Strong chemicals offset by sugar collapse; long-term potential real but near-term pressure

Revenue delivered ₹557.9 Cr, up 4.6% YoY; total income ₹559.9 Cr

Chemicals ₹168.7 Cr (+19.4%), EBITDA ₹19.2 Cr (+53%), margin 11.4% vs 8.9%

Segment revenue ₹377.9 Cr (-1.2% YoY), EBITDA loss -₹14.6 Cr (worsened from -₹4.5 Cr). Total PAT -₹19.3 Cr worse than -₹16 Cr prior year.

Chemicals EBITDA margin expanded 250 bps to 11.4%, but consolidated EBITDA halved to ₹2.6 Cr from ₹6.5 Cr due to sugar/ethanol loss widening

Commissioning completed as stated; capacity target confirmed at call

Prior call: vague 'debottlenecking benefits starting this quarter.' Now: ₹169 Cr Q1, ₹190 Cr Q2 expected, ₹240 Cr/quarter by FY28 with ₹25 Cr capex. Delivers credibility.

Prior call was bullish on integrated platform synergies. Q1 shows sugar/ethanol EBITDA loss -₹14.6 Cr (tripled from -₹4.5 Cr). Feedstock and cost pressures worse than signaled. No path to recovery quantified yet.

200 KLPD grain distillery commissioned on time. Now evaluating 160 KLPD fungible maize capacity addition to optimize sugar/ethanol mix. Adds flexibility but timeline TBD.

CDSCO application filed (July 2026) for preliminary efficacy trials; trials expected Q3 FY27. Represents de-risking of the molecule vs pure R&D stage. Still no revenue until Phase II/III success, but concrete milestone.

Prior call seemed to imply recovery in 'results' post-debottlenecking. Q1 shows consolidated PAT worsening. Management now focuses only on segment guidance; no consolidated FY27 EPS/PAT target stated.

Pilot trials progressing well. Results will be known by March 2027. After that, we will determine scale-up and commercial possibilities. Currently on track, results expected latest by March 2027.

Completed safety trials. Filed CDSCO application in July for preliminary efficacy trials. Next milestone is CDSCO permission, expected by end of Q3 FY27. After preliminary efficacy success, will pursue out-licensing or partnerships.

Triple-negative breast cancer is a large market with difficult prognosis globally. Not developing alone; other players are active, but success will unlock large opportunity. At out-licensing stage post-preliminary efficacy, will look for partners globally.

CBG is a CNG substitute aligned with green transition. We have pressmud available as feedstock. Interested in exploring this opportunity alongside biobutanol, which government has also highlighted. Will keep updating as we progress.

That question is best asked to OMC. But India's fuel consumption is growing in line with GDP or higher. E20 blending, E85/E100 draft guidelines, flex-fuel vehicles launching—all support higher ethanol demand.

Debottlenecking done last year; now translating to market. We grew from ₹141 Cr (Q1 FY26) to ₹169 Cr (Q1 FY27) and expecting ₹190 Cr in current quarter. After ₹25 Cr further capex completed early FY28, we expect ₹240 Cr/quarter. Margins sustained and growing—definitely see this as sustainable opportunity.

Closely monitoring sugar and ethanol prices. If we divert more sugarcane to sugar, fermentation/distillation capacity frees up. We are exploring 160 KLPD maize grain-prep facility to use idle sugarcane capacity for grain ethanol. This gives us optionality to capture favorable sugar economics while retaining ethanol flexibility.

E20 running successfully for ~1.5 years. Government announced draft E85/E100 guidelines; auto companies launching flex-fuel vehicles. Long-term impact of E20 and higher blending will be very positive. Geopolitics, India's growth, farmer income, climate—all support transition.

Closing inventory ~65,000 tons. Some in long-term contracts, some open market. Sugar prices have increased recently; industry wanted higher MSP for cane. Increasing sugar prices will improve economics going forward. How that unfolds next year we will see closer to season.

Expecting ₹190 Cr in current quarter, then ₹240 Cr/quarter once ₹25 Cr debottlenecking capex is complete early FY28. Growth coming entirely from bio-based specialty chemicals. Seeing strong demand in India and export markets.

