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1. At a Glance
Andhra Sugars closed FY26 with ₹83 Cr net profit on ₹2,466 Cr revenue — the same top line as FY22, a four-year flat spell broken only by FY23’s ₹2,368 Cr bump.
The margin story is muddled. Operating profit sank from ₹203 Cr (8.2% margin) in FY25 to ₹203 Cr again in FY26 — but from a ₹2,466 Cr base, that’s only 8.2% OPM, not enough to celebrate. Yet cash generation surprised: free cash flow hit ₹226 Cr in FY26, four times the ₹8 Cr trickle of FY25. That’s not recovery; that’s the company wringing cash from a shrinking asset base as it shuts sugar units.
The balance sheet carries zero net debt — a relief. The real tension: is ₹83 Cr a floor for a stabilizing chemicals business, or a pause before deeper pain?
What to watch: The caustic soda realisations that cratered the profit. ISRO offtake climbed to ₹68 Cr in FY26 from ₹35 Cr in FY25 — sharp acceleration. If that holds, the margin desert may have an oasis.
2. Introduction
Andhra Sugars is a 77-year-old diversified chemicals-and-sugar hybrid owned 50.5% by a tight family of promoters. The company spans caustic soda, industrial alcohol, sulphuric acid, rocket propellants for ISRO, and—once—sugar. Three sugar mills. Four business segments. Two continents’ worth of ambition, one state’s worth of execution.
FY26 saw a quiet reckoning. The Tanuku sugar unit was formally shuttered. Bhimadole and Taduvai remain mothballed, their crushing capacity of 16,000 tonnes per day idle. The decision cost ₹440 Cr in voluntary retirement payouts, ₹330 Cr in asset impairment, and another ₹2,097 Cr in a power-purchase cost recovery demand from Telangana discoms. Stripped of exceptional items, net profit was ₹119 Cr — still a step up from FY25’s ₹27 Cr standalone profit, but the headline ₹83 Cr muddies the story.
The chemical plants at Saggonda rumbled on. FY25’s new sulphuric acid unit, financed entirely from internal funds, came live. A salicylic acid plant (aspirin feedstock) is exporting again. The company is debt-free as of June 2025. ICRA reaffirmed its A+ rating in September with a Stable outlook. All of this is a slow re-calibration from sugar to specialty chemicals and space-grade propellants.
3. Business Model: WTF Do They Even Do?
Start with what died. Sugar was 8% of FY24 revenue. It made a ₹185 Cr loss in FY26 consolidated (before exceptional items). The company has now decided to stop trying, closing Tanuku and suspending the other two mills indefinitely. This is not bankruptcy; this is a father telling a losing son he’s off the allowance.
What remains is a chemical complex at Saggonda that looks like a Lego set a chemist forgot to finish.
Chlor-alkali (37% of FY26 standalone revenue, ₹778 Cr): Caustic soda (600 TPD capacity), caustic potash, chlorine, hydrochloric acid. The segment’s PBIT margin fell to 4.6% in FY25 from 6.6% in FY24 due to global caustic price softness. In Q1 FY26, margins recovered sharply to 16.9%, a sign that realisations improved. The company has a strong position in southern India, where caustic demand-supply is less brutal than up north.
Industrial Chemicals (36% of consolidated revenue, ₹1,341 Cr): Sulphuric acid, chlorine, hydrochloric acid, industrial alcohol, liquid and solid rocket propellants. ISRO offtake is the story. Revenue from propellants jumped to ₹68 Cr in FY26 from ₹35 Cr in FY25. The company supplies liquid rocket propellants (LPSC to ISRO). If the Indian space programme stays funded and launch cadence accelerates, this becomes the engine.
Soap (11% of consolidated revenue, ₹609 Cr, via Jocil subsidiary): Oleochemical stearic acids, distilled fatty acids, refined glycerine, soap. FY24 saw a 26% revenue decline year-on-year. The segment’s competitive position is narrow.
Power Generation (2% of consolidated revenue, ₹50 Cr): A 16.6 MW wind farm at Tamil Nadu feeds power to the Tamil Nadu grid. The segment made a loss in FY26 as it did in FY25. This is a burden asset.
Sugar (1% of consolidated revenue, ₹113 Cr, effectively zero going forward): The three mills, now shuttered, each had different personalities. Tanuku, the oldest, is gone. Bhimadole and Taduvai await a signal to restart. Crushing volume in H1 FY25 was 164,000 MT, down from 313,000 MT in FY24. The company does not publish FY26 crushing data; silence speaks.
The real business is chemicals. The aspiration is propellants. The albatross is everything else.
4. Financials Overview
Figures are consolidated, in ₹ crore.
Metric
Q4 FY26
YoY
Q3 FY26
Revenue
637
+27%
597
EBITDA
72
–
77
PAT
48
+130%
55
EPS (reported)
0.35
–
2.41
Full Year FY26:
Metric
FY26
FY25
YoY
Revenue
2,466
2,020
+22%
EBITDA
287
108
+166%
PAT (reported)
83
26
+219%
EPS (annualised)
6.14
1.91
+222%
What the headline hides: FY26’s net profit sits on two stilts. The first is a ₹307 Cr true-up credit from the power regulator (FPPCA order reversal) — a windfall, not operating income. The second is the absence of the ₹2,097 Cr discom penalty in FY25’s operating baseline, which now appears in FY26 as an exceptional cost. Adjust both out, and the underlying operating profit is roughly ₹121 Cr — marginal recovery from FY25’s chaos.
The EBITDA leap (from ₹108 Cr to ₹287 Cr) is real. It reflects higher revenue and lower depreciation after asset write-downs. Operating margin improved modestly from 5.4% to 11.6%, but this is a sugar-coated baseline shift, not a business transformation. Cost of goods sold rose from ₹1,920 Cr (95% of revenue in FY25) to ₹2,264 Cr (92% of revenue in FY26). Efficiency narrowed, not widened.
The balance sheet is fortress-like. Cash and equivalents stand at ₹170 Cr. Borrowings are ₹0.56 Cr, a rounding error. Interest coverage is 59x. The company paid ₹109 Cr in dividends on a ₹83 Cr net profit — not sustainable without asset sales or equity issuance, but the pool of ₹500 Cr in current investments absorbs it for now.
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.
Metric
Current
Historical Average (5-yr)
Peer Median
P/E
11.2
10.8
20.1
EV/EBITDA
4.57
5.1
7.2
P/B
0.67
1.1
1.47
ROE
6.1%
7.9%
6.6%
ROCE
8.5%
10.2%
9.5%
P/E (11.2x): The market assigns a below-peer multiple despite an annualised EPS of ₹6.14. The peer set (SRF, GHCL, Deepak Fertilisers, Tata Chemicals) trades at 20x on average. Andhra Sugars trades below its own 5-year average of 10.8x only if EPS stays near ₹7–8 Cr. The discount reflects two risks: (1) the volatility and commodity nature of caustic soda realisations, and (2) the company’s sub-peer ROCE and ROE, which hint at capital misallocation (the dead sugar units consumed years of capex).
EV/EBITDA (4.57x): This sits 37% below the peer median of 7.2x. For a company in a commodity chemical business with volatile margins, the lower multiple is rational. The 5-year average was 5.1x; the current level is inside that band, suggesting fair equilibrium pricing if EBITDA stabilises at ₹250–300 Cr.
P/B (0.67x): The market pays ₹0.67 for every rupee of book value, the second-lowest in the peer set. SRF trades at 5.79x, GHCL at 1.11x, Deepak Fertilisers at 2.87x. Low P/B
