Balrampur Chini Mills Limited Q3 FY26 Earnings Call Summary

Summary

Balrampur Chini Mills Limited - Q3 FY26 Earnings Call Summary Wednesday, February 11, 2026 4:00 PM

Event Participants

Executives 3 Avantika Saraogi (Executive Director), Pramod Patwari (CFO), Vivek Saraogi (CMD)

Analysts 5 Dhvaneet Savla (Savla Family Office), Hitesh Sharma (Goldman Sachs), Prashant Biyani (Elara Capital), Sanjay Manyal (DAM Capital), Vikram Suryavanshi (Phillip Capital)

Financials & KPIs

Geographic & Segment Commentary

• Sugar: Management expects a 5% to 6% increase in crushing this year, with a targeted 5% to 7% expansion in cultivated area for the upcoming season due to new geography allocations. Despite lack of sunlight impacting recovery by ~0.10-0.15%, tight national inventory (5 million tonnes opening) is supporting firm pricing.
• Distillery (Ethanol): Margins are under pressure as ethanol prices for B-heavy and juice routes have remained stagnant for three years despite a 16.4% FRP increase. The company has diverted one unit back to C-heavy molasses to maximize sugar production in response to unfavorable ethanol economics.
• PLA (Polylactic Acid): Project construction is in “full swing” with 90% of imported equipment on-site. Market development has started via trading imported PLA, noting that Indian PLA trade volumes have doubled to ~10,000 tonnes annually since the project announcement.

Company-Specific & Strategic Commentary

• PLA Market Development: Technical success achieved in developing PLA packaging for the Gutkha/Pan Masala segment (a major source of urban litter). Management confirmed prototypes passed oxygen/water vapor barrier tests for use on legacy machines.
• Agricultural Resilience: Shifted budgets from chemical inputs to labor-intensive mechanical and biological pest controls over the last three years. This has mitigated Red Rot disease and improved soil fertility, reducing the carbon footprint of sugarcane.
• Varietal Shift: Reduced Red Rot-affected varieties to low single digits while scaling the Co 14201 variety to 16% of total crush this year, with four more pipeline varieties in development.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Sugar Production & Inventory

• Question: What is the distribution of the downward revision in national sugar production? (Vikram Suryavanshi)
• Answer: Estimated gross production is 32.5 million tonnes. Breakup: UP at ~10m tonnes, Maharashtra/Karnataka at ~17.5-18m tonnes, and 4.5m tonnes from the rest of India. (Pramod Patwari & Vivek Saraogi)

PLA Technical Success

• Question: Have you received formal assurances for PLA offtake from segments like Railways or Defense? (Prashant Biyani)
• Answer: While specific names aren’t disclosable, the PMO is fast-tracking PLA for sachet packaging (e.g., Pan Masala) to reduce drainage litter. Technical success has been achieved in getting oxygen/water vapor barriers right on existing machines. (Avantika Saraogi)

Ethanol Pricing Frustration

• Question: What is the incentive for the government to increase ethanol prices if blending targets are met? (Prashant Biyani)
• Answer: The government should not act as a “trader” but as a system regulator. It’s “extremely disappointing” that ethanol prices haven’t moved despite a 16.4% rise in FRP, which burdens millers. (Vivek Saraogi)

Maizapur Grain Utilization

• Question: Why hasn’t grain-based ethanol scaled up to 8-10 crore liters at Maizapur? (Sanjay Manyal)
• Answer: The government only accepted ~60% of tenders for maize-based ethanol. We tendered for 5 crore liters but only received allocations for 3.15 crore liters. (Vivek Saraogi)

Key Takeaway

Balrampur Chini delivered a resilient operational quarter, marked by an 8.4% increase in sugarcane crushing and stable distillery volumes, though ethanol margins remained squeezed by stagnant procurement prices. Strategically, the company is pivoting toward a high-margin future with its ₹2,000 crore revenue-potential PLA project, which is on track for an October 2026 commissioning and has already seen technical breakthroughs in the high-volume sachet packaging market. While the sugar segment benefits from tight domestic inventory and firming prices (₹41-41.5/kg), the lack of ethanol price revisions remains a significant headwind, prompting a tactical shift to C-heavy molasses at one unit. Looking forward, the company aims to scale crushing to 11.5 crore quintals through improved cane yields and varietal shifts. However, the outlook remains contingent on government policy regarding ethanol pricing and potential climatic impacts on the upcoming crop cycle.