Rallis India Ltd (RALLIS) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to Rallis India Limited Q2 and H1 FY '27 earnings conference call. We have with us today, Dr. Gyanendra Shukla, Managing Director and CEO, and Mr. Bhaskar Swaminathan, Chief Financial Officer. Before we begin, I would like to mention that some of the statements made in today's discussions may be forward-looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available in the results presentation. Please note that this conference is being recorded. 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 touchtone phone. I now hand the conference over to Dr. Gyanendra Shukla. Thank you, and over to you, Dr. Shukla.
Gyanendra Shukla (Rallis India Ltd): Thank you. Good morning, everyone, for joining us today for Rallis India Limited Q2 and H1 fiscal year '27 earnings
Gyanendra Shukla (Rallis India Ltd): all. As mentioned, I have alongside with me, our CFO, Mr. Bhaskar Swaminathan.
Bhaskar Swaminathan (Rallis India Ltd): Good morning.
Gyanendra Shukla (Rallis India Ltd): Let me begin the discussion by pitching into the industry landscape initially, post which I'll discuss Rallis specific developments. Our domestic market, India's first, India's agri-input sector faced significant headwind during the '26 I mean this ongoing Kharif season is just getting concluded amid deficient and erratic rainfall, a lot of crop mix changes, subdued farm economics, and heightened competitive intensity. Moisture stress across key agricultural states like Maharashtra, Andhra, Karnataka, Telangana, parts of Punjab and Haryana affected crop prospects for paddy, soybean, maize, cotton and pulses, weighing on demand for herbicide, fungicide, and insecticides and seed treatment products. Softer product prices, higher trade discounts and channel inventory pressure further constrained fresh purchases. Consequently, domestic demand recovery is likely to remain uneven contingent on the crop condition, irrigation availability, and revival of farmer profitability. On global markets, commodity prices and industry margins, since April 2026, global agricultural market have experienced firmer commodity prices amid weather related supply risk and geopolitical disruptions. In September, the FPO FAO Food Price Index rose 1.45% month-on-month, while its Cereal Price Index has increased by 5.1%, driven by higher wheat and maize prices amid Black Sea logistical Black Sea logistical disruptions, adverse weather conditions. Vegetable oil and sugar prices also strengthened on the back of import demand, weather weather concerns and production uncertainties across key producing regions. Although global cereal production is forecasted to decline in 2026, the projected harvest remains the second largest on record, indicating tighter supply condition rather than a widespread shortage. The Middle East crisis has heightened energy and freight costs, increasing pressure on agrochemical manufacturers input cost and margins. The firmer crop prices could support farm economics and agrochemical demand, the benefits maybe offset by affordability constraints, competitive pricing, and cautious channel replenishment, keeping the sector's recovery uneven. The global agriculture sector is expected to expand over the medium term, supported by rising food demand, productivity improvements, and agriculture intensification. OECD FAO projects global agricultural production value to increase by 13% by 2035, with Asia, Sub Saharan Africa, and Latin America emerging as key growth regions. Latin America remains strategically important given its substantial soybean, maize and cotton acres, while North America and Europe are mature input intensive markets. The global crop protection market is estimated at US$ 70 billion in 2026, although growth will remain sensitive to farm economics, weather, regulation and product affordability. For Indian exporters, favorable currency movements may support rupee realizations, but sustained volume recovery remains critical. International sales may also face pressure from subdued channel demand, distributor distributor resistance, weather related disruption and heat waves in Europe, which have affected crop conditions and input application patterns. For Indian companies, the key indicator to monitor are active ingredients and intermediate prices, freight rate, rupee movements, export order volumes, channel inventories, and farmer affordability. Recent UN and international agency assessment also warn that prolonged shipping disruptions could affect crop yield and food prices into 2027. For the agrochemical industry, broader firmer crop prices can improve farm economics and support demand for herbicide, insecticide and fungicide, particularly in export oriented agriculture regions. However, higher crude oil, energy and freight and input costs may put pressure on manufacturers' margins, while elevated fertilizer cost could constrain farmers' overall input spending. The outlook is therefore cautiously constructive. Companies with strong distribution network, differentiated products, efficient manufacturing, and disciplined cost management are in better position to benefit. A sustained recovery in agrochemical demand will ultimately depend on the persistence of higher crop prices, improved farm economics, and recovery in channel inventory and purchasing activity. As far as Rabi outlook is concerned, the outlook remains sensitive to winter rainfall, soil moisture, and irrigation availability. IMD's northern, northeast monsoon forecast of 80 to 112% of the long term period
