MAGADSUGAR - Magadh Sugar

📊 NSE: MAGADSUGAR 🏢 Sugar 📅 Last Updated: 12/14/2025 9:25

💰 Financial Performance

Revenue Growth by Segment

Total revenue grew 20.6% YoY to INR 1,322.28 Cr in FY25. The Sugar segment's revenue contribution increased from 71% to 76% of total revenue, while the Distillery segment's share decreased from 22% to 19% due to government restrictions on sugar diversion for ethanol.

Geographic Revenue Split

100% of manufacturing operations are concentrated in Bihar, where the company operates three sugar mills with a combined crushing capacity of 21,500 TCD.

Profitability Margins

Net profit margin declined from 10.62% in FY24 to 8.28% in FY25. Profitability was impacted by higher raw material costs and government regulations affecting the distillery segment.

EBITDA Margin

EBITDA margin stood at 15.95% in FY25, a decrease from 19.47% in FY24, primarily due to industry-wide factors including lower grain-based ethanol profitability and higher cane costs.

Capital Expenditure

Total debt increased from INR 637 Cr in FY24 to INR 707 Cr in FY25 to support capacity enhancement and modernization projects. H1 FY26 investing activities utilized INR 40.44 Cr compared to INR 104.46 Cr in H1 FY25.

Credit Rating & Borrowing

The company maintains an A+ credit rating. Finance costs increased by 17.92% to INR 38.46 Cr in FY25, with an interest coverage ratio of 5.55x.

⚙️ Operational Drivers

Raw Materials

Sugarcane is the primary raw material, accounting for 64.13% of total revenue in FY25 (approximately INR 848 Cr).

Import Sources

Raw materials are sourced locally from major cane-growing regions in Bihar, specifically within a 30-kilometer radius of the company's mills.

Key Suppliers

The company procures sugarcane through long-term partnerships with approximately 88,500 individual cane farmers.

Capacity Expansion

Current installed capacity includes 21,500 TCD for sugar crushing, 155 KLPD for distilleries, and 38 MW for cogeneration. Recent debt-funded capex focused on modernization and capacity enhancement.

Raw Material Costs

Raw material costs represent 64.13% of revenue. Costs are influenced by the Fair and Remunerative Price (FRP) set by the government and local cane yield conditions.

Manufacturing Efficiency

The average net recovery rate was 10.2% over the last three years, with a specific recovery rate of 11.16% recorded in H1 FY25.

Logistics & Distribution

Logistics are optimized by locating mills within 30km of major cane-growing regions to ensure efficient transport and minimize yield loss.

📈 Strategic Growth

Expected Growth Rate

18%

Growth Strategy

Growth is driven by forward integration into high-margin distillery and cogeneration segments, capacity modernization to improve recovery rates, and leveraging the K.K. Birla Group's financial flexibility. The company aims for yearly cash accruals over INR 200 Cr through enhanced scale.

Products & Services

Refined sugar, Ethanol (B-Heavy and Grain-based), Spirits, and Cogenerated Power.

Brand Portfolio

Magadh Sugar & Energy Limited (part of the K.K. Birla Group).

New Products/Services

Expansion into grain-based ethanol production to supplement molasses-based distillery operations.

Market Expansion

Focus on Bihar-based operations with modernization of existing mills to improve operational metrics and throughput.

Strategic Alliances

Part of the K.K. Birla Group of sugar companies, providing access to group-level financial support and industry expertise.

🌍 External Factors

Industry Trends

The industry is shifting toward ethanol blending (E20 mandate), though currently restricted by sugar diversion caps. Future growth depends on regulatory support for ethanol pricing and export quotas.

Competitive Landscape

Faces competition from alternative sweeteners like khandsari and gur, as well as other integrated sugar players in the Bihar region.

Competitive Moat

The moat is built on integrated operations (Sugar-Ethanol-Power) which provides diversified revenue streams and the patronage of the K.K. Birla Group, ensuring financial resilience during cyclical downturns.

Macro Economic Sensitivity

Highly sensitive to the Wholesale Price Index (WPI) and inflation, as sugar is an essential commodity with government-controlled pricing.

Consumer Behavior

Rising consumer preference for natural and organic products is driving demand for high-quality refined sugar.

Geopolitical Risks

Vulnerable to changes in export-import policies and global sugar price volatility which affects domestic supply-demand balance.

⚖️ Regulatory & Governance

Industry Regulations

Operations are heavily regulated by the Essential Commodities Act, Fair and Remunerative Price (FRP) for cane, and government-mandated ethanol blending prices and diversion limits.

Environmental Compliance

Focuses on environmental stewardship and minimizing ecological footprints through sustainable cogeneration and waste management.

⚠️ Risk Analysis

Key Uncertainties

Agro-climatic risks (monsoon trends) and government policy shifts regarding ethanol diversion are the primary uncertainties, with potential to impact margins by over 5%.