Modi Naturals LtdQ3 FY24Agricultural Food & other Products

Modi Naturals Ltd

Q3 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 1

Margin

Category 1

Fundraise

Yes

Order

Capex

Yes

4 of 5 growth signals are positive — a strong management growth story.

Revenue guidance

Category 1

→FY25: Guided for 75% revenue growth, targeting Rs. 700 crore consolidated revenue (from Rs. 400 crore in FY24).
→FY26-27: High growth expected driven by Ethanol and Consumer divisions.
→Ethanol division capacity expansion from 130 KL to 310 KL by H2 FY26 will boost growth for FY26 and FY27.
→Consumer division anticipated to continue consistent growth with increased ad spends and new product launches.
→Bulk business margins expected to improve; steady EBITDA margin targeted around 5%-6%.
→Overall focus on scaling Consumer division via quick commerce, modern trade, and general trade channels.
→New products like multi-grain pasta, peanut butter, and ready-to-mix beverages are being scaled up.
→Revenue split expectation FY25: Consumer Rs. 210 crore, Bulk Rs. 215 crore, Ethanol Rs. 275 crore.

Category 1

→Modi Naturals forecasts a consolidated revenue growth of 75% for FY25, targeting Rs. 700 crores (up from Rs. 400 crores in FY24).
→EBITDA for FY25 is guided at Rs. 50 crores, with PAT expected at Rs. 30 crores, a significant improvement from prior years.
→The Ethanol division is expected to maintain 10-12% EBITDA margins in the near-to-medium term, with potential operational leverage as new capacity comes online in H2 FY26.
→ROCE for FY25 is approximately 18.5% on a consolidated basis, suggesting healthy capital efficiency.
→Expansion of Ethanol capacity from 130 KL to 310 KL by H2 FY26 will contribute to growth in FY26 and FY27.
→Consumer division growth is supported by increased ad spends, new product launches, and expanded distribution, targeting faster growth.
→The Bulk division is expected to stabilize EBITDA margins around 5-6% moving forward, recovering from past losses.

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Yes

→For the ethanol capacity expansion (Rs 100 crore CAPEX), about Rs 50 crore is expected to be funded through internal accruals.
→The remaining Rs 50 crore will be raised either through debt or equity.
→The management has not yet made a final decision on the mix of debt and equity for this funding.
→No specific mention of any immediate or additional fundraising through debt or equity beyond this planned capital raise.

→The company has received a confirmed order for 41,600 kiloliters in the Ethanol division.
→This confirmed order comes with purchase orders released quarterly, starting with the 1st quarter.
→The total order value is approximately Rs. 300 crores, translating to around Rs. 72 per liter based on current tender prices.
→Price adjustments during the year can occur through corrigenda, though none have been issued yet.
→There is no expectation of a shortfall from the allocated order volume, barring operational inefficiencies.

Yes

→Modi Naturals Limited is expanding its Ethanol division capacity from 130 KLPD to 310 KLPD, adding 180 KLPD.
→Estimated capital expenditure for this expansion is approximately Rs. 100 crores.
→Engineering work for the new plant is completed; construction is expected to start around Q3 FY25 and complete by the second half of FY26.
→Funding for the Rs. 100 crore capex will be partly through internal accruals (around Rs. 50 crores) and the remainder via debt or equity, with the final decision pending.
→The company plans increased ad spends and investments in the Consumer division, aiming for faster growth fueled by enhanced cash flows.
→No current plans for further capacity expansion beyond the 310 KLPD ethanol plant at the current location have been considered yet.

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