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Shubhshree Biofuels Energy Ltd — Q4 FY26 earnings call

Call held 1 Jun 2026

Management summary

Shubhshree Biofuels Energy Limited reported strong financial performance for FY26, with revenue growing 25% to INR 202 crores and PAT increasing 37% to INR 11 crores. The company is expanding its manufacturing capacity and investing in a torrefaction R&D plant to cater to specialized industrial requirements and improve margins. While facing working capital challenges due to rapid growth and seasonal raw material availability, management is confident in achieving its ambitious FY27 revenue target of INR 350 crores.

Highlights

Revenue from operations grew 25% to INR 202 crores in FY26.
EBITDA grew 39% to INR 16 crores in FY26.
PAT grew 37% to INR 11 crores in FY26, with a PAT margin of 5.5%.
Return on Equity (ROE) of 26.8% and Return on Capital Employed (ROCE) of 35.9%.
Manufacturing capacity increased to 450 metric tons per day, operating at 80% utilization, with plans to reach 1,000 tons per day.

Concerns

Cash conversion cycle stands at 59 days, with negative operating cash flow due to working capital requirements during rapid growth.
Current 80% plant utilization is due to seasonal raw material shortage in new plants, impacting efficiency.

Key financials

3 periods

Headline

Cash Flow Conversion Cycle
59 days
Inventory Days
19 days
Debtor Days
69 days
Payable Days
27 days

H2 FY26

EBITDA
₹10 Cr
YoY +58%
PAT
₹7 Cr
YoY +69%

FY26

Revenue from Operations
₹202 Cr
YoY +25%
EBITDA
₹16 Cr
YoY +39%
PAT
₹11 Cr
YoY +37.5%
PAT Margin
5.5%
Return on Equity
26.8%
Return on Capital Employed
35.9%

What they filed

₹ Cr · quarterly

Line item	Q4 FY25	Q2 FY26	Q4 FY26
Revenue	85	96	106
Expenses	80	90	97
EBITDA	6	6	9
Margin	7%	6%	9%
Other income	0	0	0
Interest	0	0	1
Depreciation	0	0	0
Profit before tax	6	5	9
Tax rate	29%	22%	21%
Net profit	4	4	7
EPS	7.75	7.73	12.38

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.

Order book

medium confidence

Execution

Long-term agreements range from 1 month to 4 years.

Pipeline

other

Company is waiting for some orders/LOIs for new plants.

Management indicates strong demand and a shortage of supply in the market, with existing long-term agreements and confirmed buyers for new products like torrefied biomass.

Source: Q&A

Capital allocation

high confidence

Capex ₹15 Cr Internal planning underway, to be made public within the week. 30-40% of capex cost can be recovered from government subsidies.
- Establish 5 new operational plants
- 40-ton torrefaction R&D plant
In H2 FY26, we did around INR4 crores of capex... We are planning for near about INR15 crores to INR20 crores of capex in FY27... So we can recover 30% to 40% of our capex cost from our subsidy from the government.

Guidance & targets

Revenue

Top-line Revenue Revenue · FY27 · High confidence INR 350 crores

Coming to FY27, our top-line target is near about INR350 crores

— Sagar Agrawal
Top-line Revenue Revenue · FY28 · High confidence INR 500+ crores

and going towards '28, it is INR500 plus crore.

— Sagar Agrawal

Capacity

Manufacturing Capacity Capacity · FY27 · High confidence 1,000 tons per day

From 450 metric tons per day today

Manufacturing capacity is 450 metric tons per day... Okay. And after this capex, how much will it become? 1,000 tons per day.

— Sagar Agrawal
New Operational Plants Capacity · FY27 · High confidence 5 more operational plants

From 5 operational plants today

Right now, we have five operational plants, and our target is to establish five more operational plants in FY27.

— Sagar Agrawal

Capex

Capex Spend Capex · FY27 · High confidence INR 15-20 crores

We are planning for near about INR15 crores to INR20 crores of capex in FY27.

