ADF Foods — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

ADF Foods reported a strong Q3 FY26 with consolidated revenues reaching a record INR191 crores, up 29.5% YoY, driven by robust brand penetration and new listings. Consolidated EBITDA also hit a record INR37.1 crores, with margins of 19.4%. The new Surat greenfield facility is on track for Q4 FY26 operations, and the company remains optimistic about maintaining its growth trajectory despite a one-time exceptional charge of INR6.8 crores.

Highlights

  • Consolidated revenues reached an all-time high of INR191 crores, representing a robust 29.5% year-on-year growth.

  • Consolidated EBITDA reached a record of INR37.1 crores with healthy margins of 19.4%, a 40.6% YoY increase.

  • Standalone EBITDA increased by 35.1% to INR34.4 crores, with margins of 25.1% (up 400 bps YoY).

  • Flagship brand Ashoka continues to strengthen market presence, and Truly Indian exceeded expectations with marked acceleration in growth.

  • Surat greenfield facility Phase 1 is on track to become fully operational by Q4 FY26, introducing new product lines.

Concerns

  • Consolidated PAT excludes exceptional items of INR6.8 crores due to a one-time charge for changes in Indian Labour Code.

  • Consolidated EBITDA margin decreased by 260 bps quarter-on-quarter, attributed to investment in subsidiaries.

  • Management refrained from disclosing absolute marketing expenses as a percentage of revenue.

Key financials

2 periods

Q3 FY26

  • Consolidated Revenue
    ₹191 Cr
    YoY +29.5% QoQ +17.5%
  • Consolidated EBITDA
    ₹37.1 Cr
    YoY +40.6%
  • Consolidated EBITDA Margin
    19.4%
    QoQ -2.6%
  • Consolidated PAT ex. exceptional
    ₹29.2 Cr
    YoY +55.7% QoQ +10.7%
  • Standalone Revenue
    ₹137.2 Cr
    YoY +13.3% QoQ -2%
  • Standalone EBITDA
    ₹34.4 Cr
    YoY +35.1% QoQ -8.7%
  • Standalone EBITDA Margin
    25.1%
  • Standalone PAT ex. exceptional
    ₹27.2 Cr
  • Exceptional Items
    ₹6.8 Cr
  • Volume Growth Contribution
    70%

9M FY26

  • Consolidated Revenue
    ₹486.5 Cr
    YoY +13%
  • Consolidated EBITDA
    ₹96.4 Cr
    YoY +30.8%
  • Consolidated EBITDA Margin
    19.8%
  • Standalone Revenue
    ₹377.6 Cr
    YoY +9.9%
  • Standalone EBITDA
    ₹94.6 Cr
    YoY +24.5%
  • Standalone EBITDA Margin
    25%

What they filed

Q1 FY27: revenue up 25.6%, net profit up 13.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue161 147 159 133 163 +1%191 +30%197 +24%167 +26%
EBITDA28 26 25 24 36 +29%37 +42%34 +36%30 +25%
Net profit20 19 16 15 26 +30%22 +16%26 +63%17 +13%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Surat greenfield facility Phase 1 operationalization
    • Existing product lines capacity increase at Surat plant
    • Debottlenecking efforts
    The company's capital expenditure program is on track. The Surat greenfield plant has completed pilot runs and Phase 1 is on track to be operational by Q4 FY '26.

Guidance & targets

Revenue

  • Consolidated Revenue Revenue · FY27 · High confidence INR925 crores to INR1,000 crores
    So we feel see, for the INR1,000 crores guidance, we feel fairly confident of being able to achieve anywhere between INR925 crores to INR1,000 crores.

    — Bimal Thakkar

Margin

  • Consolidated EBITDA Margin Margin · long term · High confidence high teens
    So yes, we will continue to be having margins in the high teens. We feel fairly confident of that.

    — Bimal Thakkar

  • Standalone EBITDA Margin Margin · going forward · High confidence in the 20s
    But we are fairly confident of being in the 20s on the EBITDA margin for a standalone basis.

    — Bimal Thakkar

Brand Investment

  • Truly Indian brand investment phase duration Brand Investment · next 3 years · High confidence about 3 years
    Truly Indian is still in the investment phase. And as I mentioned, it will be about 3 years -- being in the FMCG space, investment in brands is a continuous and an ongoing process. When you're launching something new and for it to start showing results, it's a 3- to 4-year period. So over the next 3 years, this brand will still continue to be in an investment mode.

    — Bimal Thakkar

Capacity

  • Surat Plant New Product Line 1 Capacity Utilization Capacity · next fiscal year · High confidence around 30% to 40%
    In the next fiscal year, we would probably see around 30% to 40% capacity utilization because there is another product line, as I mentioned, which will only start in the second quarter of next Fiscal Year.

    — Bimal Thakkar

New Product Launches

  • New product lines from Surat plant New Product Launches · one in Phase 1 (this FY), second in Q2 next FY · High confidence 2 new product lines
    So the Surat plant is going to have 2 new product lines. One is getting completed in Phase 1. So from -- in fact, from March onwards, one new product line is going to come out of the Surat plant. And some of the existing product capacity expansion is also happening at the Surat plant. And the second new product line, which is going to be there in the Surat plant will be done in Q2 of the next financial year.

