Zuari Industries

Zuari Industries' sugar division demonstrated strong performance in FY26, achieving its highest-ever crushing of 159.7 lakh quintal and a record capacity utilization of 101.7%. Sugar realization improved to INR 4,053 per quintal from INR 3,894 per quintal in the previous year. However, production was marginally lower at 14.4 lakh quintal (vs 14.7 lakh quintals last year) due to a slightly lower recovery rate of 10.26%, attributed to early operational start and agro-climatic conditions. The company is focusing on varietal replacement programs and cost optimization to improve future recovery and profitability.

The ethanol business maintained momentum with production increasing by 10.1% and sales growing by 0.7% in FY26, with an average realization of INR 62.6 per liter. Despite these gains, the sector is challenged by stagnant ethanol prices, which are impacting profitability, and a significant overcapacity, estimated at 100% against OMCs tenders. Consequently, plans to expand the ZEBPL joint venture's capacity to 1,000 KLPD have been put on hold, with the company awaiting price revisions and new OMC tenders in the coming quarters to improve the sector outlook.

Zuari Infraworld India Limited, the real estate subsidiary, reported a robust 78% year-on-year growth in total income. Its flagship St. Regis Dubai project is 98% complete, having received the building completion certificate. The company anticipates INR 850-900 crores in cash inflows from this project over the next six months, which will be entirely dedicated to deleveraging. The development management (DM) model, which yields EBITDA margins of 70-75%, is being applied to projects in Hyderabad and Kolkata (5-year revenue recognition) and Bangalore (18-month revenue recognition).

Simon India Limited, the engineering and construction company, saw its Q4 income surge to INR 29.8 crores and its FY26 total income reach INR 89.4 crores, a significant increase from INR 18.8 crores in FY25, with FY EBITDA improving to INR 6.8 crores. In financial services, Zuari Finserv's EBITDA grew by over 60% to INR 5.6 crores, while Zuari Insurance Brokers' EBITDA increased by 54%, with brokerage income rising by 40% to INR 10.2 crores. Both segments are focusing on customer base expansion and leveraging technology for future growth.

Zuari Industries is targeting a net debt reduction to INR 700-800 crores by the end of the financial year. This will be primarily achieved through expected inflows of INR 850-900 crores from the Dubai project and an additional INR 250 crores from an associate company, totaling INR 1,200 crores in deleveraging from current external borrowings of INR 1,900 crores. Management stated that these inflows are expected to bring the company to a very comfortable financial position, precluding the need for other resource raising for deleveraging at this time.

The company continues to hold strategic investments in entities like Chambal Fertilisers and Texmaco Rail, viewing them as important for the country and for their operational performance, with no intention of selling. However, an analyst raised concerns regarding a significant provision of INR 700 crores made by Texmaco Rail and the overall decline in share prices of group companies, questioning the impact on Zuari shareholders. Management acknowledged the operational performance of these entities but refrained from commenting on share price movements.

Zuari Industries is actively pursuing digital transformation across its operations. Zuari Finserv is implementing a new tech platform for financial product distribution, and Simon India has patented a tech tool to enhance engineering efficiency. The sugar division utilizes the 'Saksham' app for farmer engagement and GPS-enabled systems for cane movement tracking, demonstrating a broad commitment to leveraging technology for improved efficiency, productivity, and stakeholder engagement across its diverse business segments.