Modi Naturals operating cash flow fell 76% during H1FY27

Modi Naturals reported consolidated net cash from operating activities of Rs 8.68 crore in H1FY27, down 76% from Rs 35.96 crore in H1FY26, as working-capital changes became a Rs 25.74 crore outflow and trade receivables rose to Rs 82.39 crore at September 2026. This occurred while profit after tax increased 14.39%.

Why did Modi Naturals’ operating cash flow fall in H1FY27?

Modi Naturals’ operating cash flow fell because a Rs 25.74 crore working-capital outflow absorbed much of the cash generated before working-capital movements. Net cash from operating activities was Rs 8.68 crore in H1FY27, compared with Rs 35.96 crore in H1FY26. Cash generated from operations before direct taxes was Rs 15.26 crore, down from Rs 40.78 crore, while direct taxes paid, net of refunds, increased to Rs 6.58 crore from Rs 4.81 crore.

Operating profit before working-capital changes rose to Rs 41.01 crore in H1FY27 from Rs 33.14 crore in H1FY26. However, changes in working capital shifted from a Rs 7.63 crore inflow in H1FY26 to a Rs 25.74 crore outflow in H1FY27. The Rs 33.37 crore year-on-year movement in working capital exceeded the Rs 7.87 crore increase in operating profit before working-capital changes.

Why did Modi Naturals’ receivables rise to Rs 82.39 crore?

Modi Naturals’ consolidated trade receivables increased Rs 35.39 crore between March 2026 and September 2026, reaching Rs 82.39 crore from Rs 47.00 crore. Debtor days rose to 39 at September 2026, from 24 days at March 2026 and 21 days at September 2025. The increase in receivables was the largest change among the disclosed current-asset categories over the six-month period.

Inventory was nearly unchanged at Rs 88.94 crore at September 2026, compared with Rs 89.02 crore at March 2026, while other current assets increased to Rs 30.85 crore from Rs 26.65 crore. Trade payables increased to Rs 53.12 crore from Rs 33.52 crore, and creditor days rose to 32 from 21. These changes partly offset the higher receivables, leaving net working-capital days at 60, compared with 62 at March 2026 and 56 at September 2025.

The presentation provides the receivables balance and debtor-day data but does not disclose an ageing schedule, customer concentration or collection actions. Its working-capital formula defines net working-capital days as inventory days plus debtor days minus creditor days. Inventory days returned to 54 at September 2026 from 59 at March 2026, matching the September 2025 level of 54 days.

Did Modi Naturals’ profit rise despite lower operating cash flow?

Yes, Modi Naturals reported higher consolidated revenue, earnings before interest, tax, depreciation and amortisation (EBITDA), and profit after tax (PAT) in H1FY27 despite the lower operating cash flow. Revenue increased 19.29% year on year 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 increased to 11.27% from 10.74%, while PAT margin declined to 6.50% from 6.78%.

The Ethanol Division recorded H1FY27 revenue of Rs 193.70 crore and EBITDA of Rs 34.95 crore, compared with Rs 165.47 crore and Rs 25.67 crore respectively in H1FY26. Modi Naturals attributed the division’s revenue growth to operations commencing at the expanded facility, with ramp-up and capacity utilisation contributing to volumes and operating leverage.

The Consumer Division’s revenue fell to Rs 87.44 crore in H1FY27 from Rs 90.72 crore in H1FY26, while EBITDA declined to Rs 4.95 crore from Rs 7.20 crore. Bulk Division revenue rose to Rs 80.81 crore from Rs 47.22 crore, but EBITDA fell to Rs 0.74 crore from Rs 1.13 crore and EBITDA margin declined to 0.91% from 2.40%. Management said Bulk Division revenue growth reflected higher commodity-price realisations, while higher raw-material costs affected margins.

What changed in Modi Naturals’ funding and cash position?

Modi Naturals’ debt-to-equity ratio declined to 0.85 times in H1FY27 from 0.94 times in FY26. Consolidated non-current borrowings declined to Rs 111.56 crore at September 2026 from Rs 120.35 crore at March 2026. Current borrowings increased to Rs 54.66 crore from Rs 40.86 crore, while total equity rose to Rs 195.79 crore from Rs 172.14 crore.

Cash and cash equivalents on the consolidated balance sheet stood at Rs 2.25 crore at September 2026, compared with Rs 1.83 crore at March 2026. Net cash used in investing activities was Rs 7.52 crore in H1FY27, lower than Rs 34.85 crore in H1FY26, while capital work in progress rose to Rs 27.68 crore from Rs 19.35 crore. The cash-flow statement labels Rs 0.42 crore as a net decrease, although its stated opening cash balance of Rs 1.83 crore and closing balance of Rs 2.25 crore indicate an increase of Rs 0.42 crore.

How is Modi Naturals addressing commodity costs and working capital?

Modi Naturals said the Consumer Division faced an approximately 52% quarter-on-quarter rise in raw-material prices during Q2FY27 that could not be matched by corresponding price increases. Consolidated gross-profit margin was 20.97% in Q2FY27, down from 27.68% in Q2FY26. Management said raw-material prices had begun to correct and are expected to normalise, which it expects to ease cost pressure and support margin recovery.

Management said the Bulk Division is pursuing lean inventory management and improved procurement planning to manage commodity-price volatility and optimise working capital. The division’s inventory approach comes alongside consolidated inventory of Rs 88.94 crore at September 2026 and consolidated receivables of Rs 82.39 crore. Management also said Bulk Division realisations are expected to moderate as commodity prices decline and stabilise.

Modi Naturals said its wholly owned subsidiary Modi Biotech secured orders worth about Rs 495 crore for about 7.82 crore litres from various oil marketing companies for the upcoming Ethanol Supply Year. Management said the expanded facility is progressing and contributing to revenue growth. It also said it remained confident of achieving FY27 guidance, citing Ethanol Division ramp-up, Consumer business initiatives and the raw-material price environment.

Conclusion

Modi Naturals’ H1FY27 figures show that reported profit growth did not translate into similar operating cash generation. PAT increased Rs 2.96 crore year on year to Rs 23.53 crore, while net cash from operating activities declined Rs 27.28 crore to Rs 8.68 crore. The disclosed bridge is principally the move to a Rs 25.74 crore working-capital outflow, alongside the Rs 35.39 crore increase in trade receivables and the rise in debtor days to 39.

The next disclosed factors to watch are whether receivables and debtor days decline in the second half of FY27, whether lower raw-material prices support the Consumer Division’s margins, and how the Ethanol Division ramps up against orders worth about Rs 495 crore for the upcoming Ethanol Supply Year. Management has said it expects commodity prices to normalise and remains confident of meeting its FY27 guidance.