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.