JISLJALEQS - Jain Irrigation Systems Ltd. Share Price

Management expressed a positive outlook for FY26, anticipating substantial revenue growth. Key highlights include a projected revenue increase in the high teens, targeting approximately 18%, with expectations for EBITDA growth to exceed this rate at 23-24%. They aim to further reduce debt by at least INR 400 crores, building on a successful reduction of INR 257 crores in FY25, bringing total debt down to around INR 3,000-3,100 crores.

Specific forward-looking points mentioned include:

1. Hi-tech Division Growth: The Hi-tech business has shown strong performance, with a growth of 16.8% in Q4 FY25. For FY26, the company expects to maintain momentum, continuing to enhance margins in this division.

2. Agro Processing Improvement: Although impacted by seasonality in FY25, Agro processing is projected to recover, capitalizing on expected good monsoon conditions to improve margins for products like mango and onion.

3. Debt Reduction Goals: Management has set a clear target to consistently reduce debt by at least INR 400 crores in FY26, leveraging improved cash flow, which has reached INR 842 crores in FY25.

4. Retail and Distribution Expansion: There are plans to expand retail operations and dealer networks for micro irrigation products, aiming to recover previous sales losses and capitalize on improved demand in various states.

5. Tissue Culture Growth: Management expects tissue culture sales, particularly for banana and pomegranate, to grow by 20-30% in FY26.

6. Focus on Free Cash Flow: The company is emphasizing the generation of free cash flow from operations, enhancing financial stability and supporting growth initiatives.

The overall sentiment from management is one of optimism and confidence in achieving these targets, positioning the company for strong performance in the upcoming year.

Here are some of the key questions and their detailed answers from the Q&A section of the earnings transcript:

1. Question: What is the progress in the tissue culture of coffee for which you signed an MOU with the Indian Coffee Board? Answer: We've signed the initial MOU and completed trial supplies for their pilot projects. One pilot has shown good results after a year. We anticipate larger orders to come towards November-December as agriculture cycles dictate.

2. Question: What is the total amount of receivables from the government? Answer: We have around INR750 to INR800 crores in receivables from EPC projects and about INR375 crores related to drip irrigation on behalf of farmers. We expect to collect half of the EPC receivables this year.

3. Question: Any chances of listing your subsidiary, Jain Farm Food? Answer: Discussions regarding that are ongoing. A decision will be made in consultation with our private equity partner. No definitive timeline has been set yet.

4. Question: What is the net debt we are expecting by year-end? Answer: We are currently at a net debt of INR3,500 crores, and after reducing it by INR400 crores for FY'26, we expect it to be between INR3,000 to INR3,100 crores.

5. Question: How much of the debt reduction will go into long-term debt versus NCDs? Answer: Part of the debt reduction will come from long-term loans, and part from NCDs. This will affect our fair value accounting.

6. Question: What are the key drivers of your projected high teens revenue growth? Answer: We expect growth from tissue culture, solar water pumps, faster state payments for MIS, recovering some business in piping and significant export growth.

7. Question: Are you expanding your PVC pipe business? Answer: Yes, we plan to grow our PVC pipe business by penetrating existing and new states while focusing on quality and cost-effective products.

8. Question: Can you comment on the institutional piping business going forward? Answer: Last year, institutional sales were about INR250 crores, drastically down from INR650-700 crores. We expect more non-JJM institutional sales, including desalination projects.

9. Question: What is your outlook on the food business? Answer: We expect steady growth in the food sector, anticipating revenue increases of 15% to 20% this year as we're fine-tuning our operational strategies.

10. Question: Do you have enough cushion for future NCD repayments? Answer: Yes, we are positioned to prepay NCDs based on our projections of government receivables and ongoing project completions.

These questions cover a range of topics from business progress to financial forecasts, providing a comprehensive overview of the company's outlook and strategy moving forward.