Apex Frozen Food

Apex Frozen Foods delivered a robust performance in Q1 FY26, with net revenue increasing by 39% year-on-year and 31% quarter-on-quarter to ₹258 crores. This growth was primarily driven by a 17% YoY and 28% QoQ increase in sales volumes to 3,015 metric tons, coupled with a 19% YoY and 2% QoQ improvement in average realization to ₹811 per kilo. Profitability also saw significant gains, with gross profit rising 47% YoY and 48% QoQ to ₹88 crores, achieving a gross margin of 34%. EBITDA grew 66% YoY and 137% QoQ to ₹18 crores, while PAT surged 139% YoY and 363% QoQ to ₹9 crores.

The company's strategic focus on diversifying its revenue base away from over-reliance on the U.S. market is yielding results. In Q1 FY26, non-U.S. business contributed 45% of total revenue, a significant improvement from 30% two years prior. The European Union market, excluding the U.K., was a key growth area, contributing 39% to the overall sales mix, up from 37% in Q1 FY25. The EU market achieved a strong year-on-year sales growth of 22% and a quarter-on-quarter growth of 37% in Q1 FY26, demonstrating the success of this diversification effort.

A major milestone achieved was the long-awaited EU listing approval for the company's new second facility in June 2025. This approval is crucial for expanding access to European markets and, importantly, enables the sale of Ready-To-Eat (RTE) products, which were previously restricted. Management expects to start receiving purchase orders for RTE products from the EU this month and translate them into sales positively from next month. The new facility has a total capacity of 25,000 metric tons, comprising 15,000 metric tons for RTC (Ready-To-Cook) and 10,000 metric tons for RTE, with significant unutilized capacity available for future growth.

The U.S. market faces significant uncertainty due to recent reciprocal tariff announcements and additional penal tariffs. While some program business customers have agreed to absorb the 25% and even 50% tariffs for critical holiday orders, overall demand moderation in the U.S. cannot be ruled out. The company notes that customers are exploring other origins, and the long-term impact on end-consumer consumption and pricing stability remains uncertain. Apex Frozen Foods is carefully monitoring developments and continues to engage with customers while pushing volumes to other markets.

The supply side is also experiencing challenges, including disease-related issues at the farm level and adverse weather conditions, such as cyclonic weather, leading to distress harvests. These factors have reduced the supply of raw material and contributed to volatility in farm gate prices. In Q1 FY26, the average gross shrimp purchase price was ₹320 per kilo, an 8% increase year-on-year but an 11% decrease quarter-on-quarter, with sharp corrections observed in April 2025. The company anticipates supply to remain slower until the end of the year, with potential improvement in October or November.

Apex Frozen Foods continues to maintain a strong balance sheet, characterized by a sustained focus on debt reduction. Total borrowings have significantly decreased over the past three years, from ₹167 crores in FY22 to ₹73 crores in FY25. As of FY25, short-term borrowings stood at ₹67 crores and long-term borrowings at ₹6 crores. This prudent financial management has strengthened the net debt-to-equity ratio, which improved from 0.3x in FY22 to a healthy 0.1x multiple in FY25.

Looking ahead, Apex Frozen Foods aims to further diversify its client base across geographies to mitigate single-region dependency, with a target to increase non-U.S. sales to over 50% of total revenue. The company expects lower transportation costs for European shipments compared to the U.S., which should positively impact margins. Management is committed to minimizing costs and maintaining current margins amidst ongoing uncertainties. The company also awaits potential government support, with various proposals related to financing, freight assistance, and indirect tax reimbursements currently under evaluation by the Ministries of Commerce and Finance.