Foods & Inns Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

Foods & Inns reported strong volume growth in frozen foods and an improved gross profit per kg in Q2 FY26. The company is actively diversifying its product portfolio and expanding capacity, with promising outlooks for mango pulp exports and tomato paste. However, reported EBITDA was impacted by an MTM forex loss and increased in-house production expenses, while the Kusum Spices segment faced flat growth, prompting a strategic recalibration towards digital marketing.

Highlights

  • Frozen Food volumes grew by approximately 39% Y-o-Y in Q2 FY26, indicating strong global demand.

  • Gross profit per kg increased Y-o-Y to ~INR38.1/kg from ~INR37.2/kg, reflecting improved product mix and processing efficiency.

  • Guava business is projected to achieve ~100% growth in FY26, targeting INR35-45 crores, significantly up from INR22-25 crores last year.

  • The company is expanding its product portfolio to include garlic, tomato, papaya, and banana, and plans a low-capex expansion for spray-dried powders within 18 months.

  • The Tetra Recart segment, while currently small at ~INR2 crores YTD, has a maximum capacity potential of ~INR80-90 crores with existing infrastructure.

Concerns

  • The company recorded an MTM forex loss of ~INR5.5 crores in Q2 FY26 due to currency fluctuations, which impacted reported EBITDA.

  • EBITDA saw a 2.1% degrowth in Q2 FY26 despite volume growth, primarily due to the MTM loss and increased absolute in-house production expenses.

  • Kusum Spices segment experienced flat Y-o-Y growth in Q2 FY26, failing to meet its internal 30-40% growth target, indicating challenges in market penetration.

Key financials

  1. Frozen Food Volume Growth 39% +39%YoY
  2. MTM Forex Loss ₹5.5 Cr
  3. EBITDA Degrowth -2.1% -2.1%YoY
  4. Gross Profit per kg ₹38.1
  5. Tetra Recart Revenue ₹2 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
    • Spray dried powders capacity expansion (third plant) ₹5 Cr
    So capex with respect to spray drying is very low, maybe around less than INR5 crores is what we would be spending for the third plant that we are talking about.

Guidance & targets

Revenue

  • Tetra Recart Revenue Revenue · FY26 · High confidence INR5 crores
    In this particular year, we are expecting around INR5-odd crores of revenue in Tetra Recart, which might not be great, but we expect this to actually accelerate as days progress.

    — Anand Krishnan

  • Tomato Business Shipment Revenue · FY26 · Medium confidence INR80-90 crores

    Previously INR120 crores → INR80-90 crores

    I mean, earlier, we had mentioned about INR120 crores, I know, but maybe this year shipment might be only around INR80 crores, INR90 crores.

    — Moloy Saha

  • Guava Business Value Revenue · FY26 · Medium confidence INR35-45 crores

    From INR22-25 crores today

    But in the range of, I can say, around between INR35 crores to INR45 crores range approximately should be the total crop finished goods value likely to be, against the previous year, INR22 crores — INR25 crores.

    — Moloy Saha

  • Frozen Business Revenue · FY26 · Medium confidence INR90-105 crores

    From INR68 crores today

    Frozen for '26 last year, it is INR68 crores per annum. This year, we are targeting around -- I think it should be in the between INR90 crores to INR105 crores somewhere it should be.

    — Moloy Saha

Volume

  • Guava Business Growth Volume · FY26 · Medium confidence ~100% growth
    So this year, we are expecting that we will be approximately guava growth will be more than 100% compared to last year.

    — Moloy Saha

  • Volume Growth Volume · every year · High confidence 20%
    So the volume growth target is something that we have set internally at 20% and that's for this year as well as the next year. Next year, honestly, it's a guess that we are actually doing as of now, basically because all these numbers are dependent on the availability of raw materials and various other variables. But the target internally is 20% volume growth every year.

    — Anand Krishnan

Capacity

  • Tetra Recart Max Capacity Revenue Capacity · High confidence INR80-90 crores
    But with the current machine and the current infrastructure that we have, we can get to around INR80 crores to INR90.

