Indogulf Cropsciences Ltd (IGCL) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to Indogulf Cropsciences Limited Q2 FY '27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectation of the company as on date of this call. These statements are not the guarantees of future performance of the company, and it may involve risk and uncertainties that are difficult to predict. I now hand the conference over to the management for their opening comments. Thank you.
Sanjay Aggarwal (Indogulf Cropsciences Ltd): Good afternoon, everyone, and thank you for joining us for Indogulf Cropsciences Limited Q2 and H1 FY '27 Earnings Conference Call. Let me begin with explaining the industry landscape. The second quarter of FY '27 was challenging for the domestic agrochemical industry, primarily due to below-normal and uneven southwest monsoons. Industry reports suggest that the rain season closed about 13% below the long-period average, the weakest showing since 2015. Further, the El Niño conditions weighed on rainfall. The impact extended across the
Sanjay Aggarwal (Indogulf Cropsciences Ltd): Cycle, affecting sowing patterns, crop development, the timing of crop protection application, and purchasing decisions across the distribution channel. Drought conditions were declared in parts of Southern India and Maharashtra, and the re resulting uncertainty weighed on demand during a critical period for the industry. Dealers remained cautious on restocking amid uncertainty over crop conditions and pricing, and industry inventory had built up ahead of the season. Delayed rainfall and a dry September reduced herbicide usage as farmers restored to mechanical weeding, while weaker pest and fungal pressure kept insecticides and fungicides off take subdued. In the preceding months, the Middle East conflict and related supply chain disruption pushed generic agrochemical prices up by roughly 15 to 20% between March and May alongside rupee depreciation and higher freight, packaging and solvent cost. Since June, prices of several generic products have corrected to pre-conflict levels while elevated channel inventory and weak demand constrained the industry's ability to pass on costs through higher selling prices. For Indo Gulf, the quarter needs to be viewed in this context. The delayed onset and weak June rainfall meant that some demand normally realized in the first quarter was deferred into the second quarter, supporting a subsequential recovery. Despite the difficult backdrop, we delivered growth with improved profitability. In Q2, revenue grew 3% and EBITDA improved by 27%. Manoj ji, our CFO, will take you through the numbers in detail. Our H1 FY27 channel mix comprised B2C at 59%, B2B at 35% and exports at 6% of the revenue. During H1 FY27, crop protection contributed 85% of revenue, while plant nutrients and biological contributed 5 and 6% respectively, with the balance from other products. I would also like to highlight the exceptional growth momentum demonstrated by our few products in H1 FY27 such as Nova King, which surged from 9 lakhs to 2.23 crores on Y-to-Y basis, nearly 25x growth. Spine grew from 2.84 crores to 5 crores, a robust jump of 76% and growth of our brand Fire was from 7.74 crores to 9.73 crores, that is healthy 31% growth on year-to-year basis. Indo Apache, our flagship product, and an established market leader in this category, also strengthened its performance and increased from 10.77 crores to 11.50 crores. Within the export business of crop protection, fungicide led by Q2 FY27 product mix at 57% followed by herbicide 28% and insecticide at 15%. Our continuous focus on deepening market penetration and expanding our geographical presence has started yielding encouraging results. Let me take you through some of the key developments in the export markets. Egypt emerged as the strongest export market, recording an impressive growth of 129% year-over-year. We successfully reactivated sales in Sudan, establishing a renewed revenue stream in the market. We successfully entered the Taiwan market, strengthening Indo Gulf's presence across Asia. We secured new orders through Germany for our Latin America business, opening up an additional commercial channel. We entered the Israeli market for our plant nutrition business, further expanding our geographical reach and diversifying our market presence. In
Sanjay Aggarwal (Indogulf Cropsciences Ltd): developments include positive field trial results and import permission for Indo Apache in Sri Lanka, a formulation registration in Thailand for Spiromesifen 24% SC, and in Venezuela, a repeat order of 44 MT, following the successful export of 95 MT of NutriX. We have also decided to initiate field trials for Empire and Indo Apache in Brazil, supported by an agreement with a reputed Brazilian CRO. In the domestic market, we delivered encouraging results, with several states, including Gujarat, Chhattisgarh, Haryana, Punjab, Tamil Nadu, Telangana recording growth over the pre previous years. During H1 FY '27, we commercialized three new specialty product. The product launching during the September quarter was has received a very positive response from the market, and we will share the further details as it scales up. Our manufacturing capacity utilization averaged 60% in HY FY '27, compared to 52% in FY '26. On a quarterly basis, utilization was 70% in Q1 and moderated to around 50% in Q2, as we aligned production with the pace of demand. I would also like to update you on a new initiative. As set out in the notice of our AGM, the Board has proposed reallocation of INR8.34 crore of unutilized IPO proceeds, originally earmarked for an in-house DF plant towards specialty machinery and a dedicated production facility for climate stress management and plant growth regulators product at our Barwasni facility in Sonipat on an area of 9,000 square meter. This is a considered redirection of capital, not a departure from our intent of building re-manu our manufacturing capacities. After a dedicated commercial and market assessment, the Board and management concluded that the DF line was facing pricing pressure and shrinking margins, while climate stress management has emerged as one of the fastest-growing categories in agricultural input, driven by heat waves, prolonged droughts, erratic rainfall and other abiotic stress that are increasingly affecting crop productivity across India. Our flagship technology in this space, phosphorus derived from rhodophytes, is designed to help crops withstand heat stress at the critical reproductive stage through osmotic regulation, antioxidant activation, heat stress mitigation, and improved flower retention. We expect the facility to be operated by Q4 FY '27, and we believe it will improve our fin- capital efficiency, accelerate revenue generation from newly created infrastructure, and strengthen our competitive position in both domestic and export markets. Looking ahead, we remain mindful of the uncertainties facing in the agricultural sector. The India Meteorological Department expects El Nino El Nino conditions are likely to persist throughout the winters, although forecasts currently expect them to ease by around February 2027. Rabi soil moisture and the pace of channel inventory liquidation will be the key monitorables for the second half, alongside farmer economics and input cost movements. We, therefore, expect Q3 FY '27 to remain a challenging quarter. Industry analysts currently expect agri input earnings to bottom between bottom out between October and December 2026, with a recovery from first quarter of FY '28 as weather conditions normalize. We, therefore, remain measured in our near-term assessment and focused on factors within our control: a richer product mix, new product introduction, and disciplined cost control to protect our margins. Our priorities for rest of FY '27 are to deepen farmer engagements, expand our differentiated
Sanjay Aggarwal (Indogulf Cropsciences Ltd): portfolio across specialty products and biologicals, pursue selective international opportunities, and maintain discipline in procurement, inventory and manufacturing. With that, I would now like to hand over the call to our CFO, Mr. Manoj Gupta, who will take you through the financial performance in greater details. Thank you.
