Prime Fresh Q1 FY27 earnings call

Prime Fresh reported robust financial performance in Q1 FY27. Revenue increased to INR 81.71 crores, a significant 53.2% rise compared to INR 53.34 crores in the previous year. EBITDA grew by 49.25% to INR 6 crores from INR 4.02 crores, leading to an EBITDA margin of 9.83% (up from 7.53% YoY). Net Profit After Tax (PAT) also saw a substantial increase of 50.51%, reaching INR 4.35 crores compared to INR 2.89 crores in Q1 FY26.

The company, which began in 2007 with a B2C model, quickly pivoted to B2B after 9 months, supplying to supermarkets, hypermarkets, and other companies. Over 19 years, Prime Fresh has built a fully integrated value chain, procuring from 1,30,000 farmers across 19 states and supplying to modern retail, e-commerce, HoReCa, and food processors. This model involves sorting, grading, and packing, with an omnichannel sales strategy, and has led to a network of 2400+ suppliers and 90+ HCE relationships.

A key growth strategy is the Nashik Cluster Development Programme, expected to be awarded in August 2026. This project involves a farmer component (INR 60 crores value, 35% subsidy) for backward integration and an IA component with Prime Fresh's balance sheet exposure of INR 75 crores (excluding INR 5-6 crores preoperative expenditure). The INR 75 crores will fund an integrated packhouse, cold chain, reefer vehicles, and other infrastructure, with INR 24 crores expected as a government grant. The project aims to increase tonnage sourcing capability by 15,000 tons in Year 1 and 2 lakh tons over 6 years, with an equity payback projected within 5 years.

Prime Fresh is actively managing its working capital, having reduced standalone debtors by INR 12 crores in Q1 FY27. The company's internal target is to maintain receivables at 88-94 days as a percentage of sales and ensure outstanding debtors do not exceed 25% of sales. To support growth, the cash credit facility from Bank of Baroda was increased from INR 7.8 crores to INR 20 crores at an 8.5% interest rate. Additionally, BOB sanctioned INR 20 crores specifically for the Nashik CDP, with the project's peak debt expected to be around INR 35 crores.

While Q1 FY27 EBITDA margins of 9.83% were boosted by one-time^📎 factors, management guided for a sustainable EBITDA margin of 7% to 7.5% and a net profit margin of 5.5% to 5% for the current year, factoring in new investments and corporate overheads. Long-term aspirations include achieving 9.5% to 11% EBITDA margins by mid-FY28 and 14% to 16% in the next 4-5 years, driven by scale, technology, and backward/forward integration. The company also aims for 15-20% minimum volume growth and 25-30% value growth.

Prime Fresh currently focuses on 9 to 12 F&V products, with plans to expand by three to four more categories within the next year. The company has also acquired a 51% stake in a value-added products and ready-to-eat segment company, which is expected to contribute to margin support. Geographical expansion in UP, the Northeast, and southern markets, along with adding new general trade and APMC partners, are key catalysts for growth.

Despite understanding the B2C business model from its initial venture and current dealings with e-commerce partners, Prime Fresh is cautious about re-entering the B2C segment directly. Management highlighted the significant upfront investment required for marketing, infrastructure, and dedicated long-term capital commitment, which could lead to defocusing from its core B2B operations. The company plans to leverage its subsidiary, Prime Fresh Retail India Private Limited, to focus on strategic long-term partners in the B2C space.