JISLJALEQS - Jain Irrigation Systems Ltd. Share Price

Management provided an optimistic outlook for FY '27 following a challenging FY '26. The company recorded a revenue of approximately INR 1,800 crores in Q4 FY '26, a growth of 4.3% compared to INR 1,750 crores in the same quarter last year. The Hi-Tech segment, which includes drip irrigation and tissue culture, grew by 8%, and the Agro Processing unit saw a growth of 6%. Overall, the company managed an EBITDA growth of 7%, with the Hi-Tech business achieving a notable 22% increase in EBITDA.

For the full year, total revenue grew by 11%, with the Hi-Tech segment exceeding 20% growth. The food business notably crossed INR 2,000 crores in revenue, growing by 9%. Future expectations include focusing on cash flow, with a target to increase operating cash flow to four figures by addressing government receivables. The management highlighted that approximately 76% of the generated EBITDA in FY '26 was converted into free cash flow, amounting to over INR 600 crores.

Management noted the significant raw material price shocks experienced in March, causing temporary disruptions in demand, particularly in PVC. However, they anticipate improved demand for water management products due to expected adverse monsoon conditions. The beverage manufacturing business commenced in FY '26, with positive contributions anticipated in FY '27.

Looking forward, management emphasized a recovery trajectory for the food segment, with expectations for a strong domestic outlook. They reiterated the importance of increasing sales in North India and enhancing retail growth above 15%. Overall, management conveyed confidence that FY '27 would see improved performance across revenue, margins, and cash flow as the structural issues are addressed and stabilized.

Question 1: "Could you explain how are we planning on servicing the debt, especially in previously, the management has indicated that you might restructure some portion of it and there might be a fund raise?"
Answer: Yes, the standalone business does generate cash flow, and we anticipate INR 750-800 crores this year from internal accruals. We plan to cover the debt mainly from operational cash flow, supported by about INR 150 crores in government benefits. We are exploring backup options for refinancing if necessary, but we are confident about meeting our obligations by March without issues.

Question 2: "There was a recent report by ICRA on the ratings update, which mentioned a very advanced level of talks about sale. Where are we with that?"
Answer: The sale of assets in Tamil Nadu is progressing well; we signed the necessary MoU, and it should occur within the next few weeks. We feel confident about this transaction catalyzing favorable outcomes for investors.

Question 3: "What progress have we made in the U.K. business and in the bottling plant?"
Answer: We've invested approximately INR 140 crores in our bottling business, which is now operational. U.K. revenues grew from GBP 60 million to GBP 68 million this year, and we expect improvements in EBITDA as elevated costs from growth reduce in FY '27.

Question 4: "From which quarter can we expect to be PAT positive?"
Answer: For FY '27, our target is to achieve a positive PAT. Despite reported PAT being negative due to noncash items, our adjusted PAT stands at INR 133 crores, which shows cash generation improvement. We're optimistic about attaining a positive PAT next year, going forward.

Question 5: "Can you provide details on revenue shortfall in Q4 and its segments?"
Answer: Our revenue shortfall of INR 200-250 crores was mainly due to raw material price spikes that caused farmers to postpone purchases. We anticipated sales of INR 1,250 crores, but the INR 1,000 crores achieved was affected by sudden price increases and lower produce prices for farmers facing export challenges, despite overall improved margins.