Sukhjit Starch & Chemicals Limited — Q2 FY26 earnings call

Call held 13 Nov 2025

Management summary

Sukhjit Starch reported a challenging Q2 FY26 with revenue and net profit declines, primarily due to softening starch prices and a temporary demand pause post-GST rationalization. However, EBITDA showed a slight sequential improvement. Management highlighted softening maize prices, stable raw material availability, and anticipated a restart in Indian starch exports, expressing optimism for sequential improvement in operating performance in H2 FY26.

Highlights

  • EBITDA for Q2 FY26 showed a slight sequential improvement, reaching ₹20.05 crores compared to ₹19.89 crores in the previous quarter.

  • Maize prices, a key input cost, have started softening gradually, moving from ₹22-23 in Q1 to ₹19-20 currently, supported by better Kharif crop arrivals and government policies.

  • Management maintained healthy capacity utilization across all plants and managed inventory prudently.

  • The company expects sequential improvement in operating performance for H2 FY26, driven by stabilizing raw material environment and firm demand.

  • Indian starch exports are anticipated to restart and pick up in the medium term, with maize costs becoming competitive globally.

Concerns

  • Revenue from operations for Q2 FY26 declined by 14.84% QoQ to ₹312.68 crores from ₹367.20 crores in the previous quarter.

  • Net profit for Q2 FY26 decreased by 14.32% QoQ to ₹4.07 crores from ₹4.75 crores in the previous quarter.

  • H1 FY26 revenue from operations also saw a decline of 9.79% to ₹679.88 crores compared to ₹753.7 crores in the previous quarter.

  • Margins remained subdued in Q2, partly due to a pause in demand from trade during September following GST rationalization.

Key financials

2 periods

Q2 FY26

  • Revenue from Operations
    ₹312.68 Cr
    QoQ -14.8%
  • EBITDA
    ₹20.05 Cr
    QoQ +0.8%
  • Net Profit
    ₹4.07 Cr
    QoQ -14.3%

H1 FY26

  • Revenue from Operations
    ₹679.88 Cr
    QoQ -9.8%
  • EBITDA
    ₹39.9 Cr
  • Net Profit
    ₹8.82 Cr

What they filed

Q1 FY27: revenue up 7.6%, net profit up 160.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue364 373 359 367 313 −14%344 −8%402 +12%395 +8%
EBITDA30 27 15 17 16 −47%19 −30%23 +53%30 +76%
Net profit13 11 2 5 4 −69%4 −64%13 +550%13 +160%
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.

Guidance & targets

Operating Performance

  • Sequential Improvement Operating Performance · H2 FY26 · Medium confidence Improvement
    This sets the constructive tone for the second half of FY26.

    — Dhiraj Sardana, Senior VP & CEO

Input Costs

  • Maize Price Alignment Input Costs · next couple of quarters · Medium confidence In line with global pricing
    I am hopeful that the current trend of India's price of maize will be in line with the global pricing.

    — Bhavdeep Sardana, Senior VP & CEO

Exports

  • Export Activity Exports · medium term, this quarter onward · Medium confidence Start to pick up
    I think export should start to pick up as and when the export customers get into their ordering cycle.

    — Bhavdeep Sardana, Senior VP & CEO

Profitability

  • Margin Improvement Profitability · from here on · Medium confidence Improvement
    See, I am expecting improvement from here on. How much improvement, I will not have a guess. But I can safely say that things are improving.

    — Bhavdeep Sardana, Senior VP & CEO

What to watch in Q3 FY26

Maize procurement price trend

next quarter
Current ₹19-20 (down from ₹22-23 in Q1)
Target Continued softening or stability, aligning with global prices

Why it matters

Maize is a key input cost, and its price trend directly impacts the company's gross margins.

Maize prices have started softening gradually through September end due to better arrivals from the Kharif crop and supportive government policies encouraging higher maize cultivation. This has helped in moderating our input costs.

Risks & concerns

  • Weak market scenario and demand uncertainty due to GST rationalization

    medium

    A weak market scenario and uncertainty due to GST rationalization in September led to a pause in demand and strategic scaling down of production.

    Management acknowledged

  • Subdued margins despite lower raw material costs

    medium

    Margins remained subdued as maize price softening was recent, and demand was impacted by GST rationalization, leading to defensive sales to protect profitability.

    Analyst acknowledged

Q&A highlights

7 direct
Industry competitiveness and restart of Indian starch exports Direct
The industry is at a pivot point and I think the competitiveness of Indian starch manufacturers exporting, I think it's restarted again. Maize cost in India is at a level which is equal to or equivalent to what our competitors in other countries would be getting at. So, I think that's a very good sign. And I think for the short term, we will start seeing export activity and it will build up in the medium term.

Highlights a potential positive shift in the industry dynamics and export opportunities for the company.

Asked by Saurav

Sustainability of niche pricing and impact of government policies Direct
there is the government sourcing policy for ethanol. There is a glut in the ethanol market from 1,600 crores litres offered. The government only took 1,000 crores litres. 50% of what the government bought is from maize. Saying that government wants to offer, empty the old paddy stock, the rice stock, which they carry to make way for new crops. So, that has a play. And with the recent spikes in maize prices, which we have seen, there is a considerable area under acreage increase in certain areas. So, we are seeing a crop which is now touching 40 million tonnes. And with these policies in place, at least for the next couple of quarters, I am hopeful that the current trend of India's price of maize will be in line with the global pricing.

