Rallis earnings: Q2 profit falls 17% as seeds sales slide

Rallis earnings for the second quarter of FY27 showed profit after tax falling 17% to INR85 crore as weaker seed sales and pressure on product margins outweighed growth in Crop Care. Revenue was broadly flat at INR858 crore, compared with INR861 crore a year earlier. The company announced the results on October 22, 2026, for the quarter ended September 30.

Key Takeaways

• Quarterly EBITDA fell 18% despite broadly unchanged revenue.
• Seeds revenue dropped 31%, while Crop Care sales increased 4%.
• Management plans to reduce seed production as elevated inventory ties up working capital.

Table of Contents

• Rallis earnings show the limits of price-led growth
• Seeds weakness outweighs gains in Crop Care
• Inventory reduction becomes a second-half priority
• Rabi demand and export lead times remain uncertain
• Conclusion

Rallis earnings show the limits of price-led growth

Rallis India's second-quarter results announcement showed EBITDA declining to INR126 crore from INR154 crore a year earlier. Overall pricing growth of about 5% was offset by a similar decline in volumes, leaving sales steady but profitability weaker.

Chief Financial Officer Bhaskar Swaminathan said the benefit from lower-cost raw materials had largely been captured in the first quarter. By the second quarter, that weighted-average inventory benefit had faded, while delayed rains intensified price competition. A weaker contribution from fungicides, historically among Rallis's higher-margin products, also hurt the sales mix.

The quarterly decline contrasted with modest growth across the first half. Half-year profit and EBITDA remained above their year-earlier levels, despite the deterioration in the latest quarter.

Seeds weakness outweighs gains in Crop Care

Seeds revenue fell to INR70 crore from INR101 crore, with volumes down 26%. The business generated approximately break-even EBITDA, compared with INR25 crore a year earlier, and recorded a net loss of INR4 crore against a profit of INR16 crore.

The company attributed the seeds decline primarily to higher returns from the kharif season. Managing Director and Chief Executive Gyanendra Shukla also cited reduced cotton planting in northern India, shrinking cotton acreage and competition from illegal seeds.

Crop Care revenue rose 4% to INR788 crore, supported by higher prices. Within that business, institutional B2B revenue increased 17% to INR232 crore, while Soil & Plant Health sales grew 22% to INR72 crore. Those gains helped offset weaker crop-protection volumes.

Contract manufacturing exports provided another pocket of growth: revenue reached INR27 crore, a twelvefold year-on-year increase supported by a rebound in PEKK sales. Total exports rose a more modest 2.5% to INR165 crore.

Inventory reduction becomes a second-half priority

Inventory remained above the year-earlier level, particularly in seeds. Shukla said the company had stocked for normal seasonal demand and also held chemical inventory purchased at higher prices. He distinguished that company-held stock from channel inventory, saying Rallis had avoided pushing excess products into its distribution network.

Management plans to significantly reduce seed-production acreage, although production will continue for new launches. Shukla said some inventory accumulation reflected a deliberate return to normal opening-stock levels after two years of shortages, but certain crops now exceeded the intended buffer.

Kharif sales returns were largely complete, management said, with provisions made for remaining returns. Exceptions included cotton and late-planted rice in southern India, where the season extended beyond September.

Rabi demand and export lead times remain uncertain

Shukla described a mixed outlook for the rabi planting season, with water availability a constraint in some regions. He expected normal wheat demand but flagged potential weakness in southern rice and water-dependent maize areas. These were management expectations rather than confirmed sales outcomes.

For exports, management cited cumulative supply-chain delays of two to four weeks, alongside freight, insurance and container challenges. Rallis was engaging customers earlier to accommodate longer lead times.

Swaminathan said capital expenditure would be higher in the second half than in the first, with full-year spending expected to be a little above INR50 crore.

Conclusion

The next operating test is the rabi season: demand, remaining seasonal returns and planned seed-production cuts will determine how effectively Rallis can work through elevated inventory. Higher second-half capital spending remains a management plan, not a completed investment.

Read More News

More FinanceVelix news

Disclaimer

This FinanceVelix article provides general information, not personalized financial, investment, legal, or tax advice. Market prices, interest rates and economic conditions can change; investments carry a risk of loss. Facts reflect the material available when published and may change. Check important information independently and consult a qualified professional when needed. Mentioning an asset, company, or service is not an endorsement.