Gyanendra Shukla (Rallis India Ltd): reservoir element to Southern peninsular India, but does not guarantee adequate rainfall across the country. Major reservoirs held approximately 70% of the capacity, below 10-year average of 76% with the southern region facing relatively greater irrigation concerns. These conditions could influence rabi acreage, crop yield and farmer spending particularly in water stressed areas. The crop yield and farm, the the government's rabi MSP MSP increases for 2027-28 range from 0.97% for wheat to 10.3% for safflower and mustard rising 6.6% and lentil 5.5%. While higher MSPs provide a measure of price support, actual farm return will depend on yield, market prices and procurement. Moving to Rallis specific developments. We had a muted Q2 performance on the back of insufficient rainfall in the key agrochemical consuming states like Punjab, Haryana, Maharashtra, Andhra, Karnataka, Telangana, etc. Our quarterly revenue stood at 858 crore versus 861 crore of Q2 of previous year. Overall EBITDA for Q2 fiscal year '27 stood at 126 crore, lower by 18% compared to Q2 of the previous year. Profit after tax at 85 crore versus 102 crore of Quarter 2 of fiscal year '26, which is 17% lower. Approximately 43% of India received 19% deficient rain in comparison to the long-term long period average this monsoon season, which delayed the kharif sowing. It resulted in slower liquidation and high carry forward inventory. Due to prolonged geopolitical situation, channel farmers prioritize stocking for fertilizer rather than agrochemical. Fertilizers availability have been a concern due to logistical challenge. I will talk about new initiatives and launches. During the quarter quarter, we launched four new crop care products namely Silentran, which is an insecticide, Marsellas a fungicide, Blitox Super a fungicide, Trynage a herbicide. We have all together launched nine new products during fiscal year '27 across categories. In seed business, we have launched six new products across vegetable, cotton, maize in the Quarter 2 of fiscal year '27, which takes the overall tally to 15 new products in fiscal year '27, which includes cotton hybrid for North India, herbicide-tolerant hybrid rice introduced under Dhanya brand. Digital marketing interventions continue to promote products through Anubandh Edge Scheme, farmer QR code reward schemes, enhancement in Sampark Plus and SeedSure application. Anubandh Edge initiative is a retailer-level digital platform to support retailer engagement and benefit schemes and enabling tighter integration between dealer and retailers. Retailer registration as of September '26 ended has crossed 60,000 including seed and common retailers. Farmer QR code project help in helps in better product knowledge sharing with farmers. This helps in strengthening retail farmer loyalty program, sale traceability and return tracking. On it, our initiative Sampark Plus continues to capture farmer-level demand signal to generate actionable insight and improve sales conversion. We have reached 4.23 lakh farmers in Sampark Plus through regular engagement and social media post. We had launched Idea to Impact innovation platform in Q4 of fiscal year '26 to establish an open an open innovation ecosystem to ensure secure, validate and commercialize agri-innovations. Till now, we have received encouraging participation of 42 applications out of which two are in pilot stage and 20 are 28 are under review. SeedSure application enhances visibility and traceability of farm-level operations and improves data availability for decision making. We're developing SeedSure 2 version which will be high-performing, future-ready and more cost-effective. We are also coming with new R&D center in Navi Mumbai for which onboarding of various consultants on project as well as government liaisoning has been completed. The project is running as per the plan and likely to be commissioned by April '27. We are accelerating the launch pipeline for proprietary research-led varieties and high-yield potential. Our long-term priorities include strengthening customer centricity, sharpening portfolio choices, accelerating new product launches, expanding strategic alliances and farmer reach and leveraging digitalization to enhance operational efficiency and drive sustainable growth. That includes my opening remark. I will now hand over to Mr. Bhaskar, our CFO for the for a detailed analysis of financial situation. Over to you, Bhaskar.
Bhaskar Swaminathan (Rallis India Ltd): Thank you, Dr. Gyanendra. Good morning, everyone. And thank you for joining us today for our Q2 and H1 FY '27 earnings call. I'll walk you through financial performance for the quarter and half-year.
