Mawana Sugars FY26: Revenue Hits ₹1,571 Cr While Profit Drops 66% — The Cane Crushes Back

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1. At a Glance

Mawana Sugars closed FY26 with revenue of ₹1,570.94 crore — its highest in the data set, up 8.6% from ₹1,446.49 crore in FY25. On paper, that sounds like progress. But net profit collapsed 66%, from ₹109.42 crore in FY25 to ₹37.09 crore in FY26, and the operating margin retreated from 8.4% to 6.7%.

The FY25 profit number deserves an asterisk: it included ₹61.28 crore of exceptional gains from the sale of two real-estate subsidiaries (Siel IE and Siel IED). Strip those out and the FY25 base PAT was closer to ₹48 crore — making the FY26 fall less catastrophic but still real. Operating profit before exceptional items dropped from ₹68.08 crore to ₹55.31 crore.

Three numbers worth flagging: the market pays 11.1x earnings on a ₹413 crore company with ₹420 crore in borrowings and ₹803 crore of inventory. A company whose balance sheet is largely warehouse space for sugar waiting for a government quota release is a specific kind of financial architecture — one where the cash conversion cycle (214 days per the data) does a lot of heavy lifting, often against the company.

On the positive side, cane dues were cleared within the stipulated period for FY26, per the Directors’ Report, and the 62nd AGM on July 4, 2026 has a ₹4-per-share final dividend on the agenda. The board is running tidily enough. Whether the margins can sustain that tidiness is the open question.

2. Introduction

Mawana Sugars Limited (MSL) is a part of the Shriram Group and has been manufacturing and marketing sugar, ethanol, and co-generated power for more than 60 years, per the CARE rating report. The company operates two integrated sugar complexes in Meerut district, Uttar Pradesh — Mawana Sugar Works and Nanglamal Sugar Complex — making it very much a creature of Western UP agriculture, its politics, and its cane prices.

The company’s most significant structural event in recent memory was the divestment of its two real-estate subsidiaries — Siel Industrial Estate Limited and Siel Infrastructure and Estate Developers Private Limited — in October 2024 for ₹117 crore. The proceeds were used to reduce debt. Borrowings fell from ₹568 crore in March 2024 to ₹419 crore by March 2025, and held roughly steady at ₹420 crore in March 2026.

The second meaningful move was the acquisition of the remaining 66.26% stake in Mawana Foods Private Limited (MFPL) in December 2024, turning an associate into a wholly-owned subsidiary. MFPL contributed ₹43.23 crore in revenue during FY26 and ₹0.35 crore in profit — not needle-moving at the group level, but the NCLT amalgamation process, which received shareholder approval in February 2026, will eventually fold it in.

A third item announced in November 2025: the board approved the purchase of a commercial property in Gurugram’s Sector 32 for ₹28 crore from Usha International Limited, a related party, to establish a corporate office. An advance of ₹7 crore has been paid; the HSVP transfer permission is pending.

FY26 also introduced an exceptional charge of ₹5.52 crore related to the implementation of the four Labour Codes (effective November 21, 2025), reflecting revised gratuity and compensated-absence obligations.

3. Business Model: WTF Do They Even Do?

Mawana crushes sugarcane, extracts sugar, ferments the leftovers, and burns the bagasse. Three businesses, one farm.

Sugar contributes roughly 81% of revenue. The company crushed 25.66 lakh tonnes of cane in Sugar Season 2025-26 — down from 28.70 lakh tonnes the prior season, per the Directors’ Report, largely because newer cane varieties replacing CO-238 yielded less. Net sugar recovery improved to 10.20% from 9.71%, so quality was up even as volume dropped. Sugar is sold under a government-managed quota system: the Central Government allocates monthly release quotas to mills, which means MSL cannot simply dump inventory when it wants to. The ₹683 crore of sugar sitting in finished goods on the balance sheet is real inventory waiting for permission slips.

Distillery contributes about 13% of revenue. The Nanglamal distillery produced 33,798 KL of ethanol in FY26 against 29,657 KL in FY25 — a meaningful 14% volume increase. For Ethanol Supply Year 2025-26 (November 2025 to October 2026), the company has an Oil Marketing Company allocation of 38,000 KL from B-Heavy and C-Heavy molasses. The government mandate for E20 blending — 20% ethanol in petrol — became effective April 1, 2026 across all states. The Bureau of Indian Standards has now issued specifications for E22 through E30 blends. For a distillery sitting on a cane complex, this policy direction is structural tailwind.

