Nova Agritech Limited has received a credit rating outlook revision from CARE Ratings Limited, with the agency changing its outlook from 'Stable' to 'Negative' while reaffirming the CARE BBB rating on the company's long-term credit facilities. The revision, announced on February 23, 2026, affects facilities worth ₹30.99 crore and reflects challenges stemming from regulatory disruptions and operational pressures.

Rating Action Details

CARE Ratings has taken the following action on Nova Agritech's credit facilities:

Primary Reasons for Outlook Revision

The outlook revision stems from multiple operational and regulatory challenges that impacted the company's Q3FY26 performance. The government-imposed stay on bio-stimulants in July 2025 significantly affected Nova Agritech's revenue stream, as this segment contributed approximately 30% of the company's revenue share.

The Government of India cancelled over 8,000 provisional registrations for bio-stimulants, leaving only 146 approved products permitted for sale under the Fertilizer Control Order (FCO). From June 17, 2025, companies were prohibited from manufacturing or selling unapproved bio-stimulants, creating immediate supply shortages across the industry.

Financial Performance Impact

The regulatory disruptions have materially affected Nova Agritech's financial metrics:

Q3FY26 results showed a 25% decline in income compared to Q2FY26 and a 28% decline compared to Q3FY25. The sharp revenue drop was primarily driven by disruption in the bio-stimulant segment, compounded by extended rainfall in South and West India that reduced crop activity and demand for agri-inputs.

Liquidity and Working Capital Challenges

The company's liquidity position has become stretched due to deteriorating working capital metrics. Key concerns include:

• Receivables: Remained high at ₹214 crore as of December 31, 2025, with 55% outstanding for more than six months
• Inventory levels: Continued elevation at ₹95 crore
• Cash credit utilization: Approximately 96% over the 12 months ended January 2026
• Operating cycle: Extended to 217 days in FY25 from 203 days in FY24

The company offers credit periods of 4-5 months to dealers, contributing to the elongated collection period. The agricultural sector's seasonal nature, with cash flows peaking during harvest periods, further compounds working capital challenges.

Positive Developments and Recovery Prospects

Despite current challenges, Nova Agritech has secured regulatory approvals that may support future recovery. The company received 43 product approvals on January 21, 2026, valid until September 29, 2029, which is expected to help restore bio-stimulant sales.

The rating continues to derive strength from several factors:

• Strong parentage and established track record with efficient management
• Diversified product portfolio across soil health, crop nutrition, and crop protection
• Extensive distribution network spanning 6000+ active dealers across 18 Indian states
• Comfortable capital structure with overall gearing ratio of 0.25x as of March 31, 2025

Rating Sensitivities

CARE Ratings has outlined specific factors that could influence future rating actions:

Positive factors:

• Total operating income improving above ₹300 crore with sustainable profitability margin over 18%
• Operating cycle improving below 150 days

Negative factors:

• Decline in total operating income and PBLDT levels by over 20% for the projected period
• Further deterioration in operating cycle and liquidity position

The agency will monitor management efforts to ease the stretched liquidity situation and may revise the outlook to stable upon significant improvement in liquidity position.

Source: None/Company/INE02H701025/c11c947d-7aeb-4d8a-86e9-cccf0305e4c7.pdf

Nova Agritech Limited has announced its unaudited financial results for the quarter ended December 31, 2025, showing mixed performance across standalone and consolidated operations. The company, engaged in manufacturing, marketing and distribution of soil health management, crop nutrition and crop protection products, reported the results following a Board meeting held on February 12, 2026.

Standalone Financial Performance

The company's standalone operations showed a decline in revenue during the quarter. Key financial metrics demonstrate the challenging operating environment faced by the company.

For the nine months ended December 31, 2025, standalone revenue was ₹5,743.83 lakhs compared to ₹11,143.67 lakhs in the corresponding period of the previous year. Net profit for the nine-month period stood at ₹356.89 lakhs versus ₹1,007.21 lakhs in the previous year.

Consolidated Financial Results

The consolidated results, which include wholly owned subsidiaries Nova Agri Sciences Private Limited and Nova Agri Seeds Private Limited, also reflected similar trends with revenue declining year-over-year.

For the nine months ended December 31, 2025, consolidated revenue was ₹20,567.99 lakhs against ₹21,279.12 lakhs in the previous year, while net profit was ₹1,261.80 lakhs compared to ₹2,160.98 lakhs.

Operational Highlights

The company's cost structure showed some variations during the quarter. Cost of raw materials consumed on a standalone basis was ₹1,652.97 lakhs in Q3FY26 compared to ₹2,788.80 lakhs in Q3FY25. Employee benefits expense increased to ₹340.73 lakhs from ₹320.57 lakhs year-over-year.

On the consolidated front, cost of raw materials consumed was ₹5,365.13 lakhs versus ₹8,270.90 lakhs in the previous year quarter. The company benefited from positive changes in inventories of finished goods and work-in-progress, which contributed ₹786.05 lakhs to profitability in Q3FY26.

Corporate Governance and Compliance

The financial results were reviewed by the company's Audit Committee and approved by the Board of Directors. Independent auditors NSVR & Associates LLP conducted a limited review of both standalone and consolidated results as required under SEBI regulations.

The company confirmed that complete IPO proceeds were utilized as of September 30, 2025, and no statement of deviation or variation in IPO fund utilization was required for the current quarter. The paid-up equity share capital remained unchanged at ₹1,850.40 lakhs with a face value of ₹2 per share.