Zuari Industries Limited

Zuari Industries reported a mixed Q2 FY26, with standalone revenue slightly down to INR 204.5 crores from INR 207.4 crores YoY, primarily due to lower sugar sales volume. However, standalone operating EBITDA significantly improved to INR 8.9 crores from INR 3.5 crores, and PAT turned positive at INR 3.5 crores from a loss of INR 23.9 crores YoY. Consolidated PBT saw a substantial increase to INR 174.02 crores from INR 4.8 crores, largely driven by the consolidation of Zuari Agro and its merger transaction.

The company's sugar factory in Lakhimpur, Uttar Pradesh, commenced crushing on October 26, 2025, marking the earliest start in its history. Q2 sugar sales volume was 3.7 lakh quintals, lower YoY due to government quota, but offset by higher realization of INR 4,033 per quintal (vs INR 3,815 last year). Ethanol production surged by 44% in Q2, with the distillery operating for a record 311 days, up from the previous best of 262 days. Management noted that while ethanol prices are fixed, sugar prices vary, and their production decisions are data-driven to optimize profitability.

Zuari Infra World, the real estate subsidiary, is pursuing a DM model and has achieved a gross development value of INR 2,900 crores. Its Mysore project, Zuari Garden City Phase 4, is 95% complete, and the flagship St. Regis Dubai project is 86% complete, with final completion expected by February and handover by March next calendar year. The Dubai project is anticipated to generate a cash inflow of INR 800 crores by Q2 next financial year, which will be entirely used for deleveraging. Simon India, the engineering and construction arm, is executing projects worth INR 144 crores and is transitioning to a digital-first EPC company.

The company holds strategic investments valued at INR 4,680 crores as of September 30, 2025, in entities like Chambal Fertilizers and Texmaco Rail, which are considered long-term and not for immediate monetization. A clear strategy is in place for debt reduction, with the INR 800 crores from the Dubai project earmarked for this purpose. The company also reported a reduction in finance costs by INR 3.01 crores in Q2 and INR 6.3 crores in H1 due to lower borrowing costs, contributing to improved profitability.

The joint venture ZEBPL, with Envien of Europe, is nearing commissioning for its 180 klpd distillery in Uttar Pradesh, expected by the end of November 2025. The company plans to expand this capacity to 1000 klpd within 3-5 years, subject to regulatory and market dynamics. While the company secured 100% allocation in the recent ethanol tenders, management highlighted the policy risk of stagnating ethanol procurement prices, which do not reflect true costs, especially for grain-based distilleries. They remain optimistic about the sector's role in energy transition and expect increased blending targets from 20%.

Zuari Industries has been actively simplifying its group structure, including the merger of Govind Sugar Mills and Zuari Sugar and Power Limited into the parent company. Zuari Finserv's AUM grew from INR 377.4 crores to INR 560.25 crores, driven by SIPs, despite a slight income reduction to INR 4.4 crores in Q2. Zuari Insurance & Brokers saw income growth to INR 3.9 crores and EBITDA growth to INR 2.9 crores in Q2. The company also closed its furniture operations, owning 17 acres of land in Kakkalur, and is exploring monetization options.