/** blogpostTitle: Dharmaj FY26: Profitability Improves as Techncials Stabilise blogpostSlug: dharmaj-fy26 blogpostCoverImageUrl: null blogpostCoverImageDescription: Ultra realistic corporate finance cover image showing a clean desk with a laptop displaying a multi-panel dashboard. The dashboard includes a five-year upward revenue line from FY22 to FY26, a bar chart of EBITDA rising to FY26, and a small table style widget highlighting FY26 revenue ₹11,380 million, EBITDA ₹1,005 million, and PAT ₹547 million. On a second panel, show a segmented revenue mix donut with four slices labelled generically (branded formulations, domestic institutional, export institutional, active ingredients) and a gauge showing cash conversion cycle rising to 87 days. Background is a modern office with soft daylight, neutral colors, no logos, no readable brand names. blogpostShortTitle: Dharmaj FY26 earnings and FY27 outlook */

Dharmaj FY26: Profitability Improves as Techncials Stabilise

Dharmaj Crop Guard closed FY26 with stronger profitability, even as the operating environment stayed volatile. Revenue from operations rose to ₹11,380 million, up 20% year on year. The improvement was not just on the top line. EBITDA increased to ₹1,005 million, a 34% rise, and profit after tax grew 57% to ₹547 million. In Q4FY26, the company reported revenue of ₹2,338 million, with EBITDA at ₹106 million and PAT at ₹40 million, a clear turnaround from a loss in Q4FY25.

Management framed FY26 as a year of uneven seasonal demand and pressure on technical realisations through most of the year, followed by fresh uncertainty as the West Asia crisis affected crude-linked inputs and raw material availability. Against this backdrop, Dharmaj’s main achievement was a broad-based profit recovery, helped by better contribution margins and improving utilisation at the active ingredients facility commissioned in January 2024.

Segment mix: Institutional strength offsets branded softness

Dharmaj operates across three broad verticals: branded formulations (B2C), institutional formulations (B2B), and active ingredients (B2B). FY26 revenue contribution was described in the investor presentation with domestic institutional formulations as the largest vertical.

Branded formulations grew only 3% in FY26 to ₹1,979 million. Management attributed this to an uneven monsoon in late August and September 2025, followed by muted Rabi demand due to lower pest attacks and elevated channel inventories. The company maintained that underlying demand for its portfolio remained intact and expects normalisation in FY27.

In contrast, domestic institutional formulations rose 15% to ₹5,832 million, supported by steady performance through the year. Exports made a sharp comeback, with export institutional revenue up 58% to ₹834 million after a challenging FY25 affected by external disruptions.

Active ingredients scaled up meaningfully. Domestic active ingredients revenue increased 37% to ₹2,734 million, aided by improved capacity utilisation and a better product mix. A key strategic milestone highlighted by management was achieving profit before tax level break-even at the technicals unit during FY26.

The technicals plant: utilisation and mix become central

The Sayakha active ingredients and intermediates facility is a major part of Dharmaj’s evolution from a formulations-only player to an integrated agrochemicals company. The plant has cumulative capacity of 8,000 TPA, with 5,500 TPA multipurpose technical capacity and 2,500 TPA intermediates capacity. The company also outlined meaningful captive consumption. Intermediates have 70% to 75% captive consumption, while technicals have 25% to 30% captive consumption.

During the earnings call, management indicated technical plant utilisation of around 65% to 70% in FY26 and a target of around 75% in FY27. Profitability at the unit remains a work in progress. In Q&A, the company referenced technicals EBITDA margin of around 5% and suggested that 8% to 10% is achievable at optimum levels, but over a multi-year period.

What stood out is that management repeatedly positioned internal levers as the main drivers: utilisation, product mix, and increasing captive consumption within formulations. They argued this offers a more reliable path to margin improvement than relying on external pricing cycles, which were weak until February 2026.

Working capital: deliberate inventory build to protect Kharif

FY26 ended with visibly higher working capital. The CFO said closing inventory rose to ₹2,074 million from ₹1,385 million in FY25. The cash conversion cycle expanded to 87 days from 67 days. The company linked this to a deliberate decision in March 2026 to secure additional inventories to protect production continuity through the upcoming Kharif season, given uncertainty in input availability and pricing due to the West Asia crisis.

This decision also affected borrowings mix. Long-term borrowing reduced to ₹510 million from ₹641 million, while short-term working capital borrowing increased to ₹809 million from ₹514 million. Despite this, reported debt to equity remained at 0.29x.

From an investor lens, this is a key monitoring point for FY27. Management expects the cycle to ease as inventory is consumed, but that will depend on the pace of the season and the stability of supply lines.

Capacity and growth agenda: herbicides unit and branded recovery

Dharmaj’s next operational project is a dedicated herbicides facility near its formulations site at Kerala GIDC, Ahmedabad. In the investor presentation, management indicated commissioning towards the end of Q3FY27. In the concall, management explained that the initiative is driven by space constraints and movement issues at the existing site. The plan is to shift herbicide production to the new location and use the freed-up capacity to expand insecticide and fungicide formulations throughput.

Capex guidance for FY27 was stated at around ₹50 crore. Management also reiterated a focus on scaling exports through product registrations, noting export registrations and pipeline in the presentation. While the company did not quantify FY27 export contribution, it described export growth as a continuing priority.

On the branded side, management expects a return to stronger growth if seasonal conditions normalise. They highlighted increased marketing activity, including the appointment of Rohit Sharma as a brand ambassador from March onwards, and continued on-ground demand generation through farmer meetings and demonstrations.

Takeaways for investors

FY26 shows Dharmaj moving from a volatile, cycle-hit year toward a more balanced earnings profile. The financial results reflect operating leverage and better contribution margins, while the active ingredients plant moved to an important break-even milestone. However, the year-end inventory build and stretched cash conversion cycle introduce a near-term execution test.

For FY27, management guidance is clear: 18% to 20% revenue growth, modest EBITDA margin improvement of 0.5% to 0.75%, and around ₹50 crore of capex. The investment case will likely hinge on three proof points: branded formulations growth returning, technicals profitability improving with higher utilisation and mix, and working capital normalising after the pre-Kharif inventory decision.