Best Agrolife (539660) Q2 25/26 earnings summary

Executive summary

• Q2 and H1 FY26 revenue declined sharply year-over-year due to erratic and excessive rainfall, impacting agrochemical demand, especially in key regions, but operational discipline, inventory control, and a focus on patented products improved resilience and revenue mix.

• Patented products now contribute 51% of branded sales, up from 38% in Q2 FY25, supporting margin resilience and improved quality of revenue.

• Operational stabilization led to a 24% year-over-year reduction in inventory and a 13% decrease in operating expenses in Q2 FY26.

• Management implemented a revised sales return policy and reduced pre-season order placements, leading to lower sales returns and improved financial discipline.

• Strategic restructuring across regional operations improved sales team productivity and reduced OPEX.

Financial highlights

• Q2 FY26 revenue was ₹516.8 crore, down 30.8% YoY from ₹746.6 crore, with gross margin at ₹169.6 crore, EBITDA at ₹77.5 crore (margin 15%), and PAT at ₹38.9 crore (margin 7.56%).

• H1 FY26 revenue was ₹898.1 crore (down from ₹1,265.9 crore YoY), EBITDA margin was 13.7%, and diluted EPS for H1 was 24.89 (down from 49.03 YoY).

• Inventory reduced by ₹207 crore YoY to ₹666 crore, and OPEX was cut by 13% YoY in Q2 and 11% in H1.

• Standalone Q2 FY26 revenue was ₹365.16 crore; profit for the period was ₹38.33 crore.

• Debt to equity ratio at 0.89; net debt to equity at 0.44 as of H1 FY26.

Outlook and guidance

• Management expects volume growth to recover in H2 FY26, driven by improved farmer sentiment, strong demand for wheat and potato crop solutions, and a positive Rabi season outlook due to ample groundwater and full reservoirs.

• FY26 turnover is guided at around ₹1,500 crore, with targeted EBITDA margin of 13%-14%.

• Anticipates significantly lower sales returns in Q3 FY26 due to revised sales return policy and in-season order placement.