ADF Foods

ADF Foods delivered a robust Q3 FY26, with consolidated revenues reaching an all-time high of INR191 crores, marking a 29.5% year-on-year growth and 17.5% quarter-on-quarter increase. Consolidated EBITDA also hit a record INR37.1 crores, reflecting a 40.6% YoY increase, with healthy margins of 19.4%. For the 9-month period, consolidated revenues grew 13% YoY to INR486.5 crores, and EBITDA increased 30.8% to INR96.4 crores.

While standalone EBITDA margins improved significantly to 25.1% in Q3 FY26 (up 400 bps YoY), consolidated margins saw a slight QoQ decrease of 260 bps to 19.4%. Management clarified that the consolidated margin reduction is primarily due to investments in subsidiaries, particularly the distribution business and the Truly Indian brand, which are in a growth and investment phase. Standalone margins continue to remain strong, with Q3 standalone PAT (excluding exceptional item^📎s) at INR27.2 crores.

The company's upcoming Surat greenfield facility is progressing as planned, with pilot runs successfully completed. Phase 1 of the facility is on track to become fully operational by Q4 FY26. This expansion will introduce two new product lines, one starting in March 2026 and the second in Q2 FY27, primarily focusing on frozen products, which are a higher gross margin category. Overall weighted average capacity utilization in Q3 was 70-75% due to debottlenecking efforts.

ADF Foods' flagship brand, Ashoka, continues to strengthen its market presence, while the mainstream brand, Truly Indian, has exceeded expectations with accelerated growth. The company is actively pursuing new listings in prominent supermarket chains in the US, including Whole Foods Market and Costco, and expanding its distribution in Europe, with new markets opened in Eastern Europe and new supermarkets in the Netherlands and Germany. B2B and private label business accounts for about 20% of overall revenues.

Despite past tariff challenges, demand remained robust, and the company did not reduce its prices. The 50% tariff translated to a 25% price increase at the MRP level, which was passed directly to consumers. With the tariff situation clarifying, management plans to aggressively pitch new products to supermarkets, expecting this to further aid business growth, as the uncertainty had previously led them to refrain from new product introductions.

The Truly Indian brand, currently in an investment phase, is expected to reach breakeven within approximately 18 months when considering the combined margins of both the standalone company and its subsidiaries. On a standalone subsidiary level, breakeven is projected within 3 years. The brand is positioned as a premium offering with 65-70% gross margins for frozen products, contributing to the company's overall margin profile.

ADF Foods is confident in achieving consolidated revenues between INR925 crores and INR1,000 crores by FY27. This target is contingent on a better plan for the domestic market, which the company is re-evaluating and expects to finalize by Q2 FY27. The company also plans to add another 10 to 12 new SKUs from the Surat plant in the next financial year to support growth.