Shree Renuka Sugars Q2 FY26: Revenue Holds Up Seasonally, But Loss Widened Sharply as Costs Bite
Shree Renuka Sugars saw a modest uptick in its revenue this quarter compared with the previous quarter, but the business remains under severe strain. Inputs costs, weak realisations and operating losses caused the company to report a large net loss. While the revenue bump suggests some seasonal/ operational resilience, the sharp loss underscores deep challenges in the sugar and allied businesses. The quarter signals caution: revenue isn’t enough, margins and cost structure remain weak.
*Key Highlights*
* Revenue from operations (standalone): ₹ 2,323.3 crore in Q2 FY26.
* Quarterly total income (consolidated): ₹ 2,422.8 crore in Q2 FY26.
* Net loss (PAT) (consolidated): ₹ 368.6 crore in Q2 FY26 (vs a small loss of ₹22.3 crore in Q2 FY25).
* Profit-before-tax (PBT): Loss of ₹ 401.3 crore in Q2 FY26.
* EPS (diluted): -₹1.73 per share (vs -₹0.10 per share in Q2 FY25).
* Operating profit (PBDIT, excluding other income): Loss of ₹ 182.2 crore (vs profit of ₹227.4 crore in Q2 FY25).
* Segment-wise: Sugar refinery division revenue was ₹ 1,667.2 crore, but it made a PBT loss of ₹ 35.6 crore (vs profit of ₹ 300.8 crore a year ago). Sugar-milling business also reported a loss.
*Revenue & Profit Analysis*
Revenue from operations this quarter at ₹ 2,323.3 crore shows small change compared with last year, indicating that demand or sales volume for their products didn’t collapse completely. However, the profit side was painful. The company swung into a heavy loss ₹368.6 crore because operating costs far outstripped revenue. The PBDIT loss of ₹182.2 crore (versus a profit last year) shows that core operations are under stress. The slide in profitability shows up in EPS too: from a small negative in Q2 FY25 to -₹1.73 this quarter. This signals that shareholders’ capital is under pressure and returns remain negative. So, while the company managed to sell sugar/ products worth similar value as last year, the cost structure and business environment turned unfavourable resulting in sharp losses instead of modest results.
*Business Segment Performance & What Went Wrong*
Shree Renuka runs multiple businesses: sugar-milling and refining, distillery, power/ co-generation, trading etc. In Q2 FY26:
* Sugar-refinery business: Revenue ~₹1,667.2 crore. But it reported a PBT loss of ₹35.6 crore (versus profit of ~₹300.8 crore a year ago).
* Sugar-milling: Also loss-making this quarter. Milling business posted a loss of ₹68.7 crore.
* Distillery: This was a small positive, some profit (₹1.4 crore) but tiny compared with overall losses.
* Co-generation (power from bagasse/ mills) and trading businesses did not offset the losses, co-generation saw a loss, trading gave small profit.
In effect: most of their core sugar-refining and milling businesses are loss-making this quarter. The small gains in distillery/ trading are not sufficient to offset the losses.
Likely reasons: weak sugar realisations, high input costs (raw material, labour, fuel), possibly GST/ levy/ stock-price issues and adverse industry-level conditions.
*Risk & Key Challenges*
* Negative margins and heavy losses: The loss of ₹ 368.6 crore is a clear red flag. If this continues, risk to solvency and shareholder value increases.
* Volatile commodity and sugar price cycles: Sugar prices globally and domestically fluctuate widely. Company’s profitability is very sensitive to sugar price and raw-material cost swings.
* Dependence on allied businesses: Distillery or power business may not always perform; they are small now. Sugar milling/refining remains the mainstay but that is weak this quarter.
* Working-capital and debt burden: Losses erode internal accruals, liquidity & debt-repayment capacity may be under stress.
*Management Actions & Other Developments*
One positive note: the company’s board has approved a conversion of a loan of one subsidiary into equity (KBK Chem-Engineering Pvt Ltd). This may help clean up the balance sheet slightly. But this alone is unlikely to offset the large operating losses. Until the sugar business recovers (better prices, lower costs), the company will remain under pressure.
*Conclusion*
This quarter for Shree Renuka Sugars was tough and disappointing. While the top-line was relatively stable, the business is significantly loss-making. That means a lot of concern around their core business viability in current market conditions. The key takeaway is: this is a high-risk situation. Unless sugar prices firm up or company restructures operations/ cost base, the losses may continue. At present, this stock seems speculative and would need a catalyst (price recovery, turnaround in costs, favourable policy) to think of it as a buy.
The image added is for representation purposes only
