Tata Group: Why Did Rallis India’s Profit Fall 82% Despite Revenue Growth?

Synopsis: Rallis India’s profit fell sharply in Q3 FY26 by 82% despite strong revenue growth, mainly due to exceptional gratuity costs from labour code implementation and a steep sequential decline from a high base in Q2.

The shares of this company, which is into the manufacturing of agrochemicals and is present across the value chain of agriculture inputs – from seeds to organic plant growth nutrients – had its shares in the news following its Q3 results with a fall in the profits despite good revenue growth. 

With the market cap of Rs 4,531 crore, the shares of Rallis India Ltd are trading at Rs 234 and are trading at a PE of 24.7, whereas its industry PE is at 25.7. The shares have given an all-time return of over 1000% since their listing in March 1996.

Q3 FY26 Result

The revenue from operations for the company stood at Rs 623 crore when compared to Rs 522 crore in Q3 FY25, up by about 19 per cent on a YoY basis and on a QoQ basis down by 28 per cent from Rs 861 crore in Q2 FY26.

When it comes to profitability, the company has gone from an Rs 11 crore profit in Q3 FY25 to an Rs 2 crore profit in Q3 FY26, down 82% YoY, and from Rs 102 crore in Q2 FY26, down about 98% QoQ. 

Rallis India has shown significant operating efficiency improvement during Q3 & 9M FY26. Its EBITDA increased to Rs 58 crore in Q3 FY26 compared to Rs 44 crore in the same period last year, while the 9M FY26 increase in EBITDA is up 18% to Rs 362 crore, which is encouraging.

The sharp decline in profit was primarily due to two exceptional factors that distorted the company’s normal earnings. First, in earlier periods, profits were boosted by one-time gains from the sale of flats and leasehold land, which contributed about Rs 5 crore in Q3 FY26 and Rs 11 crore in 9M FY26. Since such asset sale gains are non-recurring, their absence in the current period led to a lower reported profit base.

Second, profitability was significantly impacted by the one-time Rs 40 crore cost arising from the implementation of new labour codes. This mainly relates to higher gratuity provisioning due to changes in wage definitions, which increased employee-related expenses. As this is a regulatory-driven and non-recurring adjustment, it dragged down net profit for the quarter, even though the company’s underlying operational performance remained stable.

In terms of financial quality strengths, the company performed well in fundamentals through volume-driven growth, shifts in product mix, and strategic price increases. Moreover, Rallis has kept emphasising innovation and IP, with several patents awarded to enhance its future competitiveness to ensure steady cash flow with high-value products and processes. The strategic transformation priorities are cost optimisation, innovation, talent, and enterprise resource optimisation.

Management Commentary

Dr Gyanendra Shukla, Managing Director & CEO, Rallis India Limited, said: “Q3 saw volume-led growth across businesses, supported by focused execution, strong customer engagement, and disciplined cost management. While demand remained moderate with seasonal fluctuations, we continued to strengthen our product portfolio, digital engagement, and innovation pipeline. Our focus remains on improving quality of sales, driving volume expansion, and preparing strongly for the upcoming seasons through product launches and market activation initiatives.”

Rallis India Ltd, a subsidiary of Tata Chemicals and a member of the Tata Group, is a leading agri-input company in India with more than 77 years of experience and a diverse portfolio of crop protection chemicals, seeds, and agri services. 

With a countrywide presence through a solid network of 7,000+ dealers and more than 1,00,000+ retailers, Rallis has a strong brand presence among farming communities, and with a strong ability to manufacture and develop, along with tie-ups with leading agrochemical companies worldwide, it stands amongst the top agri-input companies operating in the Indian market.

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