— Sagar Agrawal

Product Development

Torrefaction R&D Plant Commissioning Product Development · July/August '26 · High confidence Commissioned

This facility is on track to be commissioned by July/August '26.

— Sagar Agrawal
Torrefaction Commercial Production Product Development · About six months · High confidence Start

Sir near about six months, we will start the commercial production.

— Sagar Agrawal

Raw Material Cost

Raw Material Cost per kg Raw Material Cost · Over two to three years · Medium confidence Under INR 2 per kg

From INR 3.50 to INR 4 per kg (3 years ago) today

The target is to bring it under INR2.

— Sagar Agrawal

Market Opportunity

Thermal Power Plant Co-firing Mandate Market Opportunity · FY30 · High confidence 30%

From 5% today

First, regarding thermal power plants, there is currently a 5% mandate, which they have to increase to 30% by FY30.

— Sagar Agrawal

Market Penetration

Thermal Power Plants for Co-firing Market Penetration · This year · High confidence 150 plants for co-fire tests, 70-80 plants for usage

From 30 plants using it today

So this year, our target is for 150 power plants to do co-fire tests and 70 to 80 power plants to start using it in their day-to-day activities.

— Sagar Agrawal

Profitability

Torrefaction Margin Profitability · Medium confidence More than double or triple

And the margin will definitely increase very well, more than double or triple in the torrefaction sector compared to the non-torrefied biomass pellets.

— Sagar Agrawal

What to watch in Q1 FY27

Torrefaction R&D Plant Commissioning

July/August '26

Current On track

Target Commercial operations

Why it matters

This plant is key to specialized industrial requirements and higher margins, impacting future profitability.

We have successfully procured a 40-ton torrefaction R&D plant from China. This facility is on track to be commissioned by July/August '26.

Risks & concerns

Raw material shortage due to farming cessation
high

The risk is if farming stops in India, then agro-waste will decrease, but it is mitigated by widespread availability of agro-waste across India.

Management acknowledged
Cash flow issues during rapid growth and capacity expansion
medium

Cash flow can be an issue during the growth phase, but management believes it can be easily managed once the 1,000-ton plant is fully operational.

Management acknowledged

Q&A highlights

7 direct

Customer segments and market demand for biomass fuel Direct

Almost all sectors have been covered. First, regarding thermal power plants, there is currently a 5% mandate, which they have to increase to 30% by FY30... And if we talk about new sectors, all pharmaceutical companies, textile units and steel industries are moving toward green fuel.

Clarifies current customer base and significant future growth potential from thermal power plants and new industrial sectors transitioning to green fuel.

Asked by Rushabh Shah

Impact of geopolitical tensions on raw material prices and competitiveness Direct

Our substitutes are FO, LDO, and gas... Now the price has increased to INR120 per liter or INR130 per liter. Our price has increased only by INR7 to INR8... Now we are maybe 60% to 70% cheaper than gas and oil. So, it is good for us.

Explains how global energy price volatility makes biomass a more competitive and attractive alternative, driving demand.

Asked by Ranjit

Sustainability of raw material cost reduction Direct

Gradually, technology improved, the number of people involved in aggregation increased, the aggregation system improved, and automation increased in the market, so the price started coming down... as technology improves and people enter this business, the raw material cost will definitely go down.

Addresses concerns about the one-time nature of cost benefits, confirming that structural improvements in technology and aggregation are driving sustainable cost reduction.

Asked by Shreyansh V. Shah

Confirmed buyers and off-take agreements for torrefied product Direct

We have. [confirmed buyers for torrefaction product]... No, they are significant. [to revenue]

Confirms market acceptance and revenue potential for the higher-margin torrefied biomass product even before commercial production starts.

Asked by Shreyansh V. Shah

Competitive advantage and strategy to capture unorganized market share Direct

For the competitive advantage, our solution is an end-to-end solution... So our competition level has decreased completely, and we are able to get long-term orders from those plants 3 year and 5 year orders.

