Foods & Inns Limited — Q1 FY26 earnings call

Call held 18 Aug 2025

Management summary

Foods & Inns reported a Q1 FY26 with a slight margin drop attributed to product mix, despite expecting a 20% volume growth for the year. The company is bullish on tomato product sales and sees lower working capital needs due to reduced raw material costs. While the FY27 revenue target is challenging, the focus remains on absolute gross profit growth and exploring capacity expansion in spray-drying powder, alongside navigating uncertainties from US tariffs.

Highlights

  • Internal volume growth target of 20% for FY26, indicating strong demand outlook.

  • Tomato product sales expected to grow significantly from ₹75-80 crores to ₹130-140 crores in the current financial year.

  • Working capital requirement is expected to be much lower due to a substantial drop in Totapuri mango prices (from ₹27/kg to ₹8/kg).

  • Received ₹50 crores from the PLI scheme, with an additional ₹95 crores pending over the next 3 years.

  • Exploring expansion in the high-opportunity spray-drying powder business by 4-5 metric tons per day.

Concerns

  • Gross profit margin dropped slightly in Q1 FY26 due to a product mix shift towards lower-margin chili, garlic, and cheaper mango varieties.

  • The FY27 revenue target of ₹1,800 crores is now considered 'tough' to achieve due to a significant decline in raw material prices, impacting the cost-plus model's top-line.

  • US tariffs have put export volumes on hold, with customers awaiting clarity on final duty applicable for Indian food products.

Key financials

  1. Gross Profit per Metric Ton Growth -10% -10%YoY
  2. Debt ₹427 Cr
  3. Cost of Debt 9.8%
  4. Export Revenue Share 35%
  5. Spices Revenue ₹21 Cr

What they filed

Q1 FY27: revenue down 33.3%, net profit down 46.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue169 189 397 236 193 +14%150 −21%289 −27%157 −33%
EBITDA24 19 48 26 18 −25%17 −9%40 −17%20 −20%
Net profit11 1 23 7 1 −94%0 −46%19 −16%4 −46%
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

high confidence
  • Capex Capex disclosed
    Just to add, currently, all the CAPEX which were planned is already up and running. And as Mr. Moloy mentioned, however, there are new schemes that the government keeps coming up with and there is currently something called the cluster development and we seem to be eligible for it, but there will be multiple kinds of presentations that we need to do our own analysis. So neither has our taken a firm decision as to what we expect to do, but in subsequent calls and subsequent quarters, should we take a call on the CAPEX, we will definitely let you all know. But specific answer as of today, all the CAPEX is over what was planned earlier.
  • Debt Gross ₹427 Cr Cost 9.8%
    And the second question was about the debt reduction policy, like, can you just brief us about what is the debt reduction policy? Because the debt stands at Rs. 427 crores? ... Last year was around 9.75 or something.

Guidance & targets

Revenue

  • Revenue Target Revenue · FY27 · Low confidence ₹1,800 crores
    Achieving 1,800 is going to be tough, basically because the raw material price has come down.

    — Anand Krishnan

Volume

  • Volume Growth Volume · FY26 · High confidence 20%
    Around 20% is what we are expecting internally. ... Yes. That is our target. Yes.

    — Anand Krishnan

Sales

  • Tomato Product Sales Sales · Current Financial Year · High confidence ₹130-₹140 crores

    From ₹75-₹80 crores today

    Last year, our tomato, particularly tomato-based product sale made in the range of Rs. 75-Rs. 80 crores. This financial year we are expecting it should grow to around Rs. 130-Rs. 140 crores.

    — Moloy Saha

Capacity

  • Spray-Drying Powder Capacity Expansion Capacity · Not yet decided, under preliminary stage · Medium confidence 4-5 metric ton per day

    From 6 metric ton per day today

    Currently, our capacity is around 6 metric ton per day. So we would like to expand by 4-5 metric ton per day capacity. It is under initial stage and decision not yet taken, but I think very soon we will come to a decision on this.

    — Moloy Saha

Margin

  • Gross Profit Margin Margin · Going forward · Low confidence Better
    It should be better.

    — Anand Krishnan

What to watch in Q2 FY26

Volume Growth for FY26

Next quarter / FY26
Current Targeted 20%
Target Achieving 20% volume growth

Why it matters

Volume growth is a key indicator of underlying business health and demand, especially in FMCG.

Around 20% is what we are expecting internally. ... Yes. That is our target. Yes.

Risks & concerns

  • Margin compression due to product mix

    medium

    Q1 FY26 gross profit margin dropped due to higher sales of lower-margin chili, garlic, and cheaper mango varieties.

    Analyst acknowledged

  • Difficulty in achieving FY27 revenue target

    medium

    The ₹1,800 crores revenue target for FY27 is now 'tough' due to lower raw material prices impacting top-line in a cost-plus model.

    Management acknowledged

  • Impact of US tariffs on export volumes

    medium

    Future export volumes are on hold as customers await clarity on new US tariffs, creating uncertainty for a significant portion of revenue (35-38%).

    Analyst acknowledged

Q&A highlights

5 direct
Reason for margin drop in Q1 FY26 Direct
The reason for the margin drop is that the product mix actually changed this quarter. So if you see, we did a lot more of chili, garlic, and all those products which are actually lower margin products as such. Also, the variety of mango that we actually sold this quarter that is also a cheaper variety that we actually had. So that led to lower margins.

