Apex Frozen Food

Apex Frozen Foods delivered robust financial results in Q2 FY26, with net revenue growing 19% year-on-year to INR 238 crores. This growth was primarily driven by higher realizations of INR 870 per kilo, a 25% increase year-on-year. Gross profit surged by 76% to INR 96 crores, leading to a gross margin of 39%, an improvement of 1,200 basis points year-on-year. EBITDA saw a significant increase of 284% year-on-year to INR 18 crores, with the EBITDA margin reaching 7.2%. Profit after tax also improved substantially to INR 12 crores from a loss of INR 1.7 crores in the prior year's Q2.

The company's diversification strategy has seen its non-U.S. export business expand from 24% in FY22 to nearly 50% in H1 FY26, with the non-U.S. share reaching 56% in Q2 FY26. This strategy aims to mitigate dependence on any single region. Apex is actively expanding into new markets like Australia and Russia, with Australia having the potential to contribute 5% of overall business in the first year and grow to 10%. Exports to Russia are anticipated to commence in Q3 or Q4 FY26, leveraging existing product lines.

The 50% tariff imposed on U.S. shrimp imports has led to a marginal decline in sales volumes in Q2 FY26 (2,606 metric tonnes vs 2,710 metric tonnes last year) and caused 'disturbance' in customer planning. The tariff component accounted for approximately INR 39-40 crores in H1 FY26, impacting 'other expenses'. However, management noted that customers are largely compensating for these tariffs, and the company's diversification efforts have successfully mitigated the overall impact, with ongoing India-U.S. trade talks expected to resolve the issue soon.

Despite current capacity utilization being around 30%, Apex Frozen Foods plans to increase it to a minimum of 50% over the next year, targeting 14,000-15,000 metric tonnes in FY26. The company aims for 20,000 metric tonnes at 70% utilization in the next 2-3 years. The new Ready-To-Eat (RTE) facility, which received EU approval, is expected to contribute around 1,000 metric tonnes in FY26 and 2,000-2,500 metric tonnes next year, with its full impact anticipated from the next fiscal year.

Apex is strategically focusing on value-added products and customized offerings for various markets to enhance margins. Management believes a 10-12% EBITDA margin is achievable in the long term, supported by consistent realization growth and the government's push for value-added components. RTE products are expected to yield margins of approximately $0.50 plus or minus per kilo, indicating higher profitability compared to baseline commodities.

The company has significantly strengthened its balance sheet, reducing total borrowings from INR 167 crores in March 2022 to INR 41 crores as of September 2025. In H1 FY26, Apex repaid almost INR 30 crores in debt, bringing short-term borrowings to INR 40 crores and long-term to nearly INR 1 crore. This focus on debt reduction has improved the net debt-to-equity ratio from 0.34x to 0.05x, reflecting a strong financial position and improved cash flow from operations, which grew to INR 46 crores in H1 FY26 from INR 7.3 crores in H1 FY25.