Co-generation contributes roughly 2% of revenue — ₹28.84 crore in FY26 versus ₹17.40 crore in FY25. The uplift came partly from a new tariff structure notified by the UP Electricity Regulatory Commission in October 2025, which the company applied retrospectively from April 2024 through September 2025, recognising ₹5.05 crore in differential revenue. The installed capacity is 53.5 MW. Bagasse, pressmud, and molasses round out the by-product lines.

The brand “MAWANA” was formally acquired from Usha International Limited for ₹5.75 crore in December 2024 and is treated as an indefinite-life intangible. It had been living in a related party for some time before coming home.

Does the model work? It works in the sense that integrated operations reduce pure commodity exposure. The ethanol and power divisions contributed segment profits of ₹9.69 crore and ₹41.36 crore respectively in FY26 — the power division, in particular, is quietly carrying a lot of the year’s segment profitability. Sugar at the segment level contributed only ₹44.56 crore from ₹1,319 crore of external revenue, per the consolidated segment table. The numbers invite the question: is this a sugar company with ethanol as a hedge, or an ethanol-and-power company that also happens to process cane?

4. Financials Overview

Figures are consolidated, in ₹ crore.

Full Year (Annual) Results — FY26 vs FY25

The FY25 PAT and EPS figures include ₹61.28 crore in exceptional gains (net, from the Siel subsidiary divestments); the underlying FY25 PAT excluding those gains was ₹48.14 crore, per arithmetic from the consolidated P&L. The FY26 exceptional item was a charge of ₹5.52 crore (Labour Code implementation). On a pre-exceptional operating basis, PBT fell from ₹68.08 crore to ₹55.31 crore — a 19% decline on 8.6% higher revenue, meaning the margin compression was real.

CARE Ratings, in its May 2026 report, noted that PBILDT margins in 9MFY26 stood at just 1.38%, owing to major repair and maintenance expenses in the first two quarters and higher sugarcane prices for the current sugar season. The Q4 (March 2026) quarter saw operating profit of ₹87.72 crore on revenue of ₹374.41 crore — the seasonal harvest quarter performing as expected.

Finance costs fell to ₹22.16 crore from ₹29.56 crore, per the Excel data — a direct benefit of the FY25 debt reduction from subsidiary sale proceeds.

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.

Peer median P/E drawn from the Screener peer table (Balrampur Chini 29.8x, Triveni 32.4x, Bajaj Hindusthan 30.9x, Bannari Amman 28.6x); ROCE peer median from the same table.

The market currently pays 11.1x earnings here, against a peer group where most comparable mills trade at 29–33x. The gap is notable: Dalmia Bharat Sugar sits at 11.4x and Mawana at 11.1x — both are the outliers at the low end of the cohort. Bannari Amman, Balrampur Chini, and Triveni Engineering all command multiples in the 28–33x range.

The market appears to be pricing in at least one of: the company’s smaller scale (a ₹413 crore market cap against a ₹11,286 crore Balrampur), its historically erratic earnings (PAT has swung from ₹–83 crore in FY20 to ₹+359 crore in FY17 to ₹+109 crore in FY25 and back to ₹37 crore in FY26), its high working-capital intensity (cash conversion cycle of 214 days), or the pending related-party property acquisition. The company also trades below book value at 0.79x, which the market has historically assigned to businesses where asset quality — specifically ₹803 crore of inventory and ₹188 crore of fixed assets — is regarded as carrying some cyclical haircut risk.

At the same time, the market is giving some credit to the ethanol policy tailwind (mandatory E20 from April 2026, with E22–E30 specs already notified), the improved capital structure post-subsidiary sale, and the company’s near-zero net term debt position — all working capital borrowings, no long-term debt outstanding as of March 2026.

Does the 11x multiple reflect what the market expects from a mid-cycle UP sugar mill with a clean-ish balance sheet and a government-managed order book? The market’s current answer is apparently: about the same as Dalmia Bharat, and well below everyone else.

6. What’s Cooking

62nd AGM, July 4, 2026. The board has recommended a final dividend of 40% — ₹4.00 per equity share — for FY26, per the AGM notice. The record date is June 27, 2026. This follows a ₹1.00 final dividend in FY25 and a ₹3.00 interim dividend in FY24–25. Total dividend payout for FY26 would be ₹15.65 crore.