    — Anand Krishnan

What to watch in Q3 FY26

Kusum Spices Digital Marketing Impact

Next quarter/H2 FY26
Current Flat Y-o-Y growth in Q2 FY26
Target Improved growth/traction from digital marketing efforts

Why it matters

Key to achieving segment growth targets and diversifying revenue, as management is recalibrating strategy.

Having said that, digital related strategies are something that we have on our mind, and that's something that we are planning to execute soon. So hopefully, we should be able to see through some better numbers going forward.

Risks & concerns

  • MTM Forex Loss

    medium

    A non-cash MTM forex loss of ~INR5.5 crores in Q2 FY26 impacted reported EBITDA, though it is not a realized cash loss.

    Management acknowledged

  • Flat Kusum Spices Growth

    medium

    The Kusum Spices segment has shown flat Y-o-Y growth, indicating challenges in gaining market traction against established brands, despite internal growth targets.

    Analyst acknowledged

  • Raw Material Price Volatility

    medium

    The business operates on a pass-through model, meaning sales prices and values can fluctuate based on raw material prices, making top-line revenue targets less sacrosanct.

    Management acknowledged

  • PLI Disbursement Delays

    low

    Historically, PLI benefits have sometimes spilled over to the next financial year, creating uncertainty in the exact timing of their receipt.

    Management acknowledged

Q&A highlights

5 direct
EBITDA degrowth despite volume growth Direct
One is the MTM forex loss that you have yourself explained. Second is basically our other expenses have actually increased on absolute basis, if you see. But what has also happened is that our in-house capacities have actually grown over the last couple of years because of the capex that we did under the PLI and apart from the PLI as well.

Analyst challenged the reported EBITDA degrowth despite strong volume growth, and management explained the contributing factors including MTM forex loss and increased in-house production expenses.

Asked by Kaushal Sharma

Gross Profit per ton decline Direct
So with respect to the numbers that we have actually published, so if you actually see the tonnage numbers that have been given, based on that, if I were to actually calculate the gross profit per kg, it's actually grown on a Y-o-Y basis, wherein it's around INR38.1 per kg as compared to INR37.2 per kg.

Analyst questioned a perceived decline in gross profit per ton, which management clarified as an actual Y-o-Y growth, emphasizing the blended nature of the metric.

Asked by Arnav Sakhuja

FY27 Revenue Target of INR1,800 crores Partial
Arnav, with respect to this INR1,700 crores- INR1,800 crores turnover, even in the previous conference call, we actually clarified on this point, wherein the INR1,700 crores, INR1,800 crores was taken based on the raw material prices, which were prevalent a couple of years ago, right? Our business is a function and a pass-through of the raw material price.

Analyst inquired about the ambitious revenue target, and management clarified it was based on past raw material prices, shifting focus to tonnage growth and gross profit per kg rather than the absolute top-line number.

Asked by Arnav Sakhuja

Kusum Spices flat growth and strategy Direct
So I mean, we have not been able to immediately get traction basically because there are established brands in the market. But having said that, we continue to recalibrate our strategies. And the latest decision that we have taken is that we are going to do a lot of digital push because the older generation is accustomed to a few masalas, but the newer generations are happy to try newer brands.

Analyst highlighted the lack of growth in Kusum Spices, prompting management to acknowledge the challenge and outline a new digital marketing strategy to gain traction.

Asked by Kaushal Sharma

Intercorporate Deposits increase Direct
So we have always explained to you that we do a part of our business through the contract manufacturing part as such. So there are 2 components to it. The newer capacities that we have actually tied up with, a few of them actually had working capital issues. I mean, we also had working capital issues because of the nature of the business as such. But we had to give them security deposits, which is through an escrow account, which is interest-bearing.

Analyst questioned the rise in intercorporate deposits, and management provided a detailed explanation of their purpose as security deposits and material advances to contract manufacturers.