Provides insight into the complex factors influencing maize prices and the company's input costs, and management's expectation for price stability.

Asked by Saurav

Subdued margins despite lower raw material costs Direct
See, maize prices have started softening now in the last month. So, for September, there was not that much of a big dip. However, as a company, we try to protect our profitability. So, you can see that there were defensive sales. Our sales numbers are down, but we wanted to remain profitable. We did not get into a price war, etc. But we also had, as soon as the government announced GST rationalization and it came up with an indicative list of which products will come. So, there was a pause in demand from the trade for a period.

Explains the reasons behind margin pressure, including the timing of maize price softening and the impact of GST rationalization on demand.

Asked by Malini Gupta

Margin outlook for H2 FY26 and normalization to historical levels Partial
See, I am expecting improvement from here on. How much improvement, I will not have a guess. But I can safely say that things are improving. And if the government policies continue the way they are, and if India's exports, which we are hoping our industry exports start, the capacity utilization across the industry will increase. And it will further add to margin improvement for the entire industry, not only Sukhjit.

Offers a directional outlook on future margins, linking it to government policies and export recovery, but without specific numerical targets.

Asked by Malini Gupta

Current maize procurement price and trend since Q1 Direct
So, Q1 price at the farmyard was around between 22 and 23. Today, it is between 19 and 20.

Provides specific data on the trend of a critical raw material cost, indicating a favorable movement.

Asked by Varun Mishra

Drivers of consolidated revenue decline (volume vs. pricing pressure) Direct
I won't give you the exact mix, but it is a mixture of both. So, maize prices, maize starch prices have also corrected. And our plant utilization, we wilfully chose to scale down rather than produce. And in the advent of a weak market scenario, especially during the September period when there was a certain uncertainty or there was a hesitancy in the trade due to GST rationalization happening.

Clarifies that the revenue decline was a combination of both price and volume, with the company strategically scaling down production to protect profitability.

Asked by Anika Deshmukh

Demand softness in specific end-user sectors (FMCG, textile, paper) Direct
I am sure if you heard all the CEOs of FMCG companies, their various segments got impacted. Naturally, that impacted all other ingredient suppliers as well. However, certain sectors continue to do very well. Paper and packaging, pharmaceuticals have shown resilience and demand. And I think with the GST rationalization, even FMCG has come back into a fairly bullish cycle than before.

Provides a sector-wise view of demand trends, indicating resilience in some sectors and a recovery in FMCG post-GST rationalization.

Asked by Anika Deshmukh

Progress on product approval with FMCG/pharma clients for higher margin derivatives Direct
So, we are on it. We have had some onboarding. So, it's a regular process. It's business as usual for us. We are looking. We are always looking to add new customers, new clients across our units and so we keep adding. And it's a cycle which we go through regularly.

Indicates ongoing efforts to expand into higher-margin product segments and customer bases, which is crucial for future profitability.

Asked by Deepak Shah

2 min read 5 chapters

Detailed narrative

Q2 & H1 FY26 Financial Performance Overview

Sukhjit Starch reported a revenue from operations of ₹312.68 crores for Q2 FY26, a decline from ₹367.20 crores in the previous quarter. EBITDA for the quarter stood at ₹20.05 crores, showing a slight increase from ₹19.89 crores QoQ. Net profit for Q2 FY26 was ₹4.07 crores, down from ₹4.75 crores. For the first half of FY26, revenue was ₹679.88 crores, with EBITDA at ₹39.9 crores and net profit at ₹8.82 crores.

Raw Material Environment and Input Costs

Maize prices, a critical raw material, have started softening gradually since September end, moving from ₹22-23 per unit in Q1 to ₹19-20 currently. This softening is attributed to better arrivals from the Kharif crop and supportive government policies encouraging higher maize cultivation, with a crop size now touching 40 million tonnes. Freight costs are also reducing, contributing to moderated input costs. Management is hopeful that India's maize price trend will align with global pricing in the next couple of quarters.

Market Demand and Sector Trends

The second quarter saw steady improvement in demand from sectors like food processing, paper, and textiles, while pharmaceutical and packaging segments continued to show resilience. However, a pause in demand from trade occurred during September due to uncertainty surrounding GST rationalization. Post-GST rationalization, FMCG demand is noted to be returning to a bullish cycle, indicating a broader market recovery.

Operational Strategy and Profitability

Despite the revenue decline, the company maintained healthy capacity utilization across its plants and managed inventory prudently. Management stated they 'wilfully chose to scale down rather than produce' in a weak market scenario to protect profitability, avoiding a price war. Operational cost control is an ongoing process, with continuous efforts to improve yields and energy efficiency. The company is also actively onboarding new customers for higher-margin derivatives, though the approval cycle can range from 2 months to a year depending on client complexity.

Outlook and Strategic Initiatives

Management expressed a constructive tone for H2 FY26, anticipating sequential improvement in operating performance as the raw material environment stabilizes and demand remains firm. They believe Indian starch exports are restarting and expect export activity to pick up in the medium term, driven by competitive maize costs. Increased capacity utilization across the industry, fueled by exports and demand, is expected to further contribute to margin improvement for Sukhjit Starch.

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