AWL Agri Busine.

AWL Agri Business reported a sequential volume growth of 7% in Q2 FY26, reaching 1.68 million tonnes, with a 2% YoY increase. EBITDA for the quarter stood at INR600 crores, also growing 7% QoQ. However, the company experienced YoY degrowth in both EBITDA (9%) and PAT (21%) for Q2, and similar trends for H1 FY26 with EBITDA at INR1,200 crores (13% degrowth) and PAT at INR483 crores (23% degrowth). Management attributed the YoY declines to an exceptional prior year with commodity cycle gains and inventory gains, emphasizing a focus on per-tonne metrics of INR11,000 gross margin and INR3,500 EBITDA.

The edible oil segment recorded a 2% volume growth and 26% revenue growth in Q2, with a 3-year CAGR of 7%. Despite this, PBT for the segment dropped 55% to INR171 crores, primarily due to lower volumes and higher interest charges from a temporary working capital bump. The overall edible oil industry experienced sluggish growth of 1% in H1, and the broader FMCG market contracted by 0.8%. Management noted the impact of 'grammage play' with smaller SKU sizes and the low spread between palm and soya oil prices affecting demand.

The Food & FMCG segment saw a 10% volume degrowth in Q2, though this was flattish when normalized for last year's government-to-government rice exports. Encouragingly, the segment delivered a PBT of INR56 crores in Q2 and INR132 crores in H1, a significant improvement from its previous EBITDA neutral status. Market share in basmati rice increased from 7.3% to 7.7%, while wheat flour maintained 5.5%. Sugar and Poha categories showed strong growth of over 20% and 30% respectively, though soya nuggets marginally declined due to GST 2.0 implementation.

AWL continued its aggressive distribution expansion, reaching 900,000 direct outlets by September '25, with an aim for 1 million. Urban towns with over 1 lakh population are now 100% covered. Rural reach expanded significantly to 58,000 towns, up 8,000 from March '25. Alternate channels emerged as a key growth driver, clocking over INR4,400 crores in LTM revenue, with quick commerce growing an impressive 86% in Q2. AWL holds strong market shares in Q-commerce, with over 50% in soya oil and over 40% in mustard oil.

A significant challenge identified was the impact of edible oil imports from Nepal. Due to SAFTA agreements, Nepal exports packed soyabean oil at 0% duty, making it approximately INR15 per liter cheaper than Indian brands. This has led to a 2.5-3% drop in AWL's soyabean market share and a 50 basis points loss in the overall refined oil consumer pack market at an all-India level, particularly affecting border states like UP, Bihar, Bengal, and Jharkhand where AWL has strong presence.

Management expressed optimism for H2 FY26, expecting better performance driven by festive demand, normalized palm prices, and increased consumption from GST rate cuts on related food products. The company is on track to achieve INR10,000 crores in food business revenue by FY27, supported by capacity expansions including the Gohana plant (rice processing started, flour mill by November) and new Atta plants in Odisha and Bihar. However, meaningful bottom-line contribution from the Food & FMCG segment is not anticipated before FY28, as the focus remains on aggressive top-line growth and market penetration.