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EID Parry (India) Ltd

| Q2 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤11th Nov 25

Summary : EID Parry faces sugar surplus and ethanol overcapacity challenges, but expects consumer business growth and policy support.

Management Perspective neutral : The current situation presents an extremely challenging time for the industry. We recalibrate ourselves with every change that comes. We expect the scenario to improve on the back of support from the government. We don't have any imminent plans on any capacity addition... There isn't clarity on a sustainable policy framework as of yet. We are in the midst of just assessing our strategy... This will take us perhaps a few more months.

Concall Report Analysis & Insights

Business Overview

  1. Global sugar market projected for mild surplus in Sugar Year 25-26 due to increased production.
  2. India's Q2 FY'26 saw lower crushing (3.66 LMT) and sugar production (27,000 MT) year-on-year.
  3. Consumer Product Group experienced 30% degrowth due to quota restrictions and lower pulse prices.
  4. Nutraceuticals segment turnover increased to INR 61 crores, partly due to an insurance claim.
  5. Q2 FY'26 EBITDA was INR 58 crores, and PBT was INR 31.42 crores, showing improvement.
  6. Ethanol sales were 409 lakh litres, with price realization at INR 67.50 per litre.

Future Growth Prospects

  1. Consumer business expects a growth phase with larger release quotas and stabilizing staple prices.
  2. Channel consolidation in consumer business aims for efficiency and future growth.
  3. Plans for new product categories and launches in the consumer products group are underway.
  4. Strategy revisit for consumer products explores convenience foods and snacking segments.
  5. Aspiration to significantly grow consumer business EBITDA percentage by end of decade.
  6. New strategy implementation for consumer business expected by Q1/Q2 next year.

Management Insights

  1. Global sugar market is in mild surplus, with Indian output up, but pricing may soften.
  2. Industry actively lobbies policymakers for Minimum Support Price revision and ethanol blending increase.
  3. Karnataka's additional cane price adds burden; monitoring policy response is crucial.
  4. Q2 crushing and sugar production were lower compared to the previous year.
  5. Consumer Product Group saw degrowth due to quota restrictions and lower pulse prices.
  6. Ethanol capacity utilization is expected to remain similar to last year (90%+).
  7. Government policy changes impacted ethanol investment returns; expect government support.
  8. Consumer business channel consolidation will impact Q3 volumes but aims for efficiency.
  9. No imminent plans for ethanol capacity addition due to significant overcapacity.
  10. Market downturn in pulses due to policy allowing larger imports, difficult to hedge.

Signs of Skepticism

  1. Management expects ethanol scenario to improve with government support, but no concrete policy changes are detailed.
  2. Consumer business channel consolidation is expected to impact Q3 volumes, but specific numbers are not provided.
  3. Nutraceuticals segment's strong Q2 turnover was largely attributed to a one-off insurance claim.
  4. No forward guidance was provided for consumer business growth numbers.

Risk Factors

  1. Global sugar market faces mild surplus, potentially softening sugar pricing.
  2. Brazilian sugar output risks persist due to adverse weather and productivity losses.
  3. Indian industry faces challenges from additional cane price in Karnataka and policy uncertainty.
  4. Significant overcapacity in the ethanol industry, especially grain-based distilleries, impacts utilization.
  5. Ethanol margins are strained by rising cane costs and stagnant ethanol prices.
  6. Consumer Product Group experienced degrowth due to release quota restrictions and lower dal prices.
  7. Lower dal prices (37-38% drop) are due to increased imports and government policy.

Good To Know

  1. The Q2 FY'26 earnings call was hosted by DAM Capital Advisors Limited.
  2. E.I.D.- Parry (India) Limited is part of the Murugappa Group.
  3. The company secretary is Mr. Biswa Mohan Rath.

Key Drivers

  1. Government policy support for ethanol pricing.
  2. Increased ethanol blending percentages.
  3. New product launches in consumer segment.
  4. Stabilization of pulse prices.

Key Analyst Discussions

Competitive Environment

  1. Analyst asked about potential oversupply of sugar or underutilization of ethanol capacity.
  2. Analyst questioned if industry challenges would impact the company's ethanol capacity utilization.

Market Trends & Consumer Behavior

  1. Analyst asked about channel consolidation in the pulses segment and its volume impact.
  2. Analyst inquired about lower realizations in the consumer group and stabilization expectations.
  3. Analyst asked about expectations for stable consumer product prices in Q3 and Q4.

Financial Highlights

  1. Analyst inquired about ethanol price hike expectations and margin impact from rising FRP.
  2. Analyst asked about the refinery's breakeven point given the white premium range.
  3. Analyst questioned the revenue distribution between sweetener and non-sweetener in consumer products.
  4. Analyst asked about hedging plans for lower price realization in pulses.

Product Composition

  1. Analyst asked about plans for new product lines or categories in the consumer group.
  2. Analyst inquired about the company's strategy for its ethanol mix (grain vs. molasses).

Strategic Considerations

  1. Analyst asked if the consumer business is considered the leading growth segment going forward.
  2. Analyst inquired about the 3-5 year strategy for the consumer group segment.
  3. Analyst asked about plans to grow in grain or multi-feed distillery base.
EID Parry (India) Ltd (EIDPARRY) Concall Report Analysis & Insights | Dhanarthi