ADF Foods

ADF Foods reported a consolidated revenue of ₹147.5 crores in Q3 FY25, marking a 13.8% year-on-year growth, though experiencing an 8.6% sequential decrease. For the nine months ended December 31, 2024, consolidated revenues stood at ₹430.5 crores, an increase of 17.4% year-on-year. Consolidated EBITDA for Q3 FY25 was ₹26.4 crores, a 2.2% YoY decrease, with the margin at 17.9%, down 290 basis points. Nine-month consolidated EBITDA grew 4.3% to ₹73.7 crores, with a margin of 17.1%.

The company is actively advancing its strategy to broaden the reach of its India-focused ADF SOUL brand, establishing a presence in the quick commerce market. Additionally, ADF SOUL has expanded into select modern trade outlets such as Nature's Basket, Reliance Fresh, Haiko, Food Square, Dorabjee's, and DMart in the Mumbai and Pune regions, with plans for further expansion. Investments in both ADF SOUL and Truly Indian brands are expected to generate momentum over the medium to long term.

ADF Foods' cold storage facility at Nadiad became operational in Q3 FY25, which is expected to enhance supply chain capabilities, optimize resources, and improve order fulfillment. The expansion of the Surat greenfield facility, aimed at supporting new and existing frozen food lines, is actively underway and is anticipated to begin operations by the second half of FY26. The CAPEX spend for nine months FY25 was approximately ₹22 crores.

EBITDA margins remained in the high teens despite ongoing investments in brand development and management teams. The company faced increases in raw material prices and freight costs, which had a 3% impact on margins for freight and 1.5% for raw materials. However, stringent cost control measures, process efficiencies, and rupee depreciation helped minimize the overall margin impact. Marketing spend also contributed 1.5% to margin impact.

The distribution business experienced sequential volatility, attributed to container-related issues in Q1/Q2 leading to sales carry-forward and pre-Diwali stocking by distributors in Q2. Management clarified that the volatility is primarily on the supply side, with demand remaining robust. The company acquired 100% stake in Vibrant, which has been instrumental in growing sales routed through this entity from $1-1.5 million to $5 million, supporting ADF's overall business strategy.

ADF SOUL launched a new frozen food range last month, including stuffed parathas, kulchas, naans, and snacks like paneer pakoras and samosas. This frozen lunch segment is being rolled out in two phases and is expected to comprise about 15 SKUs. The products are currently being test-marketed across quick commerce platforms (Zepto, Instamart) and select modern trade outlets in Mumbai and Pune.

ADF Foods is committed to achieving strong and sustainable financial growth, targeting ₹1,000 crores in revenue by FY27. The company expects Truly Indian to breakeven in six to eight months and SOUL in about 12 months. Management anticipates that the distribution business can generate $12 million to $14 million annually on a steady state. They are confident that investments in brand building and strengthening management bandwidth will drive continued growth across all brands and businesses.