Zuari Industries Ltd Q3 FY26 Earnings Analysis

- Ethanol capacity at Zuari Industries is currently 125 klpd, fully operational with 85% capacity utilization; new 180 klpd distillery at Zuari Envien Bioethanol is about to be commissioned. - Plans to ramp up bioethanol capacity at ZEBPL to 1000 klpd over the next 3-5 years, subject to regulatory and market conditions. - Ethanol sales volume increased by 7.6% in Q2 and 24.8% over half-year; ethanol production up 44% quarterly. - Sugar sales volumes decreased from 4.2 lakh to 3.6 lakh quintals in Q2, but sugar realizations and margins improved. - Real estate segment (DM projects) growing with projects like Gangotri and Texmaco Rail (GDV > INR 2000 crores each) under revenue-sharing model, with monthly billing revenue recognition. - Moderate export sales budgeted for sugar; domestic sugar sales expected to remain stable, driven by consumption ~28 million tons. - Continuous capacity enhancement and operational improvements planned in sugar and ethanol sectors. - Focus on debt reduction and monetization of real estate and Dubai projects to fuel growth investments.

- Zuari Industries expects EBITDA margins of 10-12% to be comfortable in the sugar sector, despite some pressure from recent cane price hikes. - Ethanol production and sales have shown strong growth, with a 44% increase in production quarter-on-quarter; bioethanol is viewed as a key growth area linked to India's energy transition. - The ethanol distillery capacity is fully operational at 125 klpd with a new 180 klpd plant (ZEBPL) about to commission, targeting 1000 klpd capacity in 3-5 years depending on policy. - Real estate segment shows strong momentum with 95% completion of Phase 4 and ongoing projects; pursuing asset-light, high-margin DM business. - Strategic focus is on balancing capital allocation across sugar, real estate, and bioethanol while prioritizing debt reduction for sustainable profits. - Overall, the company is optimistic about margin improvement, growth in sales volumes, and leveraging new capacity for future earnings enhancement.

- Zuari Industries plans capital allocation over the next 3-5 years focusing on three key verticals: • Sugar sector – improving existing capacities and exploring organic/inorganic growth opportunities. • Real estate – pursuing an asset-light model, growing the DM (Development Management) business, which is high margin. • Bioethanol – bullish on the mid-to-long-term bioethanol energy transition story in India; capital allocation will depend on policy and macroeconomic environment. - Zuari Envien Bioethanol Private Limited (ZEBPL) is commissioning a 180 klpd distillery, with plans to expand capacity to 1000 klpd in 3-5 years subject to regulatory evolution. - Real estate projects including Gangotri and Texmaco Rail have GDVs over INR 2,000 crores each, generating revenue via revenue sharing (approx. 7% of top line). These are on a service/consultancy model rather than direct development. - Strategic investments worth INR 4,680 crores are currently held in fertilizer, real estate, and rail businesses with no immediate plans to monetize.

- The company’s immediate priority is to deleverage its balance sheet by utilizing expected monetization events that will generate surplus cash for debt reduction (Page 13). - There is no explicit mention of new fundraising through debt or equity in the call. - The focus over the next 3-5 years is on capital allocation towards growth in sugar, real estate (asset-light DM business), and bioethanol sectors, dependent on policy and macroeconomic environment (Page 13). - The company is aiming to bring down gross external debt from INR 1,863 crores (as of Sept 30) by approximately INR 800 crores through cash inflow from the Dubai project in the next financial year starting April (Page 15-16). - No immediate plans for buybacks or equity fundraising were indicated; deleveraging and organic/inorganic growth are the main priorities (Page 13).

- For the real estate Phase 4 project, out of 156 plots, about 98 have been booked. - Total project revenue for Phase 4 is around ₹90 crores, to be recognized upon handover of units. - Zuari Infra's Gangotri and Texmaco Rail projects have Gross Development Values (GDV) of over ₹2,000 crores each. - Zuari Infra earns around 7% of the top line as revenue sharing from these projects. - Revenue recognition for these projects happens monthly or quarterly based on contract tenure. - Zuari's ethanol business received full allocation (100%) in recent OMC tenders, underlining strong order visibility. - No specific numeric consolidated order book was disclosed beyond these project details.