Fermenta Biotec.

Fermenta Biotech Ltd Management Discussions

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Sep 4, 2026|01:09:59 PM

Fermenta Biotech Ltd Share Price Management Discussions

of Financials

FY26 confirmed the turnaround established in FY25. Broad-based growth in the core business, disciplined cost management and stronger cash generation deepened the balance sheet and lifted free cash flow, while the Company kept investing in scalable, future-ready capacity.

Income Statement: Operating Leverage Sustains Profitability

Total income grew 14% year-on-year to Rs 548 crore, and 26% excluding real-estate value-unlocking, on 12% growth in revenue from operations and higher other income. Profit before exceptional items and tax rose 7% to Rs 89 crore as expenses grew broadly in line with income and finance costs fell 19% on continued deleveraging. Reported profit after tax was Rs 70 crore, 8% below FY25; the decline stems entirely from the high FY25 base, which carried Rs 45 crore of one-off real-estate value-unlocking against Rs 2 crore in FY26. Two exceptional items were present: a Rs 9 crore write-back of earlier doubtful-debt provisions and a Rs 2 crore one-off employee-benefit charge on adoption of the new Labour Codes.

	FY26	FY25	% Change
INCOME
Revenue from operations	525	470	12%
Other income	22	12	90%
Total Income	548	481	14%
EXPENSES
Cost of materials consumed	149	130	15%
Purchases of stock-in-trade	44	60	27%
Change in inventories	(1)	(31)	98%
Employee benefits expense	83	65	27%
Finance costs	12	14	19%
Depreciation and amortisation	22	24	10%
Other expenses	151	136	11%
Total Expenses	459	398	15%
PROFITABILITY
Profit before tax	96	83	15%
Tax expense	26	7	276%
Profit after tax and exceptional item 70	76	Y 8%

Income grew 14% and profit before exceptional items and tax rose 7%, holding the consolidated margin at 22.3%. Headline PAT reflects the high FY25 real-estate base; underlying earnings strengthened, and finance costs fell 19%.

Stronger, More Liquid Balance Sheet

Fermentas balance sheet strengthened further in FY26. Total assets grew 5% year-on-year to Rs 648 crore, with current assets up 16%, reflecting prudent investment in inventories and receivables to support anticipated revenue growth. Gross debt was held flat at Rs 109 crore; on a stronger asset base, net debt roughly halved, keeping the capital structure healthy. Equity rose 12% to Rs 401 crore, underscoring our commitment to value creation for shareholders. Inventories grew 23% to Rs 153 crore, a deliberate build to meet growing demand and ensure supply-chain continuity.

Building Strength with Discipline (? crore)

	FY26	FY25	% Change
Assets
Total Assets	648	614	5%
Fixed Assets (Net)	206	210	T 2%
Current Assets	388	335	16%
Cash & Equivalents	92	72	28%
Inventories	153	124	23%
Liabilities
Total Equty	401	359	12%
Total Debt	109	109	0%
Current Liabilities	209	212	Y 1%

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Gross debt held flat while net debt roughly halved, enhancing balance-sheet resilience

Strong cash generation underpins operational flexibility

Healthy equity growth reflects our commitment to sustainable value creation

Better Cash Conversion

Sharper execution drove a strong cash-flow performance. Operating cash flow more than doubled to Rs 93 crore as working-capital absorption fell sharply and profit-to-cash conversion improved. Capex stepped up to Rs 30 crore on capacity readiness at Dahej, yet free cash flow more than tripled to Rs 62 crore, providing flexibility to fund ongoing investment and innovation. Financing outflows held steady as gross debt was kept broadly flat and the dividend maintained, leaving net cash flow positive at Rs 8 crore.

