AVT Natural Products: FY2026 — Revenue Jumps 28%, But Complexity Rises

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1 — At a Glance

Revenue galloped from ₹556 Cr (FY2025) to ₹713 Cr (FY2026), a 28% bound in a single year. The surprise lives in the parentheses: while topline swelled, working capital ballooned to nearly 65% of sales. Inventory swelled to 321 Cr, debtors stretched to 240 Cr.

Profitability recovered. Net profit climbed from ₹48 Cr to ₹65 Cr—a 34% rebound after a dip in FY2025. EPS rose to ₹4.26 from ₹3.17.

But margins compressed. Operating margin fell to 13% from 15% two years ago.

The largest flag: leverage increased sharply. Debt crept from ₹43 Cr to ₹114 Cr in just 12 months. The company has spun three new business verticals—derma-cosmetics, nutraceuticals, biologics—while managing El Niño-driven supply shocks in marigolds and US tariff pressures on beverages.

Teaser: A plant extract company riding growth while stretching working capital and debt. The tension between expansion and cash demand defines the story.

2 — Introduction

AVT Natural Products Ltd is part of the A.V. Thomas Group, a fixture in agricultural commodities and specialty exports since the mid-20th century. The company manufactures plant-based extracts and natural ingredients for global food, beverage, animal nutrition, and nutraceutical customers.

The business reached a pivot point in FY2026. For three years prior, revenue stagnated. FY2022 to FY2024 showed cumulative sales growth of just 9%. Climate headwinds (El Niño in marigold regions) and competition from Chinese suppliers hobbled the marigold segment, historically the cash engine.

FY2026 shattered the pattern. Revenue grew 28%. The topline beneficiary: a surge in marigold supplies as climate improved, new customer wins in spice extracts and animal nutrition, and an uptick in tea.

In May 2026, the board appointed K. Nandakumar as CEO for a five-year term—a signal of intent to build professionally managed scale. A new director resigned (Shanthi Thomas), replaced by Siddharth Thomas.

The rating agency ICRA reaffirmed the company’s A+ rating in December 2025, citing stable operating performance and long-term customer agreements, but flagged rising working capital intensity as a key monitorable.

3 — Business Model: WTF Do They Even Do?

Three product lines anchor the business. Marigold extracts (34% of FY2026 sales, down from 42% in FY2022) feed eye care, food coloring, and poultry pigmentation markets globally. The company owns hybrid marigold seed development and backward integrates into growing to hedge commodity risk.

Spice extracts—paprika, capsicum, pepper (32% of FY2026 sales, flat since FY2022)—are oleoresins and oils for food flavor and color. These hit margin pressure in FY2026; realisations softened as buyer demand slowed.

Beverages (31% of sales, up from 22% in FY2022) comprise instant tea, decaffeinated tea, and value-added leaf blends. Tea was a small business five years ago; today it’s nearly a third of revenue. The US tariff on Indian tea, in place through 2025, benefited competitors not under the tariff. In November 2025, the US withdrew the beverage tariff—a tailwind for FY2027.

A fourth segment, animal nutrition and agricultural crop inputs, remains micro (3% of sales) but grew over 60% year-on-year in FY2025 and continues expanding as the company pushes into co-development with partners for new molecules.

The company also launched three vertical divisions targeting derma-cosmetics, nutraceuticals, and biological crop inputs. These are in pre-clinical and field-trial stages; commercial revenue is not yet material.

Geography: The US accounts for 51% of sales (unchanged from FY2022). Europe shrank from 27% to 7%, a sharp decline reflecting supply disruptions and customer losses. The “Others” category (Asia, LATAM, Middle East) grew from 22% to 42%—the company is geographic diversification bet or a casualty of lost European traction, depending on your view.

The company operates two extraction facilities in Kerala and Karnataka, processing 70,000 tons of plant material and 5,000 tons of extract annually. Capex guidance is ₹15–20 Cr per annum, funded from operations.

4 — Financials Overview

Figures are consolidated, in ₹ crore.

The latest quarter (Mar 2026) was a jolt. Sales leapt 44%, driven by marigold supplies normalizing and strong spice and tea dispatch. Operating profit nearly doubled, and net profit climbed 53%. The quarter annualizes to a ₹5.8 Cr operating profit and ₹4.26 EPS for the full year—which matches the reported FY2026 EPS exactly, confirming Q4 as the result quarter.

FY2026 full-year performance: Revenue of ₹713 Cr is the highest on record, eclipsing FY2022’s ₹559 Cr. Net profit recovered to ₹65 Cr from ₹48 Cr in FY2025.

Operating margin fell to 13% (₹90 Cr EBITDA) from 15% a year prior, reflecting mix deterioration (spice realisations lower) and higher manufacturing costs (freight, energy in Q1–Q3 of FY2026 was steep; power inflation abated by year-end).

The margin compression matters. Profit grew 34% while sales grew 28%, a classic signal of operating leverage at work—but the leverage was negative. The company’s operating efficiency declined even as volume surged.

5 — Market Expectations & Historical Multiples

This section describes how the market is currently pricing the company and how that compares with its own history and peer group. It is descriptive, not predictive.

P/E: The market currently pays 16.4x trailing earnings here, versus a five-year historical average of 20.7x. Relative to peers in the agricultural and food ingredients space (L T Foods at 20.5x, KRBL at 12.2x, Kaveri Seed at 15.2x), AVT sits near the median of 16.8x. The multiple is not cheap; it’s not expensive either. It sits squarely in the peer band.

EV/EBITDA: At 11.1x enterprise value to EBITDA, the company trades at a meaningful discount to the peer median of approximately 15–20x for scaled food and agriculture names. This reflects either undervaluation or lower growth expectations embedded in the EV/EBITDA calculation.

ROE and ROCE: Return on equity stands at 12.2%, below the 14.6% peer median and below the company’s own 5-year average of 14.2%. Return on capital employed is 14.2%, matching the