Mawana Foods Amalgamation. The NCLT’s First Motion Application was approved in December 2025; shareholder and creditor meetings were held in February 2026 with 99.9999% votes in favour. The Second Motion Application is pending final NCLT approval. Once sanctioned, MFPL — a retail sugar and soap business with ₹43.23 crore in revenue — will merge into MSL. The appointed date is April 1, 2025.

Gurugram Property Acquisition. The company is buying a commercial property at Sector 32, Gurugram from related party Usha International Limited for ₹28 crore, to establish a permanent corporate office. An advance of ₹7 crore has been paid. The HSVP transfer approval deadline of May 2026 was missed; the seller requested a six-month extension, which the company’s board accepted. The formal transfer remains pending.

Export Pass Fee Demand. The UP Excise department issued a ₹9.50 crore demand for export pass fees on denatured spirit for the period August 2018 to June 2024. The UP Sugar Manufacturers’ Association filed a writ petition; the Allahabad High Court issued an interim order in July 2025 allowing industrial alcohol movement subject to indemnity bonds. Management believes no provision is required, per the annual report.

Assets Held for Sale. Two land parcels with buildings having a carrying value of ₹6.42 crore were reclassified as held-for-sale in August 2025.

7. Balance Sheet

Assets = Liabilities confirmed across all three columns. ✓

Three observations:

• Borrowings in March 2024 hit ₹568 crore — the post-COVID high-water mark. The subsidiary sale proceeds in FY25 knocked ₹149 crore off that figure in a single year. FY26 held the line at ₹420 crore, which is all working capital cash credit with no term debt outstanding.
• Net worth expanded from ₹410 crore to ₹524 crore between March 2024 and March 2026 — primarily through retained earnings in FY25 before the FY26 profit retreat.
• Other Liabilities have been on a quiet diet since FY19, falling from roughly ₹789 crore to ₹177 crore. A meaningful portion of the old figure was cane dues owed to farmers; the company has now reduced those to within the government-mandated 14-day payment window, per the CARE report, which explains the structural decline.

The working capital story is the one that deserves attention. Inventory is ₹804 crore — roughly 187 days of revenue. Of that, ₹683 crore is finished goods sugar. CARE flags sugar stock of ₹778 crore as of March 2025, of which ₹547 crore was pledged against working capital. The balance sheet is, in a literal sense, a large pile of sugar with financing attached.

A balance sheet that is 72% inventory is either a sign of a business that controls its raw material or a business that is controlled by its raw material.

8. Cash Flow: Sab Number Game Hai

FY24 was the year the working capital machine went into reverse — negative operating cash flow of ₹164 crore, funded by borrowings (+₹143 crore). FY25 corrected sharply: the subsidiary sale generated ₹115.82 crore in investing cash, operating cash returned to positive at ₹113.76 crore, and the company paid down ₹144.64 crore of working capital borrowings plus ₹27.38 crore of dividends. A tidy year.

FY26 is more ambiguous. Operating cash generation fell to ₹73.31 crore — still positive, but down from ₹113.76 crore. Investing outflows resumed at ₹30.83 crore (capital expenditure of ₹32.63 crore, mostly plant upgrades including a new last mill and rotary sugar dryer per the Directors’ Report). Net cash flow was +₹17.36 crore.

The capex commitment forward is estimated at ₹36.44 crore remaining on contracts yet to be executed, per Note 35 of the consolidated statements. Annual capex has been modest — ₹32.63 crore in FY26, ₹21.27 crore in FY25 — suggesting a company that maintains rather than expands.

Cash flow that oscillates with the harvest is a feature of the sugar business, not a bug. The question is always whether the troughs are funded by debt or by reserves.

9. Ratios: Sexy or Stressy?

ROE 8.1% — the equity is earning slightly above a savings account rate. The five-year average ROE is 6.86%, per the Screener data, suggesting FY25’s 15.2% (inflated by exceptional gains) was the outlier, not FY26.

ROCE 8.4% — capital deployed across ₹1,122 crore of assets earns 8.4 paise per rupee. At the peer median of 8.3%, Mawana is not a laggard here — it just doesn’t have the scale advantages that push Balrampur or Triveni higher.

