EIDPARRY - E.I.D. Parry (India) Ltd. Share Price

In the recent earnings conference call for Q1 FY '26, E.I.D.- Parry (India) Limited's management provided a cautiously optimistic outlook, focusing on both global and domestic sugar markets. Management indicated that the global sugar market is projected to remain in mild surplus due to increased production in key regions such as Brazil, India, and Thailand. Specifically, the surplus is approximately 2 million metric tons (MMT) of raw sugar and 1.1 MMT of white sugar for 2025, with an added 1.2 MMT of white sugar expected in the first half of 2026. The current raw sugar price has dropped to about $0.16 per pound, down from $0.215 per pound earlier in the year.

Domestically, India's sugar production as of mid-July stands at 25.7 MMT, slightly affected by adverse weather early in the season. However, domestic consumption is projected at 27.9 MMT, allowing room for about 0.6 MMT of exports and a notable diversion of approximately 3.4 MMT towards ethanol production. Closing stocks are estimated at 5.5 MMT, equivalent to around 2.5 months of demand.

Management highlighted the need to monitor upcoming harvest outcomes, impacts of the ethanol pricing and blending policy, and U.S.-India trade discussions, especially as favorable monsoon conditions are anticipated to bolster the cane crop in the upcoming season.

Financially, for Q1, E.I.D.- Parry crushed 2.11 LMT of cane at a recovery rate of 8.02%, producing approximately 17,000 metric tons of sugar. The sugar sales volume was 84,000 metric tons, primarily driven by domestic sales, with an average selling price of INR 41.99 per metric ton, a 9% increase year-over-year. The sugar revenue for Q1 reached about INR 347 crores, down from INR 404 crores in the previous year mainly due to a reduced release order quota.

Key forward-looking strategies discussed included potential expansions in the Consumer Products Group and maintaining a competitive approach in the ethanol segment, where policy developments will significantly influence capacity and growth prospects.

Here are the major questions and their respective answers from the Q&A section of the earnings transcript:

Question 1: "How do we read into the volumes of the consumer part of this business - as in the entire sale is quota driven?"

Muthiah Murugappan: "Yes, our sales are quota driven. We plan to focus on high-value added sweetener products and expand our portfolio. Tactical decisions will be made to capture more quota and strengthen our institutional market segment. We also foresee the possibility of trading volumes by partnering with other mills. There are avenues for sales growth in our sweetener segment, and we will remain adaptable to the market dynamics."

Question 2: "What's really going on here in terms of the refinery business?"

Muthiah Murugappan: "The refinery business has had some debt issues; the new capital infusion is aimed at debt reduction and operational strengthening. We recently closed a step-down subsidiary in the UAE, which we didn't find strategically significant. Our focus remains on the standalone operations in Kakinada."

Question 3: "Any reason for the sharp increase in short-term debt this quarter?"

Venkateshwarlu: "The increase in short-term debt relates not only to our sugar crushing but also to sourcing molasses from other states due to increased distillery capacity. The rise in our CPG business also led to higher working capital requirements. We anticipate similar short-term debt levels at year-end due to these operational necessities."

Question 4: "Can we contemplate selling some stake in Coromandel to reduce our debt?"

Muthiah Murugappan: "Our primary focus is on our standalone operations. Discussions about stake adjustments are broader group conversations, and we aim to concentrate on our operational growth here."

Question 5: "Could you explain the revenue increase in the nutrient and allied business?"

Muthiah Murugappan: "Actually, the Nutra business has reported lower revenues this quarter compared to last year. Any positive contributions from Coromandel sales would need to be evaluated through their public disclosures. Our current focus remains on consolidating the business without immediate plans for expansion."

Question 6: "What are the expectations regarding crushing in Karnataka and southern states?"

Abdul Hakeem Ashiq: "The monsoon has been favorable, and we expect a marginal increase in crushing in Karnataka. Tamil Nadu's situation is neutral; we're working to revive it. Overall, we maintain a positive outlook for this year's crushing season based on current data."

Question 7: "What is the outlook for ethanol production capacity and government discussions on blending?"

Abdul Hakeem Ashiq: "Currently, our distillery capacity stands at 18 crore litres, operating at 90-95% utilization. Conversations regarding increasing blending percentages are ongoing within the government, and we remain hopeful for positive developments in that space."

Question 8: "What is the strategy for the Consumer Products division going forward?"

Balaji Prakash: "Our strategy focuses on expanding distribution, brand equity, and product development. We aim to harness growth in the browns category while continuing to increase our numerical distribution. Our growth targets are ambitious but cannot be quantified at this moment."

Question 9: "What is E.I.D.-Parry's long-term outlook?"

Muthiah Murugappan: "Our focus will continue on biofuels and bioenergy while also nurturing the Consumer Product Group. We are exploring sustainable aviation fuel opportunities, but policy clarity is key for further direction. Both sectors will require attention as we move forward."

These responses capture the essence of the companies' plans and operational performances as discussed during the earnings call.