Rallis India Navigates Challenging Q2 FY26 with Strategic Resilience

Rallis India Limited, a prominent player in the Indian agrochemical sector, recently announced its financial results for the second quarter and first half of fiscal year 2026. The period was marked by significant operational headwinds, primarily due to abnormal and incessant rainfall across key agricultural states. Despite these challenges, the company demonstrated strategic resilience, with a notable improvement in profit after tax and a strong performance in its B2B and export segments.

For Q2 FY26, Rallis India reported a total revenue of INR 861 crores, a 7% decline compared to INR 928 crores in Q2 FY25. This downturn was largely attributed to lower demand for agrochemical products, increased sales returns, and crop damages caused by floods. However, the company's profit after tax (PAT) saw a 4% increase, reaching INR 102 crores against INR 98 crores in the previous year, with the PAT margin improving by 120 basis points to 11.8%. This indicates effective cost management and a favorable product mix amidst a difficult operating environment.

Segmental Performance: A Mixed Bag

The Crop Care segment, which encompasses crop protection and soil and plant health solutions, experienced a 3% degrowth in Q2 FY26, with revenue standing at INR 760 crores. Domestic B2C revenue decreased by 8%, while the Soil and Plant Health (SPH) segment saw a 20% decline due to regulatory disruptions in the biostimulants category and adverse weather. Conversely, the B2B segment delivered a strong performance, with revenue increasing by 14% year-on-year, driven by higher volumes from key products like Metribuzin, Pendimethalin, and Metalaxyl.

The Exports business emerged as a significant growth driver, registering a robust 33% increase in Q2 FY26, with revenues reaching INR 161 crores. For the first half of FY26, exports grew by an impressive 51% to INR 312 crores. This growth was primarily volume-led, benefiting from strategic expansion into new geographies and customer acquisition. The company noted that 85% of its technical supply exports are not impacted by US tariffs, providing a competitive advantage.

In contrast, the Seeds segment faced considerable challenges, with revenue decreasing by 29% to INR 101 crores in Q2 FY26. This decline was primarily due to supply chain constraints, particularly for maize in Tamil Nadu and neighboring states, and the impact of widespread adoption of illegal HTBt cotton varieties. Despite the revenue dip, higher gross margins and effective pricing helped mitigate the overall impact on the segment's profitability.

Financial Summary (Q2 FY26 vs Q2 FY25)

(Note: Exports Revenue for Q2 FY25 is estimated based on 33% growth for Q2 FY26 from the concall transcript.)

Strategic Initiatives and Future Outlook

Rallis India is actively pursuing several strategic initiatives to drive future growth and enhance resilience. The company launched new products like 'Deeweed' (herbicide) and 'Dodrio' (fungicide) in Q2, alongside new seed hybrids in cotton, rice, and maize, which have received positive market response. To address regulatory challenges in biostimulants, manufacturing has been moved in-house, a move expected to benefit organized players in the long term.

Management emphasized its focus on expanding the customer base and product portfolio, particularly in the seed segment, targeting five key crops: cotton, maize, millet, mustard, and rice. Digital initiatives are being leveraged to enhance market reach and penetration, while R&D efforts are being streamlined with a budget of INR 60-70 crores annually, focusing on modern breeding tools and securing new product registrations.

Looking ahead, the company anticipates a slightly better rabi season, contingent on the resolution of fertilizer supply issues. While pricing pressure is expected to persist due to market competition, normalized channel inventory suggests stable demand. Rallis India aims to achieve a 23-25% EBITDA margin in its seed business, reflecting its commitment to profitability and disciplined execution.

Conclusion: Navigating Headwinds with Strategic Clarity

Rallis India Limited's Q2 FY26 performance underscores its ability to navigate a challenging agricultural landscape marked by adverse weather and regulatory shifts. The company's strategic focus on B2B growth, export expansion, new product launches, and R&D rationalization positions it for sustained performance. Despite short-term headwinds, Rallis India is demonstrating strategic clarity and disciplined execution, aiming for long-term competitive and profitable growth.