    — Bimal Thakkar

  • New SKUs added from Surat plant New Product Launches · next Financial Year · High confidence another 10 to 12 more products
    So it's a continuous ongoing process. And now with the Surat plant coming in, also there will be an addition of, at least in this next Financial Year we would see another 10 to 12 more products being added out from the Surat plant as well.

    — Bimal Thakkar

What to watch in Q4 FY26

Surat greenfield facility Phase 1 operational status

Q4 FY26 (by March 31, 2026)
Current On track to become fully operational
Target Fully operational

Why it matters

New capacity and new product lines from this facility are crucial for future growth and diversification.

Phase 1 is on track to become fully operational by Q4 of Financial Year '26.

Risks & concerns

  • Prevailing tariff challenges in US market

    medium

    Despite tariff challenges, US business shows substantial progress, and management expects the situation to clear off, enabling new product launches.

    Management acknowledged

  • Consolidated margin reduction due to investment in subsidiaries

    low

    Consolidated EBITDA margin decreased QoQ due to sales of subsidiaries (distribution and Truly Indian brand business) being in investment mode, but standalone margins remain strong.

    Management acknowledged

  • One-time charge for Indian Labour Code changes

    low

    An exceptional item of INR6.8 crores was incurred due to a one-time charge for changes in Indian Labour Code, impacting PAT.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Variability in revenue growth (QoQ vs YoY) and capacity constraints. Direct
So as far as the quarter-on-quarter performance goes, so typically the second quarter and the fourth quarter are where you will see a bump up happening because of festive season sales. So you have quarter 2 typically leads into Diwali and quarter 3 or quarter 4, depending on the time Ramadan comes in, that's another period where you have a slight bump up in sales.

Clarifies seasonality in revenue and addresses past capacity issues, linking it to current strong performance.

Asked by Pritesh

Impact of tariff changes on demand and margin volatility. Partial
So on the margin front, if you see between Q2 and Q3, our standalone sales, if you look at the standalone revenues, the margins on the standalone have, in fact, improved. And the consolidated margins have come down because this Q3, the sales of the subsidiaries, which includes our distribution business and also the Truly Indian brand business, it's because of that, that you've seen on a consolidated basis, there has been a margin reduction. But otherwise, on a standalone basis, the margins continue to remain strong.

Explains the reason for consolidated margin dip despite standalone strength, attributing it to investment in subsidiaries.

Asked by Avnish Tiwari

Capacity utilization in Q3 and for the new Surat plant. Direct
So in Q3, we were again, we have many products. But as an overall weighted average, I would say, with the increase now on the debottlenecking, we were probably at about 70%, 75% on a weighted average.

Provides current capacity utilization and future plans for the new plant, indicating increased capacity.

Asked by Charchit Maloo

Truly Indian brand's path to EBITDA positive. Direct
So when you add up both the margins of both the companies, we will see a breakeven happening in about 18 months. If you look at it just on a subsidiary level, then you will see a breakeven after 3 years.

Gives a clear timeline for the profitability of the key growth brand, Truly Indian.

Asked by Bharat Sheth

Impact of tariff reduction on consumer prices and company margins. Direct
So firstly, the 50% tariff doesn't translate into a 50% price increase at the MRP level, okay? It translates... Yes. I'm just clarifying that. It translates to a 25% price increase. And secondly, we did not increase -- I mean, we did not reduce our price while selling during the tariff time. Our price to our various distributors is a C&F price. So the tariff -- whatever the tariff price -- whatever tariff they paid, they put it in their selling price and it's passed on directly to the consumer.

Clarifies how tariffs were passed on and the company's pricing strategy, indicating potential for new product offerings with tariff clarity.

Asked by Hitesh Randhawa

Marketing expenses as a percentage of revenue. Evasive
We refrain from giving absolute numbers. But when you look at the growth, it's a 24% growth year-on-year and quarter-on-quarter. So you can imagine the kind of investments which we have been doing on our mainstream Truly Indian brands and the frozen categories.

Management is not transparent about a key investment metric for growth brands, making it harder to assess efficiency.

Asked by Priyanka

Margins for the distribution business. Direct
Yes. Okay. So Priyanka, our distribution margins, as we have been previously mentioning, remains at 12% to 14% in terms of our margin on an ongoing basis. We were better off in the last few quarters due to extra promotional supports. But on a steady state, the margins will be at around 12% to 14%.

Provides a clear margin band for the distribution segment, which impacts consolidated margins.

Asked by Priyanka

Soul brand's current revenue run rate. Direct
But at the moment, Soul is in only in the Bombay markets and in limited channels, and we are doing about INR50 lakhs in our sales into the market.

Gives a specific, albeit small, revenue figure for a brand that was previously discussed as being 'back to the drawing board,' indicating its current scale.

Asked by Ashish Agarwal

3 min read 7 chapters

Detailed narrative

Strong Q3 & 9M FY26 Performance

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.

Standalone vs. Consolidated Margin Dynamics

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 items) at INR27.2 crores.

Surat Greenfield Facility Progress and Capacity Expansion

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.

Brand Performance and Market Penetration

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.

Tariff Impact and Future Strategy

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.

Truly Indian Brand Profitability Timeline

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.

FY27 Revenue Guidance and Domestic Market Focus

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.

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