Pajson Agro (PAJSON) Q4 FY26 Profit Lags Sales as Costs and Capex Bite
The cashew processor posted a 36% surge in annual revenue, but a sharp margin contraction in the March quarter reveals the pressure from rising costs and expansion funding.
Pajson Agro's FY26 revenue jumped 37% to ₹256 crore, yet its Q4 profit margin fell sharply. Higher raw material costs and doubled interest expenses to fund inventory and a new plant squeezed profitability despite strong top-line demand.
For Pajson Agro, a cashew processor running its plant near full capacity, the story is one of demand meeting its limits. The March quarter saw revenue surge 35.6% from a year earlier, but profit growth of 10% lagged far behind as costs rose faster than sales.
The numbers show a business in a growth squeeze. Annual revenue for FY26 hit ₹255.72 crore, up 36.6%. Yet the quarterly profit margin fell 190 basis points year-on-year and 390 basis points from the previous quarter, landing at 8%.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin
| Metric | CurrentQ4 FY26 | Same quarter LYQ4 FY25 |
|---|---|---|
| Revenue (₹ Cr) | 137.0YoY +36% | 101.0 |
| Profit (₹ Cr) | 11.0YoY +10% | 10.0 |
| Net Profit Margin | 8.0%YoY -19% | 9.9% |
Why the profit didn't keep up
Higher sales did not translate into proportionally higher earnings because costs ballooned. Total expenses jumped 40.4% year-on-year in Q4, driven by a spike in raw cashew nut prices and a 10.5% currency movement, as noted by Gunpowder. Interest expense doubled as the company took on more debt to fund its expansion and a massive inventory build.
This margin pressure was most acute in the second half of FY26. The company's EBITDA margin fell to about 14%, down from roughly 18% in the first half, according to the same report.
The cash catch in rapid growth
The strain is visible in cash flow. To support growth and build stock for the new plant, Pajson Agro's inventory surged. This led operating cash flow to turn deeply negative, consuming cash instead of generating it alongside profits. The company's cash conversion over the last three years was negative 13%, a gap highlighted by Sector Alpha.
Funding this working capital build and a ₹76 crore greenfield expansion has meant higher borrowings. Short-term debt nearly doubled by September 2026 to fund inventory and ongoing capital expenditure, reports StockWatch.
Banking on a new facility
Management's answer to the capacity crunch is a major expansion. A new 35,000 MT plant is slated to start commercial production in Q4 FY27, funded largely by IPO proceeds. The company, according to its earnings call transcript on Arthneeti, expects revenue from existing operations to grow about 20% in FY27, with margins recovering to a 15-16% range.
The market has taken a bullish view on this growth story, with the stock price rising significantly over the past year. However, with no visible analyst coverage as a BSE SME-listed company, the investment case rests squarely on the timely execution of this capacity ramp-up and a return to steadier margins.
Key Points
- Annual revenue grew 36.6% in FY26, but Q4 profit margin contracted sharply due to higher input costs and interest expense.
- Operating cash flow remained negative as money was tied up in a large inventory build to support growth and the new plant.
- The company is funding a major capacity expansion through IPO proceeds, with commercial production from the new facility expected in Q4 FY27.
- Management guides for 20% revenue growth from existing operations in FY27 and an EBITDA margin recovery to 15-16%.
Hexa Perspective
Pajson Agro is in a classic growth investment phase, sacrificing near-term margin and cash flow to build scale. The existing plant is at capacity, justifying the expansion, but the path to better profitability is narrow. It depends on managing volatile raw material costs, stabilizing working capital, and seamlessly ramping up the new facility. For now, investors are betting on the volume story, but the margin recovery promised for FY27 will be the critical test of that thesis.
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