Manoj Gupta (Indogulf Cropsciences Ltd): Thank thank you Sanjay ji. Good evening everyone and thank you for joining us. I will take take you through the financial performance of Q2 FY27. On a consolidated basis, revenue from operations for the quarter stood 255.8 crores compared with the 248.3 crores Q2 FY26, representing a 3% year-on-year growth. Subsequently, revenue increased by approximately 52% from 168.5 crore in Q1 FY27. This was achieved despite subdued demand due to the erratic rain rain and drought-like condition in the part of the country. In Q2 FY27, the gross profit was 76.8 crores as compared to 73.1 crore in Q2 FY26. Growth of 5% and gross profit margin was 30% as compared with 29%. EBITDA for the quarter stood 40.6 crores as compared to with 32 crores in Q2 FY26, a growth of 27%. EBITDA margin improved to 16% from 13%. The improved profitability was an outcome of the improved product mix, supported by a greater share of high-margin products along with the prudent cost management. Employee expenses declined by 8% year-on-year to 13.3 crore and other expenses declined 14% to 22.9 crore, which together brought up our operating cost down by 14.2% of revenue from 16.6% in Q2 FY26. This was achieved even as a packaging cost rose with the higher crude oil price. Finance cost for the quarter was 4.1 crore, 11% lower than Q2 FY26. Profit after tax stood at 25.7 crore as compared with 20.7 crore in Q2 FY26, a growth of 24% with the PAT margin at 10% compared with 8% in Q2 FY26. Coming to H1 FY27, revenue from the operations stood at 424.3 crores, a degrowth of 3% on YoY basis owing to the weak Kharif season. Gross profit increased by 7% on YoY basis to 123.4 crore with the gross margin improving to 29% from 26%. The EBITDA and EBITDA margin stood at 50.1 crore and 12% in H1 FY27 compared with the 41.9 crore and 10% in H1 FY26. PAT and PAT margin for H1 FY27 were 28.1 crore and 7% compared with the 24.6 crore and 6%. Inventory levels remain elevated as sales during the season were below plan and working capital increased accordingly. Inventory stood 349.6 crores at the end of the September compared with the 343.5 crore at the end of March '26. Finance cost for H1 FY27 was 8.7 crore 8.6 crore, 3% higher year-on-year basis. We will continue to manage working capital closely through the second half. We have the subsidiary, Abhiprakash Globus, which we have started. Now we are talking about our subsidiary. Our revenue from the operations grew 58% on sequential basis and we clocked at 33.35 crores. We have entered two new states in this quarter, Chhattisgarh and Orissa, and we are seeing good initial response for our products. Our focus for the remainder of the year is on the quality and sustainability of growth, specialty and value-added products, biologicals, deeper domestic distribution, and exports, while maintaining discipline on cost, working capital, and manufacturing efficiency. We remain confident that the capabilities we are building will support stronger performance as the agriculture cycle progress. Thank you once again for your continued trust and support. With that, we can now open the floor for the questions. Thank you.
Moderator: Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Yash Parker with Patel Investments. Please go ahead.
Yash Parker (Patel Investments): Hi, sir. Thank you so much for the opportunity. I have a couple of questions. First is, gross profitability has improved compared with the previous year. How much of the, of this improvement reflects a one, more favorable product mix, and procurement discipline, and how much reflects change in input costs versus pricing?
Sanjay Aggarwal (Indogulf Cropsciences Ltd): Okay. So, Yash, good afternoon. So, basically, gross margins have improved despite of the incremental pressure on the, on the purchase side. The the improvement is basically by the improved product mix, and as as our products reflects substantial changes in the total sales of our nutrients and biological products and more profitable products.
Yash Parker (Patel Investments): Right. So, next question I is that how does, how do you intend to balance revenue growth versus profitability? So, particularly as the size of our company grows and there is an increase in contribution of biologicals, plant nutrients, and differentiated speciality products. So, what is the intention behind balancing revenue growth and profitability?
Sanjay Aggarwal (Indogulf Cropsciences Ltd): So, basically, by the addition of new products and we keep on adding the new products with better margins, and we keep on discarding the products where the margins reduces. So, this is the basically the regular driver for growing the profitabilities.
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