Foods & Inns Limited — Q4 FY25 earnings call

Call held 22 May 2025

Management summary

Foods & Inns concluded Q4 FY25 with a rebound in domestic sales and strong growth in its frozen foods segment. The company received a significant PLI incentive of ₹25.08 crores for FY23-24 and is on track for further incentives in FY25. Strategic capacity expansions are underway for spray-dried powder and frozen foods, while raw material prices for the upcoming season are favorable. Despite some FOREX losses and pending PLI dues, management expressed confidence in achieving volume growth across key segments and improving EBITDA margins from Q4 FY26.

Highlights

  • Received PLI incentive of ₹25.08 crores for FY23-24, and met eligibility for FY24-25 incentives (projected ₹33.2 crores).

  • Domestic sales rebounded in Q4 FY25, with positive customer sentiment and anticipated healthy order book for FY26.

  • Frozen foods division achieved over 35% growth in FY25, supported by new greenfield capacity.

  • Alphonso mango season started with satisfactory crop yields and lower raw material prices than last year.

  • Spray-dried powder division is at full capacity and planning further expansion.

Concerns

  • Experienced FOREX loss in Q4 FY25, though less than Q3's ₹4.2 crores.

  • Approximately 10% of PLI dues from FY21-22 and FY22-23 remain pending.

  • Kusum brand sales saw a dip due to the loss of a tender-based client over pricing concerns.

  • Customer call-off for pulping business can take 15-18 months, leading to inventory holding costs.

  • Export uncertainties due to global shipping line issues and geopolitical events persist, potentially causing delays.

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 ₹10 Cr
    • PLI compliance
    • Tomato CAPEX
    • Spray drying expansion
    Yes, we have front-ended a lot of CAPEX because a lot of CAPEX was also related to the PLI for which we had to complete it by March of 2024. That is number one. But having said that, we also did this Tomato CAPEX that actually went online in December or November of 2024. So all those things put together actually came in in FY'25. But having said that, roughly around 10 or maximum of 15 is what you can actually consider in FY'26 as CAPEX.
  • Debt Gross ₹440 Cr
    So the debt number is something that is already published, I think it's around Rs. 440 odd crores, a breakup is around Rs. 350 crores of working capital - Rs. 355 crores of working capital and the rest is in the form of long term debt.
  • Liquidity Liquidity disclosed Good credits from farmers and traders help manage working capital despite delays in customer call-offs.
    So on these 2 factors, the raw material cost in the previous season, that is 2024 inventory crop season, the raw material prices were high. So because of which the working capital went up. Also, there was a delayed call off from customers, whether it was export or domestic, even though they are fulfilling their orders, for which they are also giving us the inventory holding costs sort of a thing, but that adds pressure to my working capital part of it. So both put together, last year was a pressurized situation for us, but having said that you correctly said that we have actually enjoyed good credits from our farmers as well as the traders who actually supply to us because of which we are happy to be in the ecosystem and they are also knowing that as a company we might delay, but not default. So that's the comfort because of which the third or the fourth generation farmers continue to be with us saying that these guys will never default but maybe delay but if we support them, then probably they will also support us.

Guidance & targets

Volume

  • Mango Pulping Tonnage Growth Volume · FY26 · High confidence 15%
    So with respect to tonnage that we actually expect to grow in the mango pulping segment is around 15% as per the initial orders that we have actually got.

    — Anand Krishnan

  • Kusum Business Growth Volume · FY26 · High confidence 30-40%
    We are