Balrampur Chini Mills Q4 FY26: Higher cane costs, steady sugar prices, and a PLA buildout

Balrampur Chini Mills Limited closed Q4 FY26 with revenue growth, but with visible pressure on profitability as sugarcane costs moved higher in Uttar Pradesh. On a consolidated basis, revenue for Q4 FY26 rose to INR 1,603.99 crore from INR 1,503.68 crore in Q4 FY25. Profit before tax declined to INR 236.17 crore from INR 311.70 crore, with the PBT margin falling to 14.72% from 20.73%.

Management attributed the margin compression largely to the year-on-year hike in the state advised price of sugarcane in Uttar Pradesh, which increased from INR 370 per quintal to INR 400 per quintal. Higher sugar sales volumes and a marginal improvement in realisations partly cushioned the impact, but could not fully offset the higher cane cost.

A quarter where volumes helped, but costs dominated

In the sugar segment, Q4 FY26 revenue increased to INR 1,616.01 crore from INR 1,447.32 crore in Q4 FY25, supported by higher sales volumes. Total sugar sales rose to 21.42 lakh quintals from 19.95 lakh quintals, while average sugar realisation improved to INR 40.83 per kg from INR 40.47 per kg.

Operationally, cane crushed in Q4 FY26 was 622.18 lakh quintals, up 1.6% year-on-year. However, recovery metrics softened. Net sugar recovery decreased to 9.62% from 9.76%, and recovery before diversion edged lower to 11.59% from 11.68%. The company explicitly highlighted that higher cane prices were the primary driver behind lower margins in Q4 FY26 and FY26.

The distillery segment’s operating environment remained mixed. The presentation and the concall both noted that ethanol prices for juice and B-heavy routes have not been revised for three consecutive years, limiting margin expansion despite higher activity levels. For Q4 FY26, distillery segment revenue declined to INR 501.18 crore from INR 530.05 crore, while FY26 revenue rose to INR 1,720.97 crore from INR 1,430.01 crore in FY25.

Core financial snapshot

Ethanol: volumes rising, pricing still the constraint

Balrampur’s distillery metrics show a continued pivot towards multiple feedstocks. FY26 ethanol production from B-heavy molasses rose to 9.66 crore bulk litres from 7.20 crore bulk litres in FY25. Grain route ethanol production rose to 4.75 crore bulk litres from 1.73 crore bulk litres. Ethanol sales volumes in FY26 increased to 26.56 crore bulk litres from 23.44 crore bulk litres.

However, management repeatedly pointed to the absence of a pricing revision for juice and B-heavy ethanol routes. The company described conversations with the government as positive, but did not provide a quantified expectation for a revision. This remains a key variable for distillery profitability.

The presentation also provided an update on the broader ethanol blending programme. During ESY 2024-25, supply was about 1003 crore bulk litres till 31 October 2025 against contracted quantity of about 1131.7 crore bulk litres, resulting in ethanol blending of about 19.24%. For ESY 2025-26, OMCs contracted about 1048.4 crore bulk litres of ethanol, with the government working on a roadmap for Beyond E-20.

PLA project: capex revised, timeline reiterated, market seeding underway

The company’s largest strategic initiative remains its Poly Lactic Acid project, positioned as India’s first PLA plant at 80,000 tonnes per annum capacity. The board approved a revision in the project’s estimated gross capex from INR 2,850 crore to INR 3,080 crore, citing cost escalation of about INR 230 crore due to higher construction material costs, supply chain disruption, and design changes during model review.

Management reiterated that commissioning is expected in Q3 FY27. As of 30 April 2026, the company had spent about INR 1,718 crore, with civil erection about 87% complete, structural erection about 47% complete, and equipment erection about 27% complete. The company also reported that about 94% of imported equipment had arrived at site.

The company disclosed that PLA business development is underway using imported PLA, including outreach under the Bioyug initiative. The presentation states 175+ customers have been targeted, the company is catering to 100+ customers, 30+ customer trials are ongoing, and 25+ trials have been completed. A pipeline exceeding 80,000 tonnes per annum is anticipated by end of 2027.

In FY26, the PLA segment reported a PBIT loss of INR 16.72 crore, reflecting pre-operating costs including business development expenses and free samples.

Funding and balance sheet actions around the transformation

On 23 April 2026, the company announced a preferential equity issue of up to INR 450 crore at INR 483 per share, subject to shareholder approvals. The issue includes promoter and promoter group participation along with multiple non-promoter funds.

Separately, the company disclosed a treasury update with reaffirmed credit ratings of AA+ (stable) and A1+ by CRISIL, and IND AA+/Stable and IND A1+ by India Ratings. As of 31 March 2026, long-term borrowings were disclosed at INR 97.50 crore for the existing business and INR 903.00 crore for PLA. For the PLA term loan, repayment is stated to commence from Q3 FY29 in 20 equal quarterly installments.

The company also approved an additional project that complements PLA operations: a lactogypsum processing plant at Kumbhi with capex up to INR 160 crore and installed capacity of about 76 lakh gypsum boards per annum. Commercial production is expected to begin by December 2027, subject to approvals.

What to track from here

Balrampur’s FY26 narrative is increasingly defined by two forces. The first is the near-term profitability of the core sugar and distillery businesses, which remains heavily influenced by government policy on cane pricing, ethanol pricing, and exports. The second is execution quality on the PLA project, where the company has provided a clear commissioning target and detailed progress disclosures.

In the concall, management maintained a balanced tone. It acknowledged the near-term reality of margin pressure from higher cane prices and the lack of ethanol price revisions. At the same time, it emphasized supportive domestic sugar prices due to lower expected closing stocks, and reiterated confidence in the integrated advantage for PLA based on feedstock and energy proximity.

If commissioning remains on track for Q3 FY27 and utilisation ramps to meet the incentive-linked thresholds under the Uttar Pradesh Bioplastic Industrial Policy 2024, the PLA project could become the company’s most meaningful strategic shift in years. For now, the financial performance continues to reflect a traditional integrated sugar cycle, with transformation capex layered on top.