Whalesbook
📉 The Financial Deep Dive
The Numbers:
Fermenta Biotech Limited has reported a mixed financial performance for the nine months ended December 31, 2025 (9MFY26). Consolidated revenue surged by 25% year-on-year (YoY) to ₹421.2 crore, with consolidated EBITDA rising 20% YoY to ₹97.2 crore and profit after tax (PAT) increasing by 20% YoY to ₹51.7 crore.
However, the performance in the third quarter (Q3FY26) presented a contrasting picture. Consolidated revenue (including real estate) saw an 11% YoY decline to ₹140.5 crore. EBITDA decreased sharply by 49% YoY to ₹28.1 crore, and PAT dropped by 68% YoY to ₹12.0 crore.
The Quality & Drivers:
Excluding real estate revenue, Fermenta's 9MFY26 performance was exceptionally strong. Revenue jumped 41% YoY to ₹413.6 crore, and EBITDA surged by 86% YoY to ₹95.1 crore. This growth was primarily fueled by a robust performance in the Human Nutrition segment (+51% YoY for Vitamin D3 sales) and Animal Nutrition segment (+46% YoY), complemented by a significant 64% YoY increase in Green Chemistry Solutions/Enzymes.
The company highlighted strong operational leverage, with 9MFY26 revenue (ex-real estate) reaching 96.9% of FY25's total revenue. EBITDA (ex-real estate) for 9MFY26 surpassed the full FY25 EBITDA by 14.1% within nine months. Volume growth was substantial, with Human Nutrition up 46% and Animal Nutrition up 52% over 9MFY25.
Other income saw a notable 57% YoY increase, partly boosted by a non-recurring ₹2.7 crore insurance claim in Q1FY26. Conversely, real estate revenue experienced a steep 95% YoY decline.
The Grill:
The significant YoY drop in Q3FY26, particularly in EBITDA (-49%) and PAT (-68%), warrants attention. While management attributes this to the decline in real estate revenue, investors will be keen to understand the sustainability of the core business growth and the impact of the US trading subsidiary reporting an EBITDA loss compared to a profit in the prior year.
Financial Deep Dive:
- Income Statement: The core segments (Vitamin D3, Green Chemistry) are driving growth, overshadowing the collapsing real estate segment. The substantial increase in Other Income due to the insurance claim is a one-off factor.
- Balance Sheet & Cash Flow: No specific balance sheet figures or cash flow statements were provided in the text. However, the mention of 'robust operational leverage' implies efficient use of resources and potentially strong cash generation from core operations.
- Key Ratios: No specific ratios like ROE, ROCE, Debt-to-Equity, or Interest Cover were provided in the text. However, the company's overall performance suggests a positive trend, especially excluding the real estate segment.
Flags & Capex:
A significant development is the Board's approval of ₹110 crore capex at Dahej for plant-based Vitamin D3, green chemistry enzymes, and derivatives, aimed at enhancing leadership in sustainable biocatalysis and Vitamin D3 innovation. The Environment Division was transferred to a wholly-owned subsidiary for ₹19 crore. An exceptional expense of ₹2.19 crore was incurred due to new Labour Codes, and a ₹2.0 crore reversal for slow-moving inventory was recognized.
Geographically, excluding real estate, India's share decreased to 39% (-2% YoY), while Europe grew to 32% (+7% YoY). North America saw a decline to 13% (-5% YoY). The German subsidiary showed strong 147% YoY revenue growth.
🚩 Risks & Outlook:
The primary risks include the continued decline in the real estate segment, performance of the US trading subsidiary, and potential execution challenges for the new capex project. However, management guidance points towards continued value creation through sustained volume momentum and improving margins, with a strategic focus on scaling the core human nutrition business.