Modi Naturals Aims for ₹950 Crore Revenue by FY27 Driven by Ethanol Expansion

Modi Naturals is setting an ambitious revenue target of ₹950 crores by fiscal year 2027, largely powered by a substantial increase in its ethanol production capacity.

Ethanol Capacity Doubles, Consumer Growth Key

Modi Naturals has significantly boosted its ethanol production capacity from 130 KL per day to 282 KLPD. While commercial operations for the expanded capacity began late in FY26, the full financial impact is expected to be realized from FY27 onwards. The company's consumer division also showed strong momentum, achieving a record quarterly revenue of ₹50 crores, with pasta sales performing particularly well.

Operational efficiency has seen notable improvement, with working capital days reducing to 62 from 66, and cash flow from operations increasing to ₹61.1 crores. The company also reported closing a non-viable solvent extraction plant in Pilibhit and receiving a ₹4.9 crore insurance settlement for a previous machinery breakdown.

Growth Drivers and Financial Outlook

The expanded ethanol capacity is positioned as the primary engine for future growth. Management's FY27 revenue forecast of ₹950 crores is based on a conservative assumption of only 50% utilization of the new capacity, indicating potential for higher earnings. The ethanol business aims for sustainable EBITDA margins between 12% and 15%. In parallel, the consumer segment is targeted to reach ₹500 crores in revenue over the medium term, supported by growth across both its oil and food product lines.

Strategic Realignment and Future Investments

Modi Naturals has been actively optimizing its operations. The closure of the Pilibhit plant signifies a strategic shift towards focusing on high-growth areas like ethanol and consumer goods, moving away from less productive assets. The company is also planning a ₹20 crore investment in a value-addition project for ethanol byproducts.

Navigating Industry Challenges

Management acknowledges that industry-wide ethanol overcapacity poses a significant risk. However, they believe their cost structure and geographical location provide a competitive advantage. The company also points to execution risks within the consumer division as a key concern.

What to Watch Next

Investors will be closely tracking the utilization rates of the expanded ethanol capacity and whether the company achieves its targeted 12-15% EBITDA margins for this segment. The growth and profitability of the consumer division, especially its food products, will also be critical. Successfully managing execution risks and navigating the competitive ethanol market will be key indicators for Modi Naturals' performance.