Manorama Industries Q2 FY26 Results: PAT up 105%, FY26 Guidance Revised Upward
Revenue CAGR of 40%+ FY26-28 with stable to improving margins. Growth driven by capex. Value-added products to support margins. At reasonable forward valuations
1. Manufacturing Cocoa Butter Equivalent (CBE), Specialty Fats & Butters
manoramagroup.co.in | NSE: MANORAMA
2. FY22-25: PAT CAGR 67% & Revenue CAGR 40%
3. FY-25: PAT up 180% & Revenue up 69%
4. Q2-26: PAT up 105% & Revenue up 65% YoY
PAT up 9% & Revenue up 12% QoQ
Uptick in orders from global chocolate and confectionery majors — higher acceptance of CBE and Stearin in formulations
Capacity utilization at 80–85% — near-full absorption of the upgraded fractionation lines.
Value-added portfolio ~75% of sales, up from ~70% in Q1 — product premiumization continues to outpace base fats.
Exports share at 58%, — stable international traction despite soft cocoa prices
5. H1-26: PAT up 58% & Total Income up 91% YoY
The growth was fueled by a superior mix of value-added products, optimized use of the newly upgraded fractionation facilities, and consistent demand from prominent international clients in the chocolate, confectionery, and cosmetics sectors.
Fractionation capacity expansion: preparatory work under way for upgrade from 40,000 TPA → 52,000 TPA by Q3 FY26, enabling ~30% incremental volume potential for FY27.
Backward-integration initiatives in West Africa (Burkina Faso processing unit) and forward-integration alliance in Brazil (Decel tie-up) are advancing; both expected to yield cost and market benefits in FY27.
6. Business Metrics: Strong & Improving Return Ratios
7. Outlook: FY26 Guidance raised
7.1 Management Guidance and Future Outlook
Revenue CAGR of 43% as revenue expected to grow from ₹1,150 Cr in FY26 to ~₹1,900 Cr by FY28
FY26 Guidance
Our focus on value-added products and operational excellence continued to strengthen margins and reinforce the growth trajectory, prompting an upward revision of our annual revenue outlook from INR 1,050 Crores to INR 1,150+ Crores
We remain confident in the structural strength of our business model and our ability to sustain healthy margins
FY27 and Beyond Guidance
FY27: And 27 guidance you will be sharing only by March, right?
FY28: on 52,000 tons 100% capacity utilization we see a revenue potential of around 1,800 2,000 cr plus of course provided everything goes well
7.2 H1 FY26 Performance vs FY26 Guidance – SG Finserve
On-track to meet revised guidance
Revenue Traction — Ahead of Run Rate
₹613 Cr in H1, exceeding the run-rate to meet guidance of ₹1,150 Cr+.
No adverse impact from temporary Q3 maintenance shutdown planned for December 2025; management confirmed full-year revenue guidance of ₹1,150 Cr + remains intact.
Profitability — Guidance Fully Met
EBITDA margin (27.2%) and PAT margin (17.2%) already align with management’s full-year goal.
Balance Sheet Strength — Outperforming Expectations
ROCE (36.9%) and ROE (49.9%) exceed long-term thresholds, signaling efficient asset turns and high return generation.
Free cash flow of ₹164 cr in H1 vs negative free cash flow in FY25 full year indicates strong quality of growth.
Execution on Strategic Projects — On Track
Capacity expansion to 52,000 TPA scheduled for Q3 FY26 is progressing as per plan.
Backward integration (Burkina Faso) and forward integration (Brazil) both in implementation phase.
8. Valuation Analysis
8.1 Valuation Snapshot
CMP ₹1497.8; Mcap ₹8,943.14 Cr
FY27 revenue in-line with the 30% capacity expansion — firm guidance expected in Q4-26
FY28 revenue at midpoint of revenue expectations based on new capacity
MANORAMA generated ₹164 Cr of free cash flow in H1 FY26
Available at free cash-flow yield of 1.84% (not annualized) on current market price which makes the valuations quite reasonable.
However, planned capex will be approximately around ₹450cr ( via - equity raise, debt and accruals) hence the positive free cash-flow may not be sustainable till FY27.
The valuations would start looking attractive from a FY28 and beyond perspective. Hence it should be looked at from a longer term perspective.
8.2 Opportunity at Current Valuation
Reasonable Forward Valuations
P/E ~27×, EV/EBITDA ~18× (FY27E ) are reasonable forward valuations for company delivering ~2× revenue within 2 years on a FY26 base with stable to improving margins.
₹613 Cr in H1 implies a full-year run rate of ₹1,225 Cr, exceeding the revised guidance of ₹1,150 Cr+.
8.3 Risk at Current Valuation
Premium Current Valuations
Valuations – A big risk — Trading at >40× FY26E earnings, even a small earnings miss or margin compression could easily contract the P/E.
Execution & Timing Risk – Growth is dependent on fractionation capacity expansion. Any delay could defer the FY28 earnings ramp, triggering temporary de-rating.
Raw-Material Volatility – Procurement of Shea, Sal and Mango seeds is seasonal and climate-sensitive; disruption in African or Indian harvest cycles can affect throughput and working-capital intensity.
Commodity Correlation – Although CBE prices are structurally insulated from cocoa, prolonged swings in global cocoa prices can influence customer contract negotiations and short-term realizations.
Customer Concentration – Top-10 clients contribute ~40 % of revenue; any formulation change or shift in vendor policy by a large MNC can impact volumes.
FX & Geo-political Exposure – With 60 %+ exports, INR appreciation or African supply-chain disruptions can temporarily erode competitiveness.
While operating fundamentals are sound, the margin of safety is limited at current multiples. Investors should monitor expansion milestones, margin stability, and debt control closely; sustained 25–30% earnings growth is essential to justify today’s premium positioning.
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