Dharmaj Crop Guard Ltd (BOM:543687) (Q2 2027) Earnings Call Highlights: Flat H1 Revenue, 50% ...

Negative Points

• Q2 FY'27 revenue declined 4% year-on-year to INR332.6 crore, with EBITDA down 20% and PAT down 24%.

• Technical business revenue declined 27% in Q2 and 20% in H1 due to West Asia crisis impacting input pricing and demand.

• EBITDA margin contracted to 7.3% in Q2 from 9.2% last year, and gross margin fell to 18.6% from 21.8% due to higher input costs.

• Full-year revenue growth guidance cut to single-digit from earlier 18-20% due to weak monsoon and slow recovery in technical market.

• Weak monsoon and low reservoir levels may continue to impact domestic rabi season demand, posing risk to H2 performance.

Q & A Highlights

Q: Given the weak H1 and the monsoon setback, how is Dharmaj positioning itself for FY28, and how will it revive formulation growth? A: CFO Vikas Agarwal said the weak season is largely behind the company and management is confident of staying on track for its Vision 2030 target of INR2,000 crore turnover. MD Rameshbhai Talavia added that the company sells need-based material, so channel inventory and sales returns are not a major concern, and growth in FY28 will come from technical molecule additions, export registrations and a normal monsoon-driven recovery.

Q: With the technical business down 27% in Q2, what is the strategy to scale technicals and support the INR2,000 crore vision? A: MD Rameshbhai Talavia said the company is building an integrated ecosystem where technicals produced in-house are largely consumed captively by its strong B2B formulation and B2C branded businesses. New products from R&D and the pilot plant are being added, with the aim of maximizing captive consumption and keeping the plant fully utilized, while only surplus technicals are sold in the merchant market.

Q: What is the revised revenue growth guidance for FY27 after the weak monsoon? A: MD Rameshbhai Talavia said the earlier 18%20% growth expectation assumed a normal monsoon. With 2026 rainfall at 87% of the long-period average the fourth lowest since 2001 and weakest since 2015 and a subdued technical market, the company now expects single-digit revenue growth for FY27.

Q: How did Dharmaj perform in H1 FY27 despite the weak Kharif season? A: MD Rameshbhai Talavia said H1 FY27 revenue from operations stood at INR716.7 crore, flat year-on-year, with EBITDA of INR81.6 crore at an 11.4% margin versus 11.5% last year. Profit after tax grew 3% to INR51.3 crore, showing the company held its top line and margins and grew profit in a rain-deficit season.

Q: Why did Q2 FY27 margins contract, and when is recovery expected? A: MD Rameshbhai Talavia said Q2 EBITDA margin fell to 7.3% from 9.2%, with gross margin at 18.6% versus 21.8%. Two factors drove this: higher-priced raw material bought after the West Asia crisis is now flowing through cost of goods, and technical segment margins are depressed. The company is working to pass on higher costs to end customers over Q3 and expects technical margins to recover in coming quarters.

Q: How did the formulation and export verticals perform in Q2 and H1 FY27? A: MD Rameshbhai Talavia said institutional formulation grew 2% year-on-year in Q2 and 3% in H1, while branded formulation grew 5% in Q2 and 2% in H1, held back by weak on-ground consumption. Exports were flat year-on-year in Q2 but grew 50% in H1 to INR60 crore, now forming 8% of revenue versus 6% last year, and are expected to remain a growth driver in H2.

Q: What caused the Q2 revenue decline, and how is the technical business being managed? A: MD Rameshbhai Talavia said Q2 revenue fell 4% year-on-year to INR332.6 crore, entirely due to the technical business, which declined 27% in Q2 and 20% in H1 amid tepid merchant-market realizations. Active ingredient production has been aligned with captive formulation requirements to protect blended profitability and keep the plant utilized, and the company will stay agile until the external environment normalizes.

Q: What are the key priorities for the second half of FY27? A: MD Rameshbhai Talavia outlined three focus areas: pushing higher exports to sustain the domestic formulation business, restoring technical margins through better cost pass-through, and commissioning the new herbicide formulation facility near Kerala GIDC, Ahmedabad, which remains on track and will free up capacity at the existing site ahead of the next Kharif cycle.

Q: How has the revenue mix shifted in H1 FY27? A: CFO Vikas Agarwal said institutional formulation contributed 55% of H1 revenue, branded formulation 19%, exports 8% and technicals 18%. Compared with H1 FY26, the technical share fell from 22% while exports rose from 6%, reflecting the deliberate shift toward captive use of technicals and stronger export momentum.

Q: What is the state of the balance sheet and working capital as of September 30, 2026? A: CFO Vikas Agarwal said inventory fell to INR174 crore from INR207.4 crore in March as Kharif raw material stock was consumed, and trade receivables stood at INR409.9 crore versus INR450.8 crore a year earlier. Gross debt was INR119 crore with gross debt-to-equity at 0.24x versus 0.29x in March, net worth was INR500.5 crore, and capital work-in-progress rose to INR11.7 crore on spending for the new facility.

Q: How did profitability and finance costs trend in Q2 and H1 FY27? A: CFO Vikas Agarwal said Q2 operating expenses fell 14% year-on-year to INR37.6 crore, partly cushioning the margin hit, while finance costs dropped 27% to INR3.3 crore. Q2 PBT fell 21% to INR17.7 crore and PAT fell 24% to INR13.3 crore, with EPS at INR3.93 versus INR5.13. For H1, finance costs fell 22% to INR5.9 crore, PBT grew 3% to INR68.6 crore, and EPS rose to INR15.19 from INR14.78.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .