Modi Naturals Q1 FY27: Margins Improve as Ethanol Ramps Up

Modi Naturals opened FY27 with steady consolidated revenue of 155.6 crore in Q1FY27, almost unchanged from 155.0 crore a year ago. The story of the quarter was profitability. EBITDA rose 25.6% year on year to 22.2 crore, while profit after tax increased 19.1% to 12.5 crore. The consolidated EBITDA margin improved to 14.2% from 11.4%, and PAT margin expanded to 8.0% from 6.8%.

Management attributed the improvement to better operating performance and efficiency across businesses. The ethanol division faced a planned maintenance shutdown of around 20 days and lower FCI rice prices, which held back revenue. But operating efficiency improved meaningfully and translated into stronger margins. The bulk business benefited from a leaner inventory and procurement approach, while the consumer business continued to build momentum in newer categories alongside distribution expansion, with margins holding firm.

Segment performance: Profitability led by ethanol efficiency

Ethanol remained the largest segment in Q1FY27 by revenue, with 74.8 crore. This was down 6% from 79.4 crore in Q1FY26 due to the planned shutdown and pricing impact cited by the company. Despite lower revenue, ethanol EBITDA increased 22% to 16.6 crore. The EBITDA margin expanded to 22.2% from 17.1%, a 500 basis point improvement that management linked to better plant performance and improved efficiencies.

The consumer division reported revenue of 42.5 crore, down 4% from 44.4 crore. EBITDA was stable at 3.9 crore and margin improved to 9.3% from 8.8%. The company highlighted improving momentum across the consumer business and an encouraging response to newer categories. It specifically noted that pasta continued to do well on quick commerce platforms and that the launch of Hange received a strong market response.

Bulk division revenue rose to 38.3 crore from 31.2 crore, a 23% increase. EBITDA increased to 1.3 crore from 0.8 crore. The company also disclosed an improvement in margin to 3.4% from 2.4% for the quarter. Management commentary and the slide deck emphasized a conscious move towards a lean inventory model to reduce inventory intensity, improve procurement discipline, and keep working capital requirements lower.

Ethanol expansion: Order visibility and ramp-up timeline

A central theme in the presentation is the ramp-up of the grain-based ethanol business. The company stated that ethanol capacity increased from 130 KLPD in FY24 to 282 KLPD by FY26 and that it is focused on ramping up the expanded facility. It also disclosed that it has secured additional orders worth around 140 crore for the balance ESY period through October 2026, on top of a previously stated order book of 400 crore.

Management expects both the existing and expanded plants to be fully operational by the end of August 2026. If achieved, this timeline would support higher utilization and enable execution of the additional order book over the balance of the ESY period. The company also positioned higher utilization as a driver of operating leverage and profitability over the medium term.

The presentation provides additional context on the ethanol asset. It describes the distillery as a greenfield grain-based ethanol facility in Chhattisgarh and highlights proximity to petroleum depots, sourcing advantages, and the use of husk as fuel as factors supporting costs and margins. It also notes approvals for a 310 KLD distillery and outlines the phased build-out, with Phase I and Phase II adding up to total capacity of 282 KLD.

FY27 guidance: Higher scale and profitability targets

Modi Naturals provided explicit FY27 guidance. It expects consolidated revenue in the range of 925 to 965 crore, EBITDA of 100 to 105 crore, and PAT of 66 to 70 crore. The company linked the growth plan to three drivers: branded expansion through new food launches, assortment expansion on quick commerce, modern trade and general trade with focused advertising and promotion; ethanol capacity expansion and ramp-up; and margin improvement through premiumisation and operational efficiency.

The financial statements in the deck show that FY26 revenue stood at 719.2 crore, EBITDA at 73.5 crore, and PAT at 50.3 crore. The balance sheet reflects higher borrowings alongside the growth capex, with non-current borrowings of 120.4 crore and current borrowings of 40.9 crore at March 2026. The cash flow statement shows net cash from operating activities of 61.1 crore in FY26 and net cash used in investing activities of 53.2 crore, consistent with an investment-heavy year.

Takeaways

Q1FY27 was not a high growth quarter on revenue, but it showed clear improvement in operating profitability across Modi Naturals’ businesses. Ethanol was the key driver of margin expansion, supported by efficiency gains even during a quarter affected by a planned shutdown. The bulk division’s operational shift towards lean inventory is starting to reflect in better margins, while the consumer business continues to invest behind distribution and newer categories.

The near-term execution marker is the end-August 2026 timeline for full operations of the expanded ethanol capacity and the ability to convert the disclosed order visibility through October 2026 into sustained volumes. With FY27 guidance calling for a meaningful step-up in scale and profit, the year’s outcome is likely to hinge on ethanol ramp-up discipline and steady progress in premiumisation and distribution expansion within the consumer portfolio.