Summary
Jain Irrigation Systems Limited - Q3 FY 2026 Earnings Call Summary Wednesday, February 4, 2026, 2:30 PM IST
Event Participants
Executives 2 Anil Jain (CEO & MD), Bipeen Valame (CFO)
Analysts 6 Ankit Bansal (AB Investments), Bhavya Sharma (DR Choksey Finserv), Girish Pandit (Latin Madanlal Securities), Parag Khare (ELX Consultants), Praneeth (Individual Investor), Ronak Osthwal (Arihant Capital), Ravi Kumar (Varga Investments), Sidhant (Sanshi Fund)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹1,600 crores | +17.4% YoY; Driven by strong growth across all three segments despite export headwinds. |
| EBITDA | ₹168 crores | -4.0% YoY; Margins at 10.5% vs 12.9% YoY due to inventory losses in plastic and low absorption in agro. |
| Hi-Tech Division Revenue | ₹625 crores | +16.0% YoY; Growth supported by solar agri-pump business restart and drip irrigation demand. |
| Plastic Division Revenue | ₹462 crores | +18.0% YoY; Growth achieved despite lower resin prices impacting per-unit value. |
| Agro Processing Revenue | ₹509 crores | +18.5% YoY; Demand remained strong for fruit pulp and dried onion. |
| Adjusted PAT | ₹16 crores | Profitable on adjusted basis; Reported PAT impacted by ₹38 crores non-cash write-offs. |
| Net Working Capital | 181 days | -15 days YoY; Improved from 196 days due to higher retail mix and better inventory management. |
| Long-Term Debt (JISL) | ₹688 crores | Unsustainable debt maturing in H2 FY27; Management intends to service via internal accruals. |
Geographic & Segment Commentary
- Hi-Tech Division (Drip/Tissue Culture): Registered 16% revenue growth with improved EBITDA YoY. Success was fueled by a 24% growth in retail sales and the re-entry into the solar agri-pump market.
- Plastic Division (Pipes/Sheets): EBITDA margins compressed to 7.2% due to falling PVC resin prices through December and extended rains delaying the agri-season. Prices stabilized and began increasing in January, signaling a recovery for Q4.
- Agro Processing (Jain Farm Fresh): Revenue grew 18.5%, but fixed cost absorption was poor due to erratic weather limiting onion and banana processing volumes. A new beverage bottling unit is starting production in Feb 2026 to diversify revenue.
- Global/Exports: Export revenue declined 34% YoY this quarter, dragging overall performance. However, recent FTAs with the EU and US are expected to provide preferential, duty-free access for dried onions and plastic sheets in future quarters.
Company-Specific & Strategic Commentary
- Retail Pivot: Management is aggressively shifting away from government projects to retail sales, which grew 24% this quarter and now represent the primary growth engine and working capital optimizer.
- Beverage Expansion: Investing in a large-scale beverage bottling facility (600+ bottles/min) within the food subsidiary; Phase 1 is operational in Feb 2026 with Phase 2 planned for late 2026.
- Strategic Joint Venture: Signed a 51:49 JV with a Japanese company for tomato processing; operations and revenue contribution are expected to commence in January 2027.
- Asset Monetization & IPO: Plans are underway for a potential IPO of the Food Division (Jain Farm Fresh) to provide growth capital and value monetization, with more clarity expected in Q4 results.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 15% for FY26; 18-20% for FY27 | Driven by Q4 growth target of 20% and retail market expansion in North/North-East India. |
| EBITDA Margin | 13%+ for FY26; 14-14.5% for FY27 | Expected improvement through better fixed cost absorption and higher-margin retail product mix. |
| Debt Reduction | ₹350 - ₹400 crores in FY27 | Targeted reduction specifically from the recovery of legacy government project receivables. |
| Dividend/Cash Flow | Positive Free Cash Flow | Commitment to using internal accruals for maintenance capex and debt servicing. |
Risks & Constraints
| Risk | Context |
|---|---|
| Seasonality & Weather | Erratic weather and extended rains directly impact raw material availability for agro-processing and demand for irrigation products. |
| Raw Material Volatility | Fluctuations in PVC/PE resin prices create inventory losses; while prices are now rising, rapid shifts affect Plastic division margins. |
| Project Receivables | Significant capital (₹688 cr unsustainable debt) is tied to legacy projects in Karnataka, Maharashtra, MP, and Rajasthan; recovery pace remains a watch point. |
| Non-Cash Charges | Recent results were impacted by a ₹23 crore Labor Code entry and a ₹15 crore goodwill write-off from a European subsidiary liquidation. |
Q&A Highlights
Debt & Liquidity
- Question: How will the ₹688 crores of unsustainable debt due in H2 FY27 be repaid? (Sumit Kumar)
- Answer: The company has repaid ₹1,300 crores over the last 3.5 years via internal accruals. Management expects legacy project milestones and Southern India land monetization to cover the upcoming maturities (Anil Jain).
Food Division IPO
- Question: What is the status of the Food Division IPO and the bottling JVs? (Praneeth)
- Answer: The bottling unit is a collaborative contract manufacturing model inside the main company, not a JV. The IPO timing is being discussed with bankers and PE partners, with a final call expected in the coming months (Anil Jain).
Margin Compression
- Question: Why did the Plastic division EBITDA decline significantly? (Praneeth)
- Answer: 50% was due to inventory losses from falling resin prices and 50% due to low volume growth caused by extended rains delaying the season (Anil Jain).
Government Business Exposure
- Question: What percentage of revenue now comes from the government? (Ronak Osthwal)
- Answer: It has been reduced to ~3.5% this year and is expected to fall below 1% in FY27 as the company pivots to a retail-first model (Anil Jain).
Key Takeaway
Jain Irrigation delivered a resilient Q3 FY26 with 17.4% revenue growth, reaching ₹1,600 crores, despite a 34% drop in exports and margin pressure in the plastics segment. The company’s strategic pivot toward retail—which grew 24%—is successfully optimizing the balance sheet, evidenced by a 15-day reduction in the net working capital cycle to 181 days. While reported PAT was hindered by non-cash write-offs totaling ₹38 crores, the adjusted PAT remained positive at ₹16 crores. Management is confident in achieving 15% annual revenue growth for FY26, supported by a projected 20% surge in Q4. Strategic initiatives, including a new beverage bottling line and a Japanese tomato-processing JV, set the stage for accelerated 18-20% growth in FY27. Despite a looming ₹688 crore debt maturity in late 2027, the company intends to rely on internal accruals and legacy receivable recoveries to maintain its deleveraging trajectory.
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