Asked by Kaushal Sharma

Tetra Recart maximum capacity potential Direct
With respect to the Tetra Recart question first, then on a full-scale utilization basis, we have an infrastructure, which is built for more 3 machines that we can put in the same hall. But with the current machine and the current infrastructure that we have, we can get to around INR80 crores to INR90.

Analyst sought clarity on the long-term potential of the new Tetra Recart segment, and management provided a specific revenue figure for maximum capacity utilization.

Asked by Amit Gori

PLI benefit disbursement timeline Partial
Regarding the PLI, it is generally in the financial year, next financial year, yes, we are as per the schedule terms and everything, our application to submit in next, say, 2 to 3 weeks' time. And then there will be some review at the authority level and then the disbursement take place. So we won't be able to comment on the time line. But yes, we are quite hopeful that it should be in this financial year.

Analyst inquired about the timing of PLI benefits, and management provided an update on the application process and expressed hope for disbursement this financial year, while acknowledging historical delays.

Asked by Amish Kanani

2 min read 7 chapters

Detailed narrative

Q2 FY26 Performance and Margin Dynamics

Foods & Inns reported a mixed Q2 FY26. While frozen food volumes grew by approximately 39% year-on-year, and gross profit per kg saw a slight increase to ~INR38.1 from ~INR37.2, overall EBITDA experienced a 2.1% degrowth. This was primarily attributed to a non-cash MTM forex loss of ~INR5.5 crores and increased absolute in-house production expenses related to capacity expansion, though production cost per kg actually decreased.

Product Portfolio Diversification and Capacity Expansion

The company is actively expanding its product portfolio beyond traditional mangoes, having added garlic, tomato, papaya, and banana products in recent years using existing plant infrastructure. Capacity for tomato pulping was specifically added in November/December 2025. Furthermore, Foods & Inns plans to expand its spray-dried powder capacity by adding a midsized plant with very low capex, expected to be operational within the next 18 months, leveraging existing utility infrastructure.

Promising Export Market Outlook

The export market outlook is highly promising, driven by new customer demand and India's competitive mango pulp prices due to lower Totapuri prices. Strong call-offs are anticipated from December 2025 through June 2026. Demand from Europe, initially depressed in Q1, has shown significant improvement in the last 45 days across various product categories, with Russia also emerging as a very promising market for the food processing industry.

Kusum Spices Strategy Recalibration

The Kusum Spices segment experienced flat year-on-year growth in Q2 FY26, falling short of the internal 30-40% growth target. Management acknowledged challenges in gaining traction against established brands and is recalibrating its strategy. A significant focus is now being placed on digital marketing campaigns to appeal to newer generations and leverage the brand's 50-year heritage and quality.

Tetra Recart Segment Development

The Tetra Recart segment, a newer initiative, generated approximately INR2 crores in revenue year-to-date for FY26, with a full-year target of ~INR5 crores from confirmed orders. Management indicated significant long-term potential, with existing infrastructure capable of supporting a maximum turnover of ~INR80-90 crores. The company is actively exploring new markets for Tetra Recart in Canada and North America, expecting meaningful contributions by FY27.

Intercorporate Deposits and Working Capital Management

The company reported an increase of approximately INR40 crores in intercorporate deposits. This was explained as security deposits and material advances provided to contract manufacturers. These deposits, held in interest-bearing escrow accounts at 12%, are crucial for helping manufacturers manage working capital and ensure timely order fulfillment, especially for perishable commodities requiring quick processing.

FY26 Guidance Across Key Segments

For FY26, Foods & Inns provided updated guidance for several segments. The tomato business shipment target has been revised to ~INR80-90 crores from an earlier INR120 crores. The guava business is expected to achieve ~100% growth, targeting INR35-45 crores compared to INR22-25 crores last year. The frozen business is targeted at INR90-105 crores, an increase from INR68 crores last year. The internal volume growth target across the company remains 20% annually.

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