Explains the immediate cause of margin compression, linking it to product mix and raw material quality/cost.

Asked by Krishan Sharma

Achievability of FY27 revenue target of ₹1,800 crores Partial
Achieving 1,800 is going to be tough, basically because the raw material price has come down.

Management signals a potential miss on a previously guided long-term revenue target, attributing it to raw material price deflation impacting top-line in a cost-plus model.

Asked by Krishan Sharma

Expected growth in tomato product sales post capacity expansion Direct
Last year, our tomato, particularly tomato-based product sale made in the range of Rs. 75-Rs. 80 crores. This financial year we are expecting it should grow to around Rs. 130-Rs. 140 crores. So yes, we are quite bullish on this tomato product.

Highlights a specific product category with significant expected growth (nearly doubling) driven by recent capacity expansion.

Asked by Krishan Sharma

Impact of US tariffs on export business Partial
It is too early to say because always there will be a knee-jerk reaction. Few customers are continuing with their shipment. Few customers are keeping on hold for next couple of weeks. So I don't think it's the right time to give this answer, whether there will be a long-term impact or not.

Reveals a near-term uncertainty and potential slowdown in export orders due to geopolitical factors, impacting future volume growth.

Asked by Praveen

Strategy for farmer engagement and cooperative models Direct
Now, as you know, FPOs is one of the instruments which will be very effective to have a larger kind of, tying up with larger number of farmers. And we are exploring that opportunity through the government's cluster program where governments also would like to associate all these things.

Indicates management's strategic focus on strengthening raw material sourcing through farmer producer organizations (FPOs) and government programs, crucial for quality and supply chain stability.

Asked by Amit Agicha

Experience with PLI scheme and future branding/Q-commerce strategy Direct
So under PLI, there were two categories in which we were actually selected. One was category 1 and another was category 3. Category 3 was related to branding and marketing. ... we are not claiming anything from the government. ... under which we are supposed to get Rs. 145 odd crores, we have already received Rs. 50 crores from the government of India and another Rs. 95 crores is pending to be received in the next 3 years.

Clarifies the company's engagement with the PLI scheme, highlighting both successful capital expenditure claims and a decision not to pursue branding-related incentives due to market readiness.

Asked by Amit Agicha

Company's B2B focus versus B2C/Q-commerce Direct
Sir, as I think, I told earlier also that we are not in B2C segment. Our main focus is in B2B. However, for the Q-commerce, we are working with few reputed brands in Q-commerce to tag for them and distribute. So not in our own brand, maybe in their other brand.

Reaffirms the company's core B2B strategy while indicating a cautious, partner-led approach to new channels like Q-commerce, avoiding direct B2C branding.

Asked by Amit Agicha

2 min read 6 chapters

Detailed narrative

Product Mix and Margin Performance

In Q1 FY26, Foods & Inns experienced a slight drop in gross profit margins, with gross profit per metric ton falling by approximately 10% year-on-year. This was primarily attributed to a shift in product mix, with higher sales volumes of lower-margin products such as chili, garlic, and a cheaper variety of mango. Management clarified that their business operates on a cost-plus model, meaning absolute gross profit is the key focus, which they expect to grow, rather than margin percentage.

Capacity Expansion and Growth Drivers

The company is bullish on its tomato-based product segment, expecting sales to grow significantly from ₹75-80 crores last year to ₹130-140 crores in the current financial year, following recent capacity expansion. Additionally, Foods & Inns is exploring an expansion of its spray-drying powder capacity by an additional 4-5 metric tons per day, adding to its current 6 metric tons per day, to capitalize on opportunities in the seasoning and export markets. This expansion is currently in its preliminary stages.

Working Capital and Debt Management

Foods & Inns anticipates a much lower working capital requirement for the current year. This is largely due to a substantial decrease in the procurement price of Totapuri mangoes, a key raw material, from approximately ₹27 per kg last year to around ₹8 per kg. The company's debt stood at ₹427 crores at the end of FY25, with a cost of debt around 9.75% last year. The reduction in raw material costs is expected to reduce the absolute blockage of working capital per tonnage of sales.

PLI Scheme and Government Incentives

The company has successfully leveraged the government's PLI scheme, having received ₹50 crores out of the ₹145 crores expected for capital expenditure under Category 1. An additional ₹95 crores is pending and expected over the next three years. However, Foods & Inns opted not to claim incentives under Category 3 (branding and marketing) as they were not fully prepared for direct retail distribution in international markets.

Export Market and US Tariffs

Exports currently contribute 35-38% of the company's total turnover, down slightly from 40% last year. The export business faces near-term uncertainty due to recent US tariffs, with some customers putting future orders on hold pending clarity on applicable duties. Management noted that food products are typically less affected by such geopolitical shifts in the long run but acknowledged the current 'knee-jerk reaction' in the market.

Strategic Focus and R&D

Foods & Inns maintains a strong B2B focus, supplying to Fortune 500 companies like Coca-Cola and PepsiCo, with its top 10-12 customers contributing 65-70% of total revenue. The company is establishing a new centralized R&D center in Nasik, expected to be operational in about a month, to collaborate with customers on product development. While primarily B2B, they are exploring Q-commerce opportunities by partnering with reputed brands for distribution rather than launching their own B2C products.

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