(Rs. Crore)

Particular	FY26	FY25
Operating Cash Flow
Net Profit	96	83
Depreciation	22	24
Working Capital Changes	(8)	(78)
Other Adjustments	(17)	12
Operating Cash Flow	93	41
Investing Cash Flow
Capex	(30)	(22)
Other Adjustments	(13)	22
Investing Cash Flow	(43)	ZE=2> (0)
Financing Cash Flow
Equity	(17)	2
Debt	(5)	(36)
Dividend Paid	(7)	(4)
Other Financing Cost	(13)	(14)
Financing Cash Flow	(42)	(51)
Net Cash Flow	8	(10)
Free Cash Flow	62	19

FY25 figures regrouped where necessary to conform to current-year classification

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Operating cash flow more than doubled

Free cash flow more than tripled to Rs 62 crore

Capex stepped up on capacity readiness

Steady deleveraging with efficient asset management

Net cash flow positive; reserves rebuilt

Cost Discipline Anchors Margins

The cost base held broadly stable as a share of revenue. Manufacturing expenses fell to 12% on operating leverage from higher volumes, and finance costs eased to 2% on continued deleveraging. Raw materials edged down to 37% on an improved sourcing mix. Employee, sales and administrative costs rose modestly as the business added capacity and widened market development, keeping the margin profile anchored while funding growth.

Cost Components	FY26	FY25	Key Drivers
Raw Materials	37%	38%	Improved sourcing mix
Employee Cost	16%	15%	Capacity expansion adds heads
Manufacturing Expenses	12%	15%	Operating leverage on higher volumes
Sales & Marketing	5%	4%	Wider market development push
Administrative	11%	10%	Corporate cost normalisation
Finance Costs	2%	3%	Continued deleveraging benefit

FY25 figures regrouped where necessary to conform to current-year classification

Manufacturing leverage and lower finance costs anchored margins, funding capacity and market growth while protecting profitability.

Manufacturing leverage offset selective cost investment

Finance costs eased on continued deleveraging

Margins protected while funding growth

In summary, FY26 confirmed the turnaround established a year earlier and broadened it into durable, cash-generative growth. Revenue grew 14%, and 26% excluding real-estate value-unlocking, while operating leverage lifted core EBITDA 44% and held the margin at 22.3%. A disciplined cost base, a stronger and more liquid balance sheet, and sharply improved cash conversion funded stepped-up investment in capacity and innovation. With gross debt held flat, net debt roughly halved and free cash flow tripled to Rs 62 crore, Fermenta is well placed to capitalise on emerging opportunities and deliver sustainable, long-term value for all our stakeholders.

Ratios

Resilient Returns Lower Leverage Stronger Cover

	FY23	FY24	FY25	FY26
Liquidity
Liquidity strengthened further, with the current ratio rising to 1.86 and the quick ratio to 0.99, on prudent working-capital management
Current	1.2	1.4	1.58	1.86
Quick	0.5	0.8	0.87	0.99
Asset management
Asset turnover edged up to 0.83; receivables days rose to 72 and inventory turnover eased to 3.8 as stock was built ahead of demand
Asset turnover	0.5	0.6	0.81	A 0.83
Receivables days	67	61	64	72
Inventory turnover	2.4	3.1	4.4	T 3.8
Profitability
Profitability moderated from the FY25 peak but held well above FY23-24 levels, with EBITDA margin 23.3%, ROE 18.3% and ROA 10.1%
Returns on Assets	-4%	-3%	13.1%	10.1%
Return on Equity	-7%	-5%	23.5%	16.5%
Net Profit Margin	-7%	-5%	16.3%	12.1%
EBITDA Margin	7%	12%	25.9%	23.3%
Leverage ratios
Debt-to-equity eased to 0.27 and debt-to-assets to 0.17, while interest cover expanded to 8.7x, a leaner and less risky structure
Debt to equity	0.69	0.46	0.30	0.27
Debt to assets	0.34	0.24	0.18	0.17
Interest Coverage	(0.10)	0.86	6.86	A 8.71

Liquidity and interest cover strengthened and leverage fell, while profitability held well above the FY23-24 reset.

FY26 built on the FY25 recovery and strengthened the financial foundation further. Liquidity improved, with the current ratio at 1.86 and the quick ratio at 0.99, while interest cover expanded to 8.7x and leverage eased to 0.27 debt-to-equity and 0.17 debt-to-assets. Profitability moderated from the exceptional FY25 peak but held well above FY23-24 levels, with EBITDA margin at 23.3%, ROE at 16.5% and ROA at 10.1%. Together these point to a leaner, less risky and well-capitalised platform with ample flexibility to fund future growth.

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