ADF Foods

ADF Foods reported consolidated revenues of INR 589.6 crores for FY25, marking a 13.3% year-on-year increase. However, consolidated EBITDA stood at INR 98.3 crores, a 6.3% decrease year-on-year, resulting in an EBITDA margin of 16.7%, a 350 basis point reduction. Consolidated PAT for the year was INR 69.2 crores, a 6.2% decline, with a PAT margin of 11.7%. The decline in profitability was primarily attributed to rising raw material and labor costs, as well as increased brand-building expenditures.

For Q4 FY25, consolidated revenues reached INR 159.1 crores, a 3.5% year-on-year increase and 7.9% quarter-on-quarter growth. Consolidated EBITDA for the quarter was INR 24.6 crores, a significant 28.1% year-on-year decrease, with an EBITDA margin of 15.5%. Consolidated PAT for Q4 was INR 16.4 crores, a 34.4% year-on-year decrease. Management noted that while better cost management helped, the overall impact on EBITDA margin was a 260 basis point decrease year-on-year for standalone operations due to raw material, labor, and freight cost increases.

The flagship Ashoka brand showed steady growth in markets outside the US, but experienced flat growth in the US due to strategic adjustments in sales force and distributor levels. The Truly Indian brand achieved a fourfold increase in top line in FY25, driven by new listings and retail chain additions like Safeway and Albertsons, and is expected to grow over 100% in the US in FY26. The India-focused ADF Soul brand launched a frozen range and is available through quick commerce and modern trade, with a target of INR 50-75 crores in the next three years, though it underperformed expectations in FY25 with INR 6 crores revenue.

The company's capital expenditure program is on schedule, with approximately INR 50 crores invested in FY25 for brownfield expansions. An additional INR 100 crores is planned for FY26, primarily for the Surat Greenfield facility expansion, which is expected to begin operations by the second half of FY26. ADF Foods remains net debt-free with a strong cash balance of INR 118 crores. Funding for capex will primarily come from internal accruals, with nominal debt potentially taken to leverage government subsidies for the Surat plant.

ADF Foods secured nationwide distribution rights for Lipton teas in the US, which is expected to drive organic growth. The company's business mix is approximately 70% own brands (B2C) and 30% B2B/private label, with gross margins ranging from 40-60% for own brands and around 30% for B2B. A 10% US tariff is expected to be applicable from the end of May 2025; management plans to absorb part of this and pass the remainder through the value chain to distributors and retailers.

ADF Foods aims to achieve INR 1,000 crores in consolidated revenue by FY27, with EBITDA margins maintained in the high teens. The company anticipates mid-teens growth for the Ashoka brand in the US and over 100% growth for the Truly Indian brand in the US for FY26. Other markets like Australia are projected to grow by 40-50% in FY26. The company continues to invest in brand development and enhancement of its management team to drive long-term sustainable financial growth.