Modi Naturals H1 Revenue Rises 19% as Q2 Margin Falls

Modi Naturals Limited reported H1FY27 revenue of Rs 361.95 crore, up 19.29%, while Q2FY27 gross margin dropped 6.71 percentage points to 20.97% as cost of goods sold rose faster than sales; H1FY27 EBITDA increased 25.14% to Rs 40.79 crore.

Why did Modi Naturals' Q2FY27 gross margin decline?

Modi Naturals' Q2FY27 gross margin declined because raw-material costs rose faster than selling prices. Consolidated revenue increased 38.94% year on year to Rs 204.90 crore, but cost of goods sold rose to Rs 161.93 crore from Rs 106.66 crore. Gross profit consequently increased only 5.26% to Rs 42.97 crore, and gross margin fell from 27.68% in Q2FY26 to 20.97%.

Management attributed the pressure to sharp increases in edible-oil and grain prices across the business. In the Consumer Division, raw-material prices rose about 52% quarter on quarter in Q2FY27, according to management, and the increase could not be passed on through corresponding price rises. Management said input prices had subsequently corrected downward and were expected to normalise.

The squeeze also appeared below gross profit. Q2FY27 earnings before interest, tax, depreciation and amortisation, or EBITDA, rose 23.19% to Rs 18.62 crore, but EBITDA margin declined to 9.09% from 10.25%. Profit after tax, or PAT, increased 9.45% to Rs 11.02 crore, while PAT margin decreased to 5.38% from 6.83%.

Which divisions drove Modi Naturals' H1FY27 revenue growth?

Modi Naturals' Ethanol and Bulk divisions drove H1FY27 revenue growth, while Consumer Division revenue declined. Ethanol Division revenue rose 18.04% to Rs 193.70 crore from Rs 165.47 crore in H1FY26. Its EBITDA increased to Rs 34.95 crore from Rs 25.67 crore as the expanded facility commenced operations and capacity utilisation increased, according to management.

Bulk Division revenue rose to Rs 80.81 crore in H1FY27 from Rs 47.22 crore in H1FY26, but EBITDA declined to Rs 0.74 crore from Rs 1.13 crore. Its EBITDA margin fell to 0.91% from 2.40%. Management said the revenue increase was largely driven by higher realisations following commodity-price increases, while higher raw-material costs and volatility pressured margins.

Consumer Division revenue declined to Rs 87.44 crore from Rs 90.72 crore, and EBITDA decreased to Rs 4.95 crore from Rs 7.20 crore. Management's stated actions include premiumisation, changes in product mix, distribution expansion and products in snacking and high-protein categories that are in the pipeline. These plans are intended to broaden the Consumer Division portfolio amid the input-cost environment.

Did Modi Naturals' H1FY27 earnings keep pace with revenue?

Modi Naturals' H1FY27 EBITDA grew faster than revenue, although gross and net margins declined. Revenue increased 19.29% to Rs 361.95 crore, EBITDA rose 25.14% to Rs 40.79 crore and PAT grew 14.39% to Rs 23.53 crore. EBITDA margin improved to 11.27% from 10.74%, while gross margin fell to 24.67% from 26.56% and PAT margin declined to 6.50% from 6.78%.

The H1 EBITDA-margin increase coincided with lower other expenses despite higher sales. Other expenses declined to Rs 31.52 crore from Rs 32.39 crore as revenue rose by Rs 58.54 crore, while employee cost increased to Rs 16.97 crore from Rs 15.59 crore. Depreciation increased to Rs 5.82 crore from Rs 4.01 crore, reflecting the larger operating base.

PAT grew more slowly than EBITDA as finance cost and tax rose. Finance cost increased to Rs 5.74 crore from Rs 4.83 crore, while tax rose to Rs 5.74 crore from Rs 4.75 crore. Earnings per share increased to Rs 17.77 in H1FY27 from Rs 15.45 in H1FY26.

How did Modi Naturals' balance sheet and cash conversion change?

Modi Naturals' total assets increased to Rs 448.22 crore at September 2026 from Rs 406.24 crore at March 2026, led by current assets. Current assets rose to Rs 212.42 crore from Rs 171.97 crore, as trade receivables increased to Rs 82.39 crore from Rs 47.00 crore. Inventory was broadly unchanged at Rs 88.94 crore, compared with Rs 89.02 crore.

The higher receivables balance was reflected in debtor days, which increased to 39 at September 2026 from 24 at March 2026 and 21 at September 2025. Creditor days increased to 32 from 21 over the March-to-September period, while inventory days declined to 54 from 59. Net working-capital days were 60, versus 62 at March 2026 and 56 a year earlier.

Net cash from operating activities declined to Rs 8.68 crore in H1FY27 from Rs 35.96 crore in H1FY26 because working-capital changes used Rs 25.74 crore, compared with a Rs 7.63 crore source of cash a year earlier. Operating profit before working-capital changes nevertheless rose to Rs 41.01 crore from Rs 33.14 crore. Cash and cash equivalents ended H1FY27 at Rs 2.25 crore, compared with Rs 1.83 crore at the start of the period.

Debt to equity declined to 0.85 times in H1FY27 from 0.94 times in FY26 and 1.07 times in H1FY26. Total equity rose to Rs 195.79 crore at September 2026 from Rs 172.14 crore at March 2026, while non-current borrowings declined to Rs 111.56 crore from Rs 120.35 crore. Current borrowings increased to Rs 54.66 crore from Rs 40.86 crore.

What could affect Modi Naturals' second-half performance?

Modi Naturals' second-half performance will depend in part on whether lower input prices translate into improved Consumer and Bulk Division margins. Management said raw-material prices had corrected and expected cost pressures to ease, but also said Bulk Division realisations were likely to moderate as commodity prices decline. Q2FY27 EBITDA margin was 9.09%, compared with 11.27% for H1FY27.

The Ethanol Division provides a disclosed source of order visibility. Modi Naturals has received orders worth about Rs 495 crore for about 7.82 crore litres from various oil marketing companies for the upcoming Ethanol Supply Year. The presentation does not disclose delivery timing, pricing terms or the portion of this order value that could be recognised in FY27.

Conclusion

Modi Naturals delivered H1FY27 revenue growth of 19.29% and EBITDA growth of 25.14%, supported by the Ethanol Division's Rs 193.70 crore revenue and the Bulk Division's higher commodity-linked realisations. The Q2FY27 gross-margin decline to 20.97%, however, showed that input-cost increases reached the cost base faster than price adjustments, particularly in the Consumer Division.

The next measure to watch is whether the raw-material correction cited by management supports a recovery from the Q2FY27 EBITDA margin of 9.09%. Management has maintained its FY27 guidance and points to the Ethanol Division ramp-up, the about Rs 495 crore oil marketing company orders and Consumer Division distribution and product plans as factors for the second half.