P/E 11.1x — the market pays 11.1 rupees for every rupee of trailing earnings. The peer group trades at roughly 30x. The gap is either a valuation opportunity or a valuation signal; the ratio reports the fact.

PAT Margin 2.4% — of every ₹100 in revenue, ₹2.40 reaches the bottom line after paying cane farmers, utility bills, 1,170 permanent employees, and interest on ₹420 crore of borrowings. Sugar is not a high-margin industry.

D/E 0.80x — a meaningful improvement from 1.38x in FY24. The borrowing is all short-cycle working capital, not long-dated project debt, which gives it a different texture: repayable on demand in principle, but seasonally predictable in practice.

10. P&L Breakdown: Show Me the Money

FY25 PAT includes ₹61.28 crore net exceptional gains; underlying PAT excluding those was ₹48.14 crore.

Revenue has grown steadily — ₹1,355 crore, ₹1,447 crore, ₹1,571 crore — a three-year CAGR of roughly 7.7%. That’s respectable for a regulated commodity business. The problem is the margin. EBITDA peaked in FY25 and retreated in FY26 despite higher revenue, per the Excel data. The CARE report attributes this to higher cane costs (the Uttar Pradesh State Advised Price is set by the state government without guaranteed correlation to sugar realisations) and major repair and maintenance expenses in Q1 and Q2 of FY26.

The repair spending is worth noting: the company spent ₹18.13 crore on plant and equipment repairs in FY26 (per the standalone P&L note 30), up from ₹16.21 crore in FY25. A rotary sugar dryer of 20 MT capacity was installed to improve fine grain sugar quality, and the last mill was replaced with a larger unit — ₹410.25 lakh of capital investment on energy conservation equipment per the Directors’ Report. These are maintenance outlays that should benefit future crush seasons, but they hit the current-year cost line.

Finance costs fell from ₹29.56 crore to ₹22.16 crore — a genuine improvement from debt reduction. The interest rate on cash credit was reduced from 9.5% to 9.25% effective January 1, 2026.

11. Peer Comparison

Mawana sits at the small end of a competitive group. The six largest peers are all north of ₹2,500 crore in market cap; Mawana at ₹413 crore is the smallest by a significant margin. Scale matters in sugar: Balrampur Chini and Triveni Engineering carry integrated distillery and power operations at a size that gives them margin elasticity Mawana cannot match.

The ROCE cluster between 8.3% and 9.3% (excluding Shree Renuka’s negative and Bajaj’s 2.3%) is telling: most of the UP-Maharashtrian sugar complex earns roughly the same return on capital. Mawana’s 8.4% sits in the middle of that band. M.V.K. Agro at 14.4% ROCE and 42.2x P/E is the growth premium at the smaller end; Dalmia Bharat Sugar at 11.4x P/E and 8.3% ROCE is Mawana’s nearest comparator by valuation.

Why does Balrampur Chini trade at 29.8x and Mawana at 11.1x on broadly similar ROCE? Scale, liquidity, institutional ownership, and the market’s read on earnings stability are the usual suspects — but the ratio reports the gap, not the reason.

12. Miscellaneous: Shareholding & Promoters

Krishna Shriram holds 63.49% — 62.93% directly and 0.55% as trustee of Enterprise Trust — making this a tightly held, family-dominated company in the classic UP industrial mould. His father, the late Sidharth Shriram, founded the business more than 60 years ago, per the CARE report. Krishna Shriram chairs the board as a Non-Executive Non-Independent Director.

There are 55,118 shareholders as of March 2026, with 93.16% holding fewer than 500 shares — a retail-heavy register, which is common for older UP-listed industrials. Institutional ownership is minimal at 0.61%, which partly explains the valuation discount relative to better-covered mid-cap peers.

One governance annotation the filings provide without drama: in 2025, SEBI issued a disgorgement order against promoter Krishna Shriram; in April 2025, SAT stayed that order, per the Announcements. The matter is pending. The auditors have not flagged it as a qualification.

The Managing Director is Rakesh Kumar Gangwar, who has been with the company since 2009, per Annexure 4 of the Annual Report. His remuneration for FY26 was ₹2.28 crore (disclosed in KMP transactions). The board that hired him re-approved his appointment most recently at the June 2025 AGM, and the sitting fees for non-executive directors were doubled from ₹25,000 to ₹50,000 per meeting effective August 2025.