Highlights the company's integrated 'Pellet-to-Ash' model as a key differentiator that reduces competition and secures long-term contracts.

Asked by Rakesh Shah

Current utilization rate and future margin expansion Direct

The utilization of 80% is because of the raw material... the raw material crop is now going to come in the next two months after the rainy season. So as soon as it comes, that will be on 100% utilization.

Explains the current 80% utilization is due to seasonal raw material availability in new plants, with a clear path to 100% utilization post-rainy season, implying future margin improvement.

Asked by Arpit Jodhani

Negative operating cash flow and working capital management Partial

Right now, our cash flow depends upon the season a bit, and the company is also growing... So, the cash flow cycle will be a little disturbed. So planning is going on how to improve the cash flow cycle.

Acknowledges the challenge of negative operating cash flow due to growth and seasonality, indicating active planning to improve the cash flow cycle.

Asked by Sahil Sanghvi

Timeline for torrefaction commercialization and expected margin premium Direct

Sir near about six months, we will start the commercial production. And the margin will definitely increase very well, more than double or triple in the torrefaction sector compared to the non-torrefied biomass pellets.

Provides a clear timeline for a high-margin product and quantifies the expected margin improvement, which is crucial for future profitability.

Asked by Rao Shubham

2 min read 6 chapters

Detailed narrative

Strong Financial Performance in FY26

Shubhshree Biofuels Energy Limited reported robust financial results for FY26, with revenue from operations growing 25% to INR 202 crores. EBITDA saw a significant increase of 39% to INR 16 crores, and PAT grew 37% to INR 11 crores, achieving a PAT margin of 5.5%. The company also demonstrated strong return metrics, with a Return on Equity of 26.8% and Return on Capital Employed of 35.9%, reflecting the capital-efficient nature of its business model.

Capacity Expansion and Operational Milestones

The company increased its in-house manufacturing capacity to 450 metric tons per day, operating at 80% utilization. Key operational milestones included the successful integration of a comprehensive ERP system to enhance supply chain efficiency and the procurement of a 40-ton torrefaction R&D plant from China. This torrefaction facility is on track to be commissioned by July/August 2026, aiming to cater to specialized industrial requirements and significantly increase margins.

Strategic Growth through Integrated Business Models

Shubhshree operates through two synergistic models: 'Farm-to-Factory' biomass manufacturing and 'Pellet-to-Ash' boiler management. The 'Farm-to-Factory' model ensures end-to-end control over sourcing and logistics of agricultural residues, while the 'Pellet-to-Ash' model provides comprehensive boiler management services, guaranteeing green steam at fixed prices and supporting a circular economy through ash reuse. This integrated approach strengthens client relationships and secures long-term contracts.

Market Opportunity and Decarbonization Drive

India's net-zero ambitions and the Ministry of Power's mandate for biomass co-firing in thermal power plants (5% currently, targeting 30% by FY30) present a massive market opportunity. The company notes that thermal power plants currently utilize only 0.2% of their capacity for co-firing, indicating substantial growth potential. Additionally, industrial sectors like textiles, pharmaceuticals, and steel are increasingly adopting green fuels, driven by both cost-effectiveness and export requirements for carbon-neutral products.

Working Capital and Cash Flow Management

Despite strong growth, the company faces challenges with its cash conversion cycle, currently at 59 days, and negative operating cash flow. This is attributed to the rapid expansion and the seasonal nature of raw material availability, which impacts plant utilization (currently 80% due to raw material shortage in new plants). Management is actively planning to improve the cash flow cycle and expects 100% utilization once raw material supply normalizes after the rainy season.

Future Outlook and Capex Plans

Shubhshree has set ambitious top-line targets of INR 350 crores for FY27 and over INR 500 crores for FY28. To support this growth, the company plans a capex of INR 15-20 crores in FY27, primarily for establishing five new operational plants to increase total capacity to 1,000 tons per day. Management expects to recover 30-40% of capex costs through government subsidies, reinforcing confidence in its expansion strategy.

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

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