Original-Research: MustGrow Biologics Corp. (von GBC AG): BUY

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: 20260629_MustGrow_IC

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.)