Synopsis: An ethanol-focused micro-cap stock fell nearly 10% after Q3 results showed a 13% YoY revenue rise but a sharp 61% drop in net profit and 26% decline in EBITDA, pressuring sentiment.
A micro-cap company, primarily engaged in the business of Sugar Manufacturing (By-product Molasses) from Sugarcane and Co-generation of Electricity Power, has come into the spotlight following the announcement of its Q3 financial results, attracting attention from investors and market watchers.
With a market capitalization of Rs. 620.62 crore, the shares of Davangere Sugar Company Limited were trading at Rs. 4.34, down by 5.45 percent from its previous day’s closing price of Rs. 4.59 per equity share. The stock has touched an intraday low of Rs. 4.12, implying an upside of 10.24 percent from previous day’s close price.
Q3FY26 Results
The company reported revenue of Rs. 82.69 crore in Q3FY26, registering a 13 percent YoY growth compared to Rs. 73.18 crore in Q3FY25. On a sequential basis, revenue increased by 71.6 percent QoQ from Rs. 48.19 crore in Q2FY26, indicating a strong rebound in topline performance during the quarter.
EBITDA stood at Rs. 13.41 crore in Q3FY26, reflecting a 26.4 percent YoY decline from Rs. 18.22 crore in Q3FY25. However, on a QoQ basis, EBITDA fell by 12.8 percent compared to Rs. 15.37 crore in Q2FY26, suggesting some moderation in operating performance despite higher revenues.
Net profit came in at Rs. 2.62 crore in Q3FY26, down 61.3 percent YoY from Rs. 6.77 crore in Q3FY25. On a sequential basis, profit remained largely flat with a marginal 0.4 percent QoQ decline from Rs. 2.63 crore in Q2FY26, indicating stable bottom-line performance compared to the previous quarter.
The company reported segment revenue of Rs 43.70 crore from Sugar, Rs 6.51 crore from Co-Generation, Rs 0.23 crore from Aviation, and Rs 31.54 crore from Distillery, while the Others segment contributed Rs 1.33 crore. Overall, total income from operations stood at Rs 83.31 crore for the period.
Major reasons for Net profit decline are that revenue grew only 13 percent year-on-year while net profit declined sharply by 61.3 percent YoY, mainly due to a significant rise in costs — with raw material expenses increasing from 72 percent of sales last year to 104 percent this year, power and fuel costs rising from Rs 2.57 crore to Rs 4.35 crore, and tax expenses increasing from Rs 1.22 crore to Rs 1.78 crore.
Davangere Sugar Company Limited manufactures and sells sugar and molasses in India, operating across four segments: Sugar, Co-Generation, Aviation, and Distillery. The company also generates power with a 24.45 MW co-generation capacity, produces ethanol, and runs an aviation business with a fleet of helicopters. Incorporated in 1970, it is headquartered in Bengaluru, India.
A return on equity (ROE) of about 3.17 percent, a return on capital employed (ROCE) of about 6.7 percent and debt to equity ratio at 0.40 demonstrate the company’s financial position. At the moment, the company’s P/E ratio is 73.8x higher as compared to its industry P/E 44.7x.
Over the past three years, the company has demonstrated strong growth, achieving a revenue CAGR of 20 percent, a profit CAGR of 24 percent, reflecting operational performance.
As of December 2025, the company’s shareholding pattern shows that promoters hold a 41.78 percent stake, while public shareholders account for 51.22 percent, and foreign institutional investors (FIIs) hold 6.99 percent of the total equity.
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