13. Corporate Governance: Angels or Devils?

The Secretarial Audit Report for FY26, signed by M/s Nirbhay Kumar & Associates, states that the company has generally complied with applicable laws and that the board is properly constituted with three independent directors and adequate processes. No material non-compliance flags.

Statutory Auditors are S.R. Batliboi & Co. LLP (an EY affiliate) — appointed at the 58th AGM in 2022 for a second five-year term through the 63rd AGM. Their opinion on both standalone and consolidated statements for FY26 is unmodified.

One item in the auditors’ report warrants noting: the audit trail feature of SAP S/4 Hana is not enabled for certain changes made through privileged or administrative access rights. The auditors flag this as a factual matter (under Rule 11(g)) but stop short of a qualification. The company’s prior-year audit trail has been preserved per statutory requirements.

Related party transactions include the ₹7 crore advance paid to Usha International Limited for the corporate office property, plus ongoing lease and expense-reimbursement flows. All transactions are stated to be at arm’s length, and the Audit Committee has reviewed them.

Contingent liabilities include: ₹19.47 crore in income tax demands under appeal, ₹9.50 crore export pass fee demand (contested), ₹8.55 crore central excise disputes, and the large ₹479.86 crore disclosed contingent liability related to interest on delayed cane payments — a figure that has sat unchanged on the balance sheet for years and which management characterises as remote in probability of crystallising, per Note 51.

No auditor resignations. No significant and material orders from regulatory authorities. Four shareholder complaints received and resolved in FY26.

14. Industry Roast & Macro Context

The Indian sugar industry is a masterpiece of regulatory architecture with a CIBIL score attached. The government sets the cane price (FRP at the Centre, SAP in UP — and UP’s SAP has historically sat above the Centre’s FRP, because sugarcane farmers vote). It sets the minimum selling price for sugar. It allocates monthly release quotas so no single mill can flood the market. It mandates ethanol blending percentages. It decides when mills can export and when they cannot. By the time a piece of sugarcane reaches a consumer’s tea cup, it has passed through approximately seven layers of government involvement.

This is not necessarily a criticism — the framework emerged from decades of sugar industry volatility that produced genuine farmer payment crises. But it does mean that MSL’s profitability is a function of arithmetic it did not write. When SAP rises faster than MSP, margins compress. When the government restricts sugar exports to protect domestic supply (as it did from late 2023 into 2024), realisations flatten while costs do not. When the ethanol blending mandate rises — from 10% to 20%, now heading toward E22-E30 — the distillery division gets a structural tailwind that partially compensates.

Western UP adds its own complications. The region faces rapid urbanisation eating into agricultural land, aging cane varieties vulnerable to top borer infestation, and the replacement of CO-238 with newer varieties that are still proving themselves at scale. The 2025-26 season saw all-India sugar production of roughly 278 lakh tonnes against initial estimates of 310 lakh tonnes, per ISMA data cited in the Management Discussion — with closing stock estimated at 46 lakh tonnes, roughly two months of consumption. The sugar market is tighter than it looks from the inside.

The ethanol story is genuinely interesting: all-India blending hit 19.98% by March 2026 against the 20% target, with the mandatory E20 rollout from April 2026. MSL’s 38,000 KL ethanol allocation for the supply year gives the distillery reasonably predictable revenue. The government’s next-phase ambitions (E85 to E100 by 2030-ish) read like a long-term business plan for anyone owning a working KLPD licence.

15. EduInvesting Verdict

SWOT

The central tension at Mawana Sugars in FY26 is familiar to anyone who has watched a regulated commodity business at mid-cycle. Revenue is growing. The balance sheet has been tidied. The ethanol mandate is a genuine long-term structural shift in the company’s favour. And yet the operating margin in FY26 — 6.7% — is what it was in FY24, suggesting that scale and structural improvement have not yet translated into durable margin expansion.

A P/B of 0.79x on a balance sheet that is mostly sugar inventory and fixed assets — and a P/E of 11.1x against peers at 30x — tells a story the market has been telling for a while: highest-quality execution in a regulated industry at the smaller scale tends to get priced like a utility, not a growth business.

A company that has reduced its debt, owned its brand, navigated the cane cycle, and positioned for the ethanol mandate — now waiting for the market to notice.