Kriti Industries Navigates Monsoon Challenges, Eyes Strategic Growth

Kriti Industries (India) Limited, a key player in the polymer piping sector, recently released its Q2 and H1 FY26 financial results, painting a picture of a company grappling with significant external headwinds while simultaneously laying strategic groundwork for future growth. The management candidly acknowledged that the quarter’s performance would likely disappoint stakeholders, as sales declined and profitability was impacted by unforeseen circumstances.

For the second quarter of the financial year 2026, Kriti Industries reported a total revenue of INR 85.7 crore, marking a substantial 27% year-on-year decrease. The company also registered an EBITDA loss of INR 4.2 crore and a net loss of INR 9.7 crore. The first half of FY26 saw total revenue at INR 309.8 crore, a 17.3% decline compared to the previous year, with EBITDA falling to INR 11 crore, representing a 62.6% drop. The net loss for H1 FY26 stood at INR 2.4 crore. This downturn was primarily attributed to unprecedented extended monsoon rains in key agricultural sales regions, which disrupted construction activities and dampened rural demand, impacting both the agricultural and building products segments. Sales volumes across the company declined by 26% in Q2, with the agricultural and building products segments experiencing a 33% year-on-year reduction each.

Segmental Performance and Market Dynamics

The agricultural segment, which constitutes a significant portion of Kriti Industries' revenue, was particularly hit. Sales in this segment declined by 33% year-on-year in Q2, primarily due to the delayed and uneven monsoon, which led to cautious channel stocking. Similarly, the building products segment also saw a 33% decline, as continuous rainfall disrupted construction activities and dampened retail sentiment. In contrast, the industrial solutions segment showed resilience, delivering 1,252 MT in sales volumes, supported by institutional orders and steady project demand, registering a strong 64% growth year-on-year. The micro-irrigation segment, though smaller, also contributed to the overall revenue.

Management noted that the company's decline was sharper compared to the broader industry, largely due to its geographical concentration in Madhya Pradesh, Rajasthan, and Maharashtra. These regions experienced widespread rains from May through October, an unprecedented situation that significantly impacted demand. However, despite the overall market softness, Kriti Industries managed to improve its per-unit realization by focusing on selling appropriate products. The company also estimates an increase in its market share in Madhya Pradesh, moving from approximately 50% to 58-59%, indicating strong brand loyalty and market presence even in challenging times.

Strategic Initiatives and Future Outlook

Recognizing the challenges posed by geographical concentration, Kriti Industries is actively pursuing strategic initiatives to diversify its revenue streams and enhance its market position. The company is working on expanding its presence in new geographies beyond its traditional core markets. This move is expected to mitigate risks associated with localized demand fluctuations and tap into new growth opportunities. Additionally, there is a strong focus on aggressively developing the building material segment, which is projected to witness substantial growth over the next six to seven years due to rapid urbanization and increasing infrastructure projects.

Kriti Industries has also undertaken significant capital expenditure (CAPEX) plans. The company has raised approximately INR 150 crore from investors and promoters, with about 50% of warrants already converted. Around INR 67-68 crore has been deployed in CAPEX, with further investments planned. Management emphasized a sequential and watchful approach to CAPEX deployment, ensuring each step is firmly established before proceeding. This disciplined capital allocation is expected to support the company's strategic growth initiatives and enhance operational capabilities.

Management's Vision and Market Confidence

Despite the current setbacks, management expressed confidence in the company's ability to improve performance going forward. They are actively analyzing market data and taking informed steps to leverage their market leadership and brand strength. The stability of resin prices during the quarter also prevented inventory losses, providing some relief. Management anticipates a revival in demand post-Diwali, with positive signs emerging from early November. They expect the building material industry, particularly in the medium sector, to perform much better in the next year, and foresee positive demand prospects for agriculture, especially up to summer, given adequate water supply.

The company's leadership team is well-structured, with a professional CEO, individual vertical heads, and regional in-charges, ensuring clear responsibilities and strategic execution. Kriti Industries is committed to achieving a differentiated presence in the market through its key strategic initiatives. The management believes that these efforts, once stabilized over the next couple of months, will have a substantial positive impact on both the top line and bottom line in the coming year, reinforcing investor trust and positioning the company for sustained growth in the long term.