Original-Research: MustGrow Biologics Corp. (von GBC AG): BUY
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Original-Research: MustGrow Biologics Corp. - from GBC AG
29.06.2026 / 11:00 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
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Classification of GBC AG to MustGrow Biologics Corp.
Company Name: MustGrow Biologics Corp.
ISIN: CA62822A1030
Reason for the research: Initial Coverage
Recommendation: BUY
Target price: 2.70 CAD
Target price on sight of: 31.12.2027
Last rating change:
Analyst: Matthias Greiffenberger, Cosmin Filker
From Mustard Seed Innovation to Commercial Scale-Up
MustGrow Biologics Corp. is a Canadian agricultural biologicals company
focused on mustard-derived technologies for soil health, crop nutrition, and
crop protection. The company operates in an attractive segment of the
agricultural inputs market that benefits from rising demand for biological
solutions, regenerative farming practices, and more sustainable alternatives
to conventional chemistry. MustGrow is no longer only an early-stage
development platform. With TerraSante already commercialized, TerraMG
advancing through development, and Bayer providing strategic validation, the
company is evolving into a more focused biologicals platform. The strategic
profile has become clearer following the exit from NexusBioAg, as resources
are now directed toward TerraSante commercialization rather than
lower-margin third-party distribution.
MustGrow's historical financial profile reflects this transition. Revenue
increased to C$4.71m in FY 2023 from C$0.01m in FY 2022 due to licence and
collaboration income, before declining to C$0.40m in FY 2024 from C$4.71m in
FY 2023 as that contribution did not recur. Revenue subsequently increased
to C$8.29m in FY 2025 from C$0.40m in FY 2024. However, FY 2025 should be
viewed as a transitional year rather than a recurring baseline, as most
sales were generated through NexusBioAg. TerraSante sales increased to
approximately C$0.60m in FY 2025 from C$0.13m in FY 2024 and were supported
by repeat demand. Management also indicated that approximately C$1.0m of
potential TerraSante sales could not be fulfilled due to inventory
constraints; no comparable estimate was disclosed for FY 2024.
Q1 2026 confirms the strategic transition: TerraSante generated quarterly
revenue of C$0.10m, compared with no continuing-operations revenue in Q1
2025, and achieved a gross margin of 23.6%, for which no meaningful
prior-year comparison is available. At the same time, the loss from
continuing operations narrowed to C$0.87m from C$1.37m in Q1 2025, primarily
reflecting lower regulatory, professional, and finance expenses.
We forecast revenue of C$4.50m in FY 2026e, C$14.05m in FY 2027e, and
C$31.56m in FY 2028e. This forecast profile reflects the transition away
from distribution-led revenue toward TerraSante as the company's principal
revenue driver. FY 2026e should therefore be viewed as a transition year in
which the revenue base becomes predominantly TerraSante-led, while FY 2027e
and FY 2028e represent the key scaling phase. Our forecast assumes
increasing TerraSante adoption through repeat orders, broader retailer and
grower uptake, acreage expansion, and improved product availability. The
most relevant near-term crop opportunities appear to be California
strawberries and potatoes in the Pacific Northwest, where management has
emphasized yield improvement and grower return on investment as the
principal value proposition.
The expected change in the revenue mix is also important for margin quality.
We forecast gross profit of C$1.04m in FY 2026e, C$4.92m in FY 2027e, and
C$15.15m in FY 2028e, corresponding to gross margins of 23.0%, 35.0%, and
48.0%, respectively. The anticipated margin expansion reflects the
increasing share of proprietary TerraSante revenue, improved contract
manufacturing economics, and the transition from batch production toward
larger-scale and continuous production. In our view, this is central to the
investment case, as MustGrow's revenue base should become more focused and
higher quality, with more attractive long-term economics than the NexusBioAg
distribution model.
We therefore view TerraSante as the key near- to medium-term growth driver.
The product is already commercialized, benefits from a broader U.S.
registration footprint, and appears to be entering a phase in which product
availability and working-capital management are becoming as important as
demand generation. TerraMG and the Bayer partnership provide additional
longer-term upside, particularly in biocontrol and international
commercialization. Bayer remains strategically important, as the partnership
provides external validation and a potential route into larger markets
across Europe, the Middle East, and Africa. However, Bayer-related revenue
is treated as upside rather than as part of the core base case in our
forecast.
We forecast EBITDA of -C$4.35m in FY 2026e, -C$1.08m in FY 2027e, and
C$8.46m in FY 2028e. The net result is expected to improve from -C$4.68m in
FY 2026e to -C$1.45m in FY 2027e and C$8.07m in FY 2028e. While reported
EBITDA remains negative in FY 2027e, it includes approximately C$1.33m of
stock-based compensation. Adjusting for this non-cash expense, EBITDA would
be slightly positive, suggesting that MustGrow could reach underlying
operational break-even in FY 2027e. The significance of this forecast lies
not only in the company's more focused business model, but also in the
increasing operating leverage expected as TerraSante scales.
The balance sheet remains an important consideration. Cash declined to
C$0.42m as of 31.03.2026 from C$2.02m as of 31.03.2025, while shareholders'
equity increased to C$1.35m from C$0.65m, supported by the January 2026
financing. Following the reporting date, MustGrow completed a further LIFE
offering comprising 7.48m units at C$0.50 per unit, generating gross
proceeds of approximately C$3.74m. The financing materially strengthens
near-term liquidity and provides additional funding for TerraSante inventory
production, working capital, and general corporate purposes. Nevertheless,
continued cost discipline and successful TerraSante commercialization remain
important given the company's ongoing operating losses.
We assign MustGrow a BUY rating with a target price of CAD 2.70, based on a
DCF valuation. In our view, this reflects the company's meaningful upside
potential as TerraSante commercialization advances and MustGrow develops
into a more focused proprietary biologicals platform. The investment case
depends primarily on TerraSante scaling, improving margins, and lower cash
burn, with TerraMG and Bayer providing additional longer-term optionality.
You can download the research here:
https://nwr.eqs-cockpit.com/fncls2.ssx?fn=redirect&u=3d1dcb1ad065fc7fa66fd790e102dda5
Contact for questions:
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Completion: 26.06.2026 (10:30 a.m.)
First distribution: 29.06.2026 (11:00 a.m.)
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2355044 29.06.2026 CET/CEST
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