India Pesticides Limited Q2 PAT falls 42% on lower sales

India Pesticides Limited reported profit after tax (PAT) of Rs 18 crore in the second quarter (Q2) of financial year (FY) 2027, down 41.7% year on year, as total income fell 21.6% to Rs 231 crore and operating profitability declined despite a 50.5% gross-profit margin.

Why did IPL’s Q2 FY2027 profit decline?

IPL’s Q2 FY2027 profit decline reflected lower sales and a steeper reduction in operating earnings. Total income was Rs 231 crore, compared with Rs 295 crore in Q2 FY2026 and Rs 256 crore in Q1 FY2027. Earnings before interest, tax, depreciation and amortisation (EBITDA) declined to Rs 33 crore from Rs 54 crore a year earlier and Rs 39 crore in the preceding quarter.

The reduction in profitability exceeded the decline in sales. PAT fell by Rs 14 crore year on year to Rs 18 crore, while EBITDA fell by Rs 21 crore. EBITDA margin declined to 14.4% from 18.2% in Q2 FY2026 and 15.4% in Q1 FY2027, while PAT margin reduced to 8.0% from 10.7% and 8.9%, respectively.

Management said lower sales, higher employee expenses and volatility in raw-material prices weighed on profitability. It also cited geopolitical uncertainty, softer overseas demand and deficient or erratic rainfall in several Indian agricultural states. Earnings before interest and tax (EBIT) were Rs 27 crore, compared with Rs 48 crore in Q2 FY2026, and EBIT margin reduced to 11.8% from 16.3%.

What happened to IPL’s margins in Q2 FY2027?

IPL’s gross-profit margin improved, but EBITDA and PAT margins declined. Gross profit was Rs 117 crore in Q2 FY2027, 11.2% below Rs 132 crore in Q2 FY2026, while gross-profit margin rose to 50.5% from 44.6%. The margin also exceeded 49.6% in Q1 FY2027, when gross profit was Rs 127 crore.

The divergence between gross margin and EBITDA margin shows the effect of expenses after gross profit. Gross profit declined by Rs 15 crore year on year, compared with a Rs 21 crore fall in EBITDA. Management identified higher employee expenses, raw-material price volatility and lower sales as the factors affecting quarterly profitability.

The first half (H1) FY2027 result showed the same pattern. H1 gross profit fell 5.8% to Rs 244 crore from Rs 259 crore, but gross-profit margin increased to 50.0% from 44.7%. H1 EBITDA nevertheless declined 32.5% to Rs 73 crore, and EBITDA margin reduced to 14.9% from 18.6%.

H1 PAT was Rs 41 crore, compared with Rs 67 crore in H1 FY2026, a decline of 38.1%. PAT margin fell to 8.5% from 11.5%, while earnings per share declined to Rs 3.57 from Rs 5.78. The six-month figures therefore show higher gross-profit conversion before operating costs but lower conversion into operating and net profit.

Which markets and segments affected IPL’s revenue?

IPL said deficient and erratic rainfall disrupted cropping cycles and reduced herbicide application across several Indian agricultural states during Q2 FY2027. Domestic revenue represented 62% of quarterly revenue, while exports accounted for 38%. Management also identified softer overseas demand as a factor affecting conditions during the quarter.

Technicals plus active pharmaceutical ingredients (APIs) represented 51% of Q2 FY2027 revenue, while formulations contributed 49%. The presentation reported Rs 115 crore of Technicals plus API revenue and Rs 111 crore of formulation revenue. For comparison, Technicals plus API revenue was Rs 746 crore in FY2026, while formulation revenue was Rs 311 crore for that full year.

IPL’s exposure to herbicide demand is linked to its Sandila facility, which produces herbicides and has technical capacity of 26,100 metric tonnes per annum (MTPA). Management specifically linked rainfall disruption to lower herbicide application. The Dewa Road facility produces fungicides and had technical capacity of 2,100 MTPA and formulation capacity of 6,500 MTPA as of 30 September 2026.

IPL received Technical Equivalence approval for an insecticide product in the United Kingdom and registration for a herbicide product in Argentina during Q2 FY2027. Management said the approvals create opportunities to engage new customers, broaden the export portfolio and commercialise products in additional geographies. It also said IPL had received good export orders for the coming quarter, without giving their value or delivery timing.

What do IPL’s cash position and expansion plans show?

IPL reported cash and bank balances, including long-term deposits, of Rs 102 crore at 30 September 2026, compared with Rs 117 crore at 31 March 2026 and Rs 120 crore at 30 September 2025. Investments were Rs 20 crore and borrowings were Rs 85 crore at 30 September 2026, resulting in net cash of Rs 36 crore.

Net cash improved from Rs 29 crore at 31 March 2026 but remained below Rs 98 crore at 30 September 2025. Cash from operations was Rs 48 crore in H1 FY2027, compared with Rs 84 crore in H1 FY2026. Total equity increased to Rs 1,043 crore at 30 September 2026 from Rs 1,010 crore at 31 March 2026.

At Hamirpur, two of 10 planned blocks were operational as of 30 September 2026, producing insecticides with 600 MTPA of technical capacity and 1,000 MTPA of formulation capacity. The site’s central facilities are designed to support 10 blocks, and management said two additional blocks are to become operational in FY2027.

Hamirpur has permitted capacity of 30,000 MTPA for technicals and 6,000 MTPA for formulations. Management said its priorities include process optimisation, backward integration and development of differentiated molecules and intermediates to improve manufacturing economics, reduce import dependence and broaden its product range. The presentation does not provide expected revenue or profit contribution from the additional blocks.

Conclusion

IPL’s Q2 FY2027 result combined a 21.6% decline in total income with a 41.7% fall in PAT, indicating that the improvement in gross-profit margin did not offset lower sales, employee expenses and raw-material price volatility. H1 FY2027 followed the same direction, with total income down 15.9% to Rs 487 crore, EBITDA down 32.5% to Rs 73 crore and PAT down 38.1% to Rs 41 crore.

The next disclosures will show whether the export orders cited by management translate into revenue, whether overseas demand and domestic herbicide application improve, and whether two additional Hamirpur blocks become operational in FY2027 as planned. Raw-material-price movements and the EBITDA margin, which was 14.4% in Q2 FY2027 versus 18.2% a year earlier, remain reported operating measures to watch.