Dwarikesh Sugar FY26: Revenue up, margins down, PAT supported by lower tax

Dwarikesh Sugar Industries Limited closed FY26 with higher revenue but weaker operating profitability. Total income for FY26 was INR 14,090.9 million versus INR 13,653.2 million in FY25. Revenue from operations increased to INR 14,019.4 million from INR 13,588.8 million, supported by higher sugar sales volumes and improved domestic realizations.

EBITDA, however, fell to INR 940.3 million in FY26 from INR 1,199.1 million in FY25, taking the EBITDA margin down to 6.7 percent from 8.8 percent. Despite the EBITDA decline, PAT improved to INR 308.4 million versus INR 233.4 million, which the company attributed primarily to a lower effective tax rate after transitioning to the new tax regime.

Q4 FY26: EBITDA softer, PAT stronger

In Q4 FY26, total income stood at INR 4,267.4 million versus INR 4,590.7 million in Q4 FY25. EBITDA declined to INR 878.8 million from INR 1,072.0 million, and EBITDA margin compressed to 20.7 percent from 23.4 percent.

PAT increased to INR 574.1 million from INR 463.3 million, with PAT margin rising to 13.5 percent from 10.1 percent. The quarter’s operating backdrop remained shaped by cane availability and the economics of ethanol off-take.

Sugar segment: better realizations, lower profitability

Sugar remained the largest contributor to operations. For FY26, sugar segment revenue from operations was INR 12,772.6 million compared with INR 12,592.3 million in FY25. Volumes also improved. Sugar sold in FY26 was 2,421.0 thousand quintals versus 2,350.0 thousand quintals in FY25.

Realizations were a key support. Average domestic sugar realization improved to INR 3,980 per quintal in FY26 from INR 3,834 per quintal in FY25. In Q4, sugar sold rose 10 percent year-on-year to 635.8 thousand quintals, and realization improved to INR 3,987 per quintal from INR 3,957 per quintal.

Yet profitability weakened. Sugar segment EBITDA declined to INR 450.2 million in FY26 from INR 692.4 million in FY25. The EBITDA margin dropped to 3.5 percent from 5.5 percent, reflecting the combined impact of higher cane costs and operating leverage pressures from reduced crushing.

The company noted that crushing for the full year declined 8 percent, from 262.97 lakh quintals to 243.2 lakh quintals. It also highlighted that the State Advised Price in Uttar Pradesh was increased by INR 30 per quintal for 2025-26, contributing to cost pressure.

Distillery and power: mixed signals, but power realization improved

The distillery segment saw a sharp quarter-on-quarter softness in Q4 FY26 on revenue. Revenue from operations for the segment was INR 1,319.6 million in Q4 FY26 compared to INR 1,895.6 million in Q4 FY25. EBITDA was INR 242.6 million versus INR 361.2 million, with EBITDA margin easing slightly to 18.4 percent from 19.1 percent.

For the full year, the company reported ethanol production of 60.3 million litres in FY26 compared with 55.0 million litres in FY25. Even so, segment revenue declined to INR 3,424.5 million from INR 3,830.3 million. EBITDA was relatively stable at INR 490.1 million in FY26 versus INR 506.7 million in FY25, with margin improving to 14.3 percent from 13.2 percent.

Management commentary pointed to weak off-take by Oil Marketing Companies, stating that volumes declined about 29 percent in Q4 FY26 and 8 percent in FY26 year-on-year. It also noted that reduced crushing impacted molasses availability, which constrained ethanol production and led to under-utilization of distillery capacity.

Power was a clearer positive during FY26. Power revenue for FY26 stood at INR 389.2 million compared to INR 319.7 million in FY25. The company attributed the improvement primarily to tariff revisions for power sold to Uttar Pradesh Power Corporation Limited. Average realization rose to INR 4.4 per unit in FY26 from INR 3.4 per unit in FY25, even as power generated and exported were marginally lower year-on-year.

Sector and outlook: cane availability and policy remain pivotal

The presentation outlined a volatile sector environment. Globally, sugar production for 2025-26 is estimated in the range of 181 to 190 million tonnes, with consumption around 177 to 178 million tonnes. The company also noted that global prices declined sharply during 2025-26 and averaged around 13 to 15 cents per pound in 2026.

In India, it cited net sugar production of about 28.2 million tonnes in 2025-26 after diversion of around 3 million tonnes for ethanol. It also highlighted policy movement on exports, noting that the government has announced a ban on sugar exports till 30 September 2026.

For the company, the key operational constraint during the year was reduced sugarcane availability. It attributed this to excessive rainfall during the crop growth phase, diversion of cane to jaggery units, and the phased withdrawal of the Co 0238 variety in Uttar Pradesh. While acknowledging that the newer varieties are still stabilizing, the company expects cane development initiatives to start yielding tangible results.

The company’s stated outlook is that a tightening domestic sugar balance sheet could support a rebound in sugar prices, keeping them firm in the near to medium term. If cane availability improves alongside more stable ethanol off-take, the operating leverage in both sugar and distillery could become a critical swing factor in future performance.