Examining the opportunity if sugarcane diversion to sugar is lower than prior year, which leaves idle distillery capacity. We want to build maize front-end prep devices so after maize prep, it goes into current fungible fermenters. We will update as we progress; seeing this opportunity and want to capture it quickly.

Not exactly sure; long-term contracts may be in range of 15,000 to 20,000 out of 65,000, but not certain enough to state precisely.

In chemicals, gross margins are improving and sustaining; cash flows we are putting into ₹25 Cr debottlenecking capex, which once done will further improve. In maize ethanol, also implemented improvements; expect government ethanol blending to continue. Need to monitor monsoons for margin play-out.

Already invested in grain facility. Looking at ₹25 Cr chemicals debottlenecking now. Will have better ideas on grain front-end facility debottlenecking as we progress. Broadly keeping debt levels similar or slight change, not major restructuring of debt-equity.

Definitely seeing greater interest. Customers also looking at supply chain reliability. Oil price/fossil changes have narrowed gap between fossil and green. Seeing greater business in last quarter and this quarter, encouraging further debottlenecking so by next year we increase business further.

Immediately investing in bio-based specialty debottlenecking. Already seeing good EBITDA; confident we can sustain this. Also looking at quick wins like maize prep devices given available distillation/fermentation capacity. Will explore opportunities in DME, biobutanol as government policies emerge. Committed to ₹20 Cr over 30–33 months on drug discovery.

Based on Q1 momentum (₹169 Cr) and visible pipeline. Management expects to sustain growth trajectory into Q2.

After ₹25 Cr debottlenecking investment completed early FY28. Implies ~42% CAGR from Q1 ₹169 Cr base. Backed by customer demand signals and committed capex.

Management cited near-term challenges but did not provide a path to recovery. Suggests uncertainty on feedstock normalization and ethanol tender allotments.

Q1 delivered 11.4% margin. Management confident this will continue and improve with further capex, though no specific steady-state target given.

Management noted 'improved sugar realizations provide opportunity,' but acknowledged feedstock/cost pressures remain. Margin recovery dependent on sugar price sustenance and monsoon conditions.

Dedicated investment to drive chemicals from ₹190 Cr to ₹240 Cr/quarter. Committed and phased.

Management confirmed internal resources sufficient; no fundraising needed. Spans preliminary efficacy + Phase II trials.

Management exploring 160 KLPD fungible capacity addition but no firm capex or timeline committed yet. Dependent on sugar/ethanol economics.

Q1 PAT -₹19.3 Cr is worse than prior-year -₹16 Cr. Company unprofitable. Sugar/ethanol EBITDA loss -₹14.6 Cr now larger in magnitude than chemicals EBITDA ₹19.2 Cr contribution. If sugar losses persist or chemicals growth slows, path to profitability will be delayed.

Sugar/ethanol EBITDA loss widened from -₹4.5 Cr to -₹14.6 Cr (tripling). Causes: challenging feedstock conditions, rising manufacturing costs, ethanol tender allotment pressure. If these persist through H2 FY27, segment could drag consolidated PAT further negative.

Management guided ₹240 Cr/quarter by FY28 (42% CAGR from ₹169 Cr base). Assumes ₹25 Cr capex fully deployed, on-time execution, and customer demand remaining strong. If capex is delayed, costs overrun, or demand softens (competitive entry, macro downturn), guidance could miss.

Q1 described as 'challenging' partly due to 'ethanol tender allotments.' MD deflected on FY27 tender volume expectations, referring to OMC. If government allotments remain constrained or decline, ethanol revenue could stagnate.

DME pilot results by March 2027 (9 months away); TNBC trials start Q3 FY27 (6 months). Neither expected to contribute material revenue in FY27 or even FY28. If timelines slip or efficacy disappoints, innovation narrative could lose momentum.

MD noted El Niño risk, monitored Maharashtra/Karnataka rainfall and dam levels. Recent 3–4 week improvement noted, but remains ongoing risk. Poor rains or drought could reduce sugarcane yield or water availability, pressuring feedstock cost and production.