At a Glance
Teesta Agro Industries Ltd’s Q1 FY26 results were a bitter pill for investors. Revenue came in at ₹37.2 crore (down 30% YoY) with net profit slipping to a modest ₹0.93 crore. The stock tanked 9% to ₹135, despite trading at a dirt-cheap P/E of 10.5 and a P/B of just 0.64. Auditor resignations, wafer-thin margins, and rising debtor days add to the drama. For now, this fertilizer stock is anything but fertilizing investor wealth.
Introduction
Teesta Agro, the company behind the “Kanchan” brand of fertilizers, operates mainly in Eastern and North-Eastern India with some exports to Bangladesh, Nepal, and Bhutan. On paper, it’s a small-cap gem: low P/B, steady profits, and growing revenues in the past decade. In reality, margins swing like a pendulum, cash flows sulk in a corner, and management’s dividend policy is as barren as a desert.
The latest quarter added more spice with auditor resignations and profitability squeezed to the bone. The share price’s sharp fall signals the market isn’t buying the “cheap” valuation story—yet.
Business Model (WTF Do They Even Do?)
Teesta Agro manufactures:
- Single Super Phosphate (SSP)
- NPK Mixture Fertilizers
- Micronutrients & Sulphuric Acid
Products are marketed under the Kanchan brand via a network in Eastern/North-Eastern India. Revenue is highly seasonal, dependent on monsoon and agri-demand. Exports offer diversification but remain a small portion.
The model is simple: make fertilizers, sell to farmers, hope for good rains. However, dependency on subsidies, volatile raw material costs, and working capital swings make this business inherently tricky.
Financials Overview
Q1 FY26 Results:
- Revenue: ₹37.2 crore (-30% YoY)
- EBITDA: ₹1.9 crore (OPM 5.2%)
- Net Profit: ₹0.93 crore (-50% YoY)
- EPS: ₹1.66
FY25 Snapshot:
- Revenue: ₹195 crore
- PAT: ₹7 crore
- EPS: ₹12.1
- OPM: 7%
Margins improved in FY25 but have again contracted this quarter. Rising expenses and slower sales are the culprits.
Valuation
- P/E: 10.5 (sector peers average ~20)
- P/B: 0.64 (dirt cheap vs peers >2)
Fair Value Estimate:
- P/E Method: EPS (TTM) ₹12.9, fair P/E 12–15 → ₹155–₹190
- EV/EBITDA: Small EBITDA base → limited use.
- DCF: Small-cap + volatile earnings = unreliable.
Fair Value Range: ₹150–₹190
(Current ₹135 – undervalued, but with risks)
What’s Cooking – News, Triggers, Drama
- Auditor Exit: Mantry & Associates resigned, Agarwal R G & Associates appointed (July 2025). Auditor exits are never a good look.
- Monsoon Dependency: Weak rainfall can hurt sales.
- Margins Pressure: Rising raw material costs impacting profitability.
- Trigger: Strong upcoming kharif season could lift Q2 numbers.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 193 |
| Liabilities | 81 |
| Net Worth | 118 |
| Borrowings | 21 |
Commentary: Low leverage, healthy asset base. However, rising debtor days (60) signal cash flow tightening.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Ops | 4 | 6 | 10 |
| Investing | -16 | -3 | -2 |
| Financing | 15 | -5 | 8 |
Observation: Operating cash improving, but working capital swings can derail stability.
Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 5.95% |
| ROCE | 7.86% |
| P/E | 10.5 |
| PAT Margin | 4.7% |
| D/E | 0.18 |
Verdict: Low returns, cheap valuations – classic value trap territory.
P&L Breakdown – Show Me the Money
| (₹ Cr) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | 286 | 163 | 188 |
| EBITDA | 13 | 7 | 13 |
| PAT | 7 | 4 | 7 |
Commentary: Revenue fluctuates like fertilizer prices. Profits are there, but not impressive.
Peer Comparison
| Company | Rev (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Coromandel Intl | 26,399 | 1,973 | 40.1 |
| Chambal Fert. | 16,646 | 1,649 | 12.5 |
| Paradeep Phosph. | 15,197 | 802 | 22.0 |
| Teesta Agro | 195 | 7 | 10.5 |
Roast: Peers play in thousands of crores, Teesta is a tiny player with micro profits.
Miscellaneous – Shareholding, Promoters
- Promoter Holding: 44.3% (unchanged)
- Public: 51.9%
- DIIs: 3.7%
- Buzz: No corporate actions, no dividends, no excitement.
EduInvesting Verdict™
Teesta Agro is the classic small-cap fertilizer stock – cheap on paper, risky in reality. Auditor exits, falling quarterly profits, and low ROE keep it out of the “must-buy” list. However, for value hunters, the low P/B and minimal debt offer a safety cushion.
SWOT
- Strengths: Low debt, cheap valuation, regional brand.
- Weaknesses: Low returns, profit volatility, no dividends.
- Opportunities: Good monsoon & export growth.
- Threats: Subsidy delays, raw material inflation, management governance risks.
Final Word: At ₹135, it’s undervalued but a high-risk, low-reward play unless operations scale up. Watch Q2 before taking any bet.
Written by EduInvesting Team | 31 July 2025SEO Tags: Teesta Agro, Fertilizer Stocks, Agrochemicals, Small Cap Analysis