Bhaskar Swaminathan (Rallis India Ltd): we shall commence the Q&A session. Starting with the top-line for the quarter, our Q2 FY '27 revenue stood at Rs. 858 crore as against Rs. 861 crore for the same period last year, resulting in an overall flat growth kind of. Pricing growth of 5% was offset by similar volume degrowth. Overall EBITDA for Q2 FY '27 stood at Rs. 126 crore, lower by 18% compared to Rs. 154 crore in Q2 of the previous year. Profit after tax stood at Rs. 85 crore versus 102 crore of Q2 FY '26, which is 17% lower than the same quarter of previous year. Crop Care revenue grew by 4% to 788 crore in Q2 FY '27 from 760 crore in Q2 FY '26 due to 6% price growth. EBITDA decreased by 2% to 126 crore in Q2 FY '27 from 129 crore in Q2 FY '26. PAT increased by 1% to 88 crore. Crop protection degrew by 3% and registered Q2 FY '27 revenue of 457 crore vis-à-vis 474 crore in Q2 FY '26, which was dragged by volume degrowth of 7%. Soil, plant, and health grew by 22% to Rs. 72 crore in Q2 FY '27 from Rs. 61 crore in Q2 FY '26, driven by price growth of 15% and volume growth of 7%. Demand for inorganic manure increased due to short availability of traditional fertilizers and import-dependent raw materials. Going to institutional category, total B2B revenue stood at Rs. 232 crore vis-a-vis 198 crore in Q2 FY '26, a growth of 17% primarily due to 8% volume growth and 9% price growth. Exports grew by 2.5% to 165 crore. There was lower demand for pendimethalin AI in Europe coupled with pricing challenges from China market. We also witnessed constrained availability of raw material partly due to supply chain disruption and prioritized allocation to India B2C crop protection business, which impacted volumes of select products, example, acephate, hexaconazole. There were also delays and uncertainty in shipping timelines due to port congestion and logistical challenges. CSM Q2 revenue displayed promising growth by lodging 12 times growth compared to the last year clocking a revenue of 27 crore this time, driven by rebound in PEKK sales volumes. Domestic B2B grew by 11% to 39 crore in Q2 FY '27 on a base of 35 crore of Q2 of previous year. Moving to seeds, seeds revenue grew degrew by 31% to 70 crore in Q2 compared to 101 crore of last year, Q2 FY '26. This was mainly due to 26% volume decline. EBITDA decreased almost to 0 in Q2 '27 from 25 crore of last year. PAT decreased to -4 crore from 16 crore of last year in the same quarter. Placement of millet, mustard, maize, and vegetable seeds were as per plan, but the acreages of paddy and cotton declined due to lack of water, leading to lower placement. On a positive note, north cotton farmers reported higher productivity coupled with healthy prices, strengthening confidence for future seed adoption and cotton cultivation. For the rabi seed production cycle, active planning and organized engagements are underway for pearl millet, paddy, maize, and sunflower. Coming to HY H1 performance, total H1 FY '27 revenue stood at 1,880 crore versus 1,818 crore of HY FY '26 last year, resulting in growth of 3%. Crop Care H1 '27 revenue clocked Rs. 14 85 crore versus 14 12 crore of H1 last year, resulting in growth of 5% primarily led by price growth. Seed revenue H1 revenues stood at Rs. 395 crore versus 406 crore of last year, resulting in a degrowth of 3% occurring due to volume decline of 6%. HY '27 EBITDA stood at Rs. 311 crore versus 304 crore of H1 last year, resulting in growth of 2% and H1 PAT of FY '27
Bhaskar Swaminathan (Rallis India Ltd): at ₹210 crore versus ₹197 crore of H1 of last year, resulting in growth of 6%. We are focused on accelerating priority brand growth through sharper market execution, targeted production product promotion and enhanced phygital, so with physical and digital engagement with farmers and channel partners. In crop care, key priorities include strengthening the go-to-market strategy, expanding customer reach, optimizing the product portfolio, and improving sales productivity through territory rationalization and cost efficiency. Digital engagement, customer feedback, and data-led market development will further strengthen channel effectiveness, deepen market penetration, and drive sustainable revenue growth and profitability. In Seeds, our primary focus will be on five strategic crops as mentioned earlier: cotton, maize, millet, mustard, and rice. A selective and concentrated approach in these crops is expected to drive operational scale and efficiency. Overall, we remain disciplined in improving capital efficiency across both fixed capital and working capital. At quarter end, our inventory levels remain elevated in comparison to the same quarter of last year. We expect capacity utilization to remain broadly stable, with growth driven by improved product mix, operational efficiencies, and higher value product offerings. We have cash liquid balance of about ₹211 crore as of 30th September '26. That concludes our opening remarks. We can now commence Q&A session. Thank you.
Moderator: Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press "*" and "1" on their touchtone telephone. If you wish to remove yourself from the question queue, you may press "*" and "2". Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rohit Nagraj from 361 Capital Limited. Please go ahead.
Rohit Nagraj (361 Capital Limited): Good morning and thanks for the opportunity. First question is, in terms of the sales returns, so have we accounted for the entire sales return during the quarter or will there be some sales return will be coming in Q3? And an allied question in terms of your perspective on how the channel inventories are currently, and will that have any repercussions on the rabi as well? Thank you.
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