Dhampur Bio Organics Limited has delivered a strong financial turnaround in Q3FY26, reporting consolidated net profit of ₹16.90 crores compared to a loss of ₹6.86 crores in the corresponding quarter of the previous year. The company announced these results for the quarter ended December 31, 2025, alongside a strategic partnership exploration for mycoprotein production.

Financial Performance Overview

The company's consolidated financial performance showed significant improvement across key metrics:

The nine-month performance for FY26 showed revenue growth to ₹2,359.82 crores from ₹1,990.24 crores in the corresponding period of FY25, though the company reported a net loss of ₹21.09 crores compared to ₹30.11 crores loss in the previous year.

Segment-wise Performance

The company operates across three main business segments with varying performance:

The sugar segment contributed the highest revenue despite a year-on-year decline, while the country liquor segment showed positive growth. Bio fuels and spirits segment experienced a moderate decline in revenue.

Strategic Partnership Development

Dhampur Bio Organics has entered into a non-binding term sheet with Planetary SA, Switzerland, to explore opportunities for exclusive mycoprotein production and commercialization in India. The arrangement involves using sugar and side streams as feedstock for mycoprotein production.

The company emphasized that this arrangement is subject to execution of definitive agreements and fulfillment of conditions as may be set out in such agreements.

Operational Highlights

Other income for Q3FY26 included insurance claims of ₹8.64 crores, equivalent to losses and expenditures incurred due to breakdowns and accidents during the period. The company maintains consistent accounting policies for such claims.

The implementation of New Labour Codes effective November 21, 2025, led the company to reassess its employee benefit obligations and recognize defined benefit obligations as per actuarial valuation as of December 31, 2025.

Corporate Governance

The Board of Directors meeting was held on January 21, 2026, where directors approved the unaudited standalone and consolidated financial results for the quarter and nine months ended December 31, 2025. The results were subject to limited review by statutory auditors Mittal Gupta & Co., who expressed an unmodified conclusion.

The company operates with two wholly owned subsidiaries: Sonitron Bio Organics Private Limited and Dhampur International Pte Limited as of December 31, 2025.

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Dhampur Bio Organics Limited has received a credit rating downgrade from CARE Ratings Limited, reflecting the company's ongoing operational challenges in the sugar industry. The rating agency announced the revision on January 13, 2026, citing continued subdued performance and financial pressures affecting the integrated sugar manufacturer.

Rating Downgrade Details

CARE Ratings has implemented significant downgrades across Dhampur Bio Organics' credit facilities, reflecting deteriorating operational metrics and financial performance.

The downgrade encompasses facilities worth ₹1,134.45 crore, representing a substantial portion of the company's banking arrangements. The commercial paper facility has been completely withdrawn as part of the rating action.

Operational Performance Challenges

The rating downgrade stems from multiple operational headwinds that have significantly impacted the company's performance metrics. Red rot infestation in central and western Uttar Pradesh regions has severely affected sugarcane quality and availability, leading to reduced recovery rates and shortened crushing seasons.

Key Performance Indicators

The company's crushing season was significantly shortened from 169 days in FY24 to 145 days in FY25, directly impacting production volumes. Despite lower production, sugar sales increased due to inventory liquidation from previous seasons.

Financial Performance Analysis

Dhampur Bio Organics' financial metrics reflect the operational challenges, with profitability margins remaining under pressure despite slight revenue growth.

Revenue and Profitability Trends

The company achieved modest revenue growth of 3.00% in FY25, but profitability deteriorated significantly. PBILDT margins compressed from 7.79% to 7.43%, while profit after tax declined from ₹49 crore to ₹12 crore. H1FY26 results show continued pressure with negative profitability.

Working Capital and Leverage Concerns

The company's financial risk profile has deteriorated due to elevated inventory levels and increased dependence on working capital borrowings. Sugar inventory remained high at 22.20 million metric tonnes as of March 31, 2025, though this reduced to 5.62 million metric tonnes by September 30, 2025.

Debt and Coverage Metrics

The extended operating cycle and higher working capital requirements have strained the company's financial flexibility, contributing to the rating downgrade.

Industry and Regulatory Factors

The sugar industry faces multiple regulatory and market challenges that have impacted Dhampur Bio Organics' performance. Government policies on ethanol blending, export restrictions, and state advised prices continue to influence operational dynamics.

Key industry factors affecting performance include:

• Restrictions on B-Heavy molasses and syrup use for ethanol manufacturing
• Limited export permissions of only 1.00 million tonnes for Sugar Season 2024-25
• State advised price increase of ₹30 per quintal in Uttar Pradesh for Sugar Season 2025-26
• Ethanol prices remaining unchanged since ESY23 despite rising production costs

Future Outlook and Rating Sensitivities

CARE Ratings maintains a stable outlook, expecting gradual improvement in operational metrics through better monsoon conditions and adoption of disease-resistant sugarcane varieties. The company is implementing measures to address red rot infestation and improve yield through newer cane varieties.

Positive Rating Factors

• Total operating income growth with PBILDT margin above 8.00%
• Reduced reliance on working capital limits
• Net leverage below 4.20x on sustained basis

Negative Rating Factors

• Overall gearing above 1.30x on sustained basis
• PBILDT margin below 6.00%
• Adverse government policy changes affecting operations

The rating agency expects revenue of ₹2,100-2,200 crore for the current year, with PBILDT margins remaining in the 7.70-8.00% range due to higher cane costs.