood at 130 days, largely driven by higher inventory levels built to support the expanded 1650 metric ton per day capacity. Inventory days are seasonally higher in Q1 and Q2 due to advance maize procurement for future quarter requirements. Management expects inventory days to progressively normalize as utilization ramps up and the higher capacity translates into incremental volumes and revenue in the coming quarters^⏳, supporting a transition to cash generation and deleveraging.