Modi Naturals Ltd Q3 FY26 Earnings Analysis

- **Consumer division:** Anticipated growth driven by new products like ready-to-eat snacks and expanded presence in Tier 2 and Tier 3 markets. - **Ethanol division:** Expected strong growth supported by favorable industry dynamics, capacity expansion to 310 KLPD starting December 2025, and growing fuel consumption (motor spirit up by 8% YoY). - **Bulk division:** Expected improvement in the second half of the year due to fresh crop arrivals and price normalization. - **Overall revenue:** Modest growth in H1 FY’26 with confidence to meet full-year guidance despite short-term GST disruptions. - **Long-term target:** FMCG division aims to reach INR 500 crores in revenue over the coming years. - **Volume disclosure:** Management currently does not share volume data but acknowledges underlying volume growth.

- Modi Naturals is confident of achieving their full-year guidance for FY’26 with no upward revision announced yet but they are on track. - They expect a stronger performance in H2 FY’26 driven by growth from all three divisions (consumer, bulk, ethanol). - Bulk division is expected to be materially stronger in H2 due to fresh crop arrivals and price normalization. - Ethanol division expects good growth in FY’27 with optimum capacity utilization post expansion and capacity stabilization. - FMCG division aims for long-term growth to reach INR 500 crores revenue, focusing on premiumization, marketing, new products (e.g., ready-to-eat snacks), and expanding presence in Tier 2/3 cities. - Advertising investments are strategic for future brand strength and volume growth. - Operational leverage from ethanol capacity expansion expected to improve margins and EBITDA in FY’27. - Management has not provided specific FY’27 EPS or operating profit guidance yet.

- Modi Naturals is currently undergoing a major capacity expansion in its ethanol division. - The second phase of the 180 KLPD ethanol plant expansion is under trial and expected to start operations by December 2025. - Upon completion, total ethanol capacity will increase to 310 KLPD. - Future plans include raising capital if needed, though currently the company is fairly okay on the capital front. - Management expects strong internal approvals over the next 12 to 18 months to manage borrowings and capital needs. - The company is also looking at entering the ready-to-eat snacking segment with new products in the pipeline. - The overall strategy includes continued investment in marketing and advertising to drive brand visibility and consumer engagement.

- Modi Naturals currently has the option to raise capital if needed but is fairly okay on the capital front at the moment. - They expect strong internal approvals over the next 12 to 18 months, which should help manage most of their financing needs, including the option to pay borrowings early. - No explicit mention of immediate plans for new fundraising through debt or equity was made during the call. - The company is confident in handling borrowings and capital without requiring additional fundraising at this point.

- Modi Naturals has secured substantial business visibility ahead of the next ethanol supply year (ESY). - They have confirmed orders for 49,700 KL of ethanol along with by-product orders worth INR 400 crores from OMCs in the October 2025 cycle 1 tender. - Additional orders are expected in subsequent tenders to fully utilize their expanded ethanol capacity. - For the expanded capacity (310 KLPD), some orders are already secured for the first quarter, with plans to secure more in cycle 2 and cycle 3 tenders. - The company remains confident of fulfilling capacity utilization through existing and upcoming tenders despite overall sector overcapacity concerns.