Godavari Biorefineries Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

3 Prachi Ambre (Investor Relations), Samir Somaiya (Chairman and Managing Director), Ashish Sinha (AGM, Investor Relations and Finance)

Analysts

9 Apurva Anil Sharma (RAAS Capital), Dhananjay Bagrodia (Alchemy), Kranthi Bathini (WealthMills Securities), Nimesh Verma (AAS Capital), Pahal Sharma (DD Capital), Santosh Shetty (LGC Capital), Soham (Vajani Capital), Soumya (Nava Securities), Suhani Singh (ROS Capital)

Financials & KPIs

Geographic & Segment Commentary

• Bio-based Chemicals: Revenue grew 19.4% YoY to ₹168.7 crores with EBITDA up 53% to ₹19.2 crores (11.4% margin vs 8.9%). Debottlenecking initiatives are showing strong results with management guiding Q2 FY27 revenue at ~₹190 crores. A further ₹25 crores investment in debottlenecking is planned, targeting ₹240 crores per quarter run-rate by early FY28. Strong customer interest from both domestic and export markets on supply chain reliability concerns.

• Sugar, Cogeneration & Ethanol: Revenue declined to ₹373 crores from ₹382.8 crores YoY with EBITDA loss widening to ₹14.6 crores from ₹4.5 crores. Challenging feedstock conditions and higher manufacturing costs weighed on performance, partially offset by improved sugar recovery. Management is considering a 160 KLPD maize front-end facility to utilize idle fermentation/distillation capacity if sugar diversion increases.

• Drug Discovery (R&D): Progressed with Japanese patent secured for anti-cancer molecule and CDSCO application filed for preliminary efficacy trials for triple-negative breast cancer molecule, expected to commence Q3 FY27 subject to approvals. Investment of ₹20 crores committed over next 2-3 years.

Company-Specific & Strategic Commentary

• Integrated Biorefinery Model: Strategy centers on converting agricultural feedstock into food, fuel, and chemicals with feedstock flexibility across sugarcane, maize, and rice. Recent commissioning of 200 KLPD grain-based distillery (total 800 KLPD) enhances ability to navigate product price volatility and policy changes.

• Green Transition Positioning: Government's new draft guidelines for E-85/E-100 fuel, CBG policy, and industry flex-fuel vehicle launches are creating tailwinds. DME pilot trials progressing as planned with results expected by March 2027; bio-butanol MOU with Synthomer secured with government exploring butanol pathways for energy security.

• Ethanol Flexibility: Evaluating 160 KLPD grain preparation facility addition within existing 800 KLPD capacity, enabling rapid pivot between sugar and ethanol production based on relative economics. Long-term sugar contracts comprise approximately 15,000-20,000 tons of 65,000 tons closing inventory.

• Digital/Operational Efficiencies: Debottlenecking investments are delivering measurable results with chemical revenue trajectory from ₹141 crores (Q1 FY26) to ₹169 crores (Q1 FY27), guided ₹190 crores for Q2 FY27, and ₹240 crores per quarter post next debottlenecking phase.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

DME and Bio-butanol Commercialization Timeline

• Question: What is the commercialization roadmap for DME and bio-butanol, and when could these platforms contribute meaningfully? (Santosh Shetty, LGC Capital)
• Answer: DME pilot trials are progressing well with final results expected by March 2027, which will determine scale-up decisions. Bio-butanol has an MOU with Synthomer as a chemical intermediate, and the government's recent call for butanol pathways for energy security expands the opportunity. (Samir Somaiya)

Drug Discovery Milestones and Out-licensing Strategy

• Question: What are the next major milestones for the triple-negative breast cancer drug candidate, and how are you evaluating out-licensing potential? (Santosh Shetty, LGC Capital)
• Answer: After successful safety trials, the CDSCO application for preliminary efficacy trials was filed last week. Expected approval and trial commencement by end of Q3 FY27. The market for TNBC is very large with most difficult prognosis globally. Out-licensing will only be considered after successful preliminary efficacy results. Estimated ₹20 crores investment required over next 2-3 years, funded internally. (Samir Somaiya)

Chemical Business Margin Sustainability

• Question: How should we think about sustainability of current margin profile and steady-state margin potential in the chemical business? (Soumya, Nava Securities)
• Answer: Debottlenecking completed last year is now generating results - revenue trajectory from ₹141 crores to ₹169 crores, with ₹190 crores expected in current quarter. The ₹25 crores further debottlenecking investment will be completed by early next financial year, targeting ₹240 crores per quarter. Growth is coming specifically from bio-based specialty chemicals. (Samir Somaiya; Ashish Sinha)

Sugar vs. Ethanol Prioritization Strategy

• Question: With tighter sugar-ethanol economics, how would you prioritize sugar versus ethanol production, and how valuable is feedstock flexibility? (Soumya, Nava Securities)
• Answer: Economic decisions are driven by relative sugar and ethanol prices plus government policy allocations. If diversion shifts toward sugar, sugarcane fermentation/distillation capacity becomes free - exploring 160 KLPD maize preparation facility addition to utilize existing 800 KLPD capacity fully, enabling better utilization of both sugar and ethanol facilities. (Samir Somaiya)

CBG Policy and Green Transition Opportunities

• Question: Is the new CBG policy something you're looking at, and any benefits along those lines? (Dhananjay Bagrodia, Alchemy)
• Answer: Government's green transition urgency has accelerated given fossil resource scarcity. CBG is a CNG substitute and DME is an LPG substitute - both align with existing capabilities. As pressmud is available as CBG feedstock, all green transition opportunities in chemicals globally and energy in India are being evaluated. (Samir Somaiya)

Ethanol Demand Outlook

• Question: Given last year's ethanol tendering, would we expect much more than that this year? (Dhananjay Bagrodia, Alchemy)
• Answer: India's economy is growing at pace with fuel consumption growth at or above GDP. With E20 maintaining blending levels, absolute ethanol demand will increase. Government draft guidelines for E85/E100 and auto companies launching flex-fuel engines signal higher ethanol demand going forward. (Samir Somaiya)

Sugar Inventory and Monetization

• Question: What is the closing sugar inventory of this quarter end, and how do you expect existing inventory to be monetized? (Soham, Vajani Capital)
• Answer: Closing sugar inventory is approximately 65,000 tons, with roughly 15,000-20,000 tons in long-term contracts and the rest open market. Higher sugar prices should improve sector economics going forward, with clarity on impact expected closer to the sugar season. (Samir Somaiya)

Capital Allocation and Leverage

• Question: How should we think about operating cash flows, gross margin sustainability, and leverage trajectory over the medium term? (Nimesh Verma, AAS Capital)
• Answer: Chemical sector gross margins are improving and sustaining, with ₹25 crores debottlenecking investment funded from internal accruals. In sugar/maize/ethanol, grain ethanol played a dominant role in the current tender with margins dependent on monsoons. Debt levels are expected to remain broadly at similar levels with only slight changes to the overall debt-equity structure. (Samir Somaiya)

Export Demand and Global Supply Tightness

• Question: Given global supply tightness, are you seeing stronger customer interest in bio-based chemicals, and could this translate into meaningful export opportunities? (Pahal Sharma, DD Capital)
• Answer: There is definitely stronger interest with customers increasingly focused on supply chain reliability. Higher oil prices have narrowed the gap between fossil and green products, driving interest in bio-based specialty chemicals both at home and abroad. This demand growth is what's encouraging the next debottlenecking investment. (Samir Somaiya)

Key Takeaway

Godavari Biorefineries' Q1 FY27 performance was marked by contrasting segment trends: bio-based chemicals delivered strong growth (revenue up 19.4% to ₹168.7 crores, EBITDA up 53% to ₹19.2 crores with 11.4% margins), while the sugar-cogeneration-ethanol segment saw losses widen to ₹14.6 crores on challenging feedstock conditions. The strategic focus centers on the integrated biorefinery model with newly commissioned 200 KLPD grain-based capacity (total 800 KLPD) providing feedstock optionality across sugarcane, maize, and grain. Management is executing a three-pronged growth strategy: investing ₹25 crores in chemical debottlenecking to drive quarterly revenue from ₹169 crores to ₹240 crores by FY28, evaluating a 160 KLPD maize front-end facility to maximize capacity utilization based on sugar-ethanol diversion economics, and advancing the triple-negative breast cancer drug candidate through CDSCO preliminary efficacy trials expected to commence Q3 FY27. Government tailwinds including E-20 expansion, E-85/E-100 draft guidelines, CBG policy, and the bio-butanol call are creating significant market opportunities. Risks remain on monsoon dependency, sugar-ethanol price dynamics, and geopolitical volatility, though management expressed confidence in the flexibility of the integrated model to navigate these challenges. The near-term outlook hinges on improving chemical margins, the sugar sector's favorable price environment, and successful execution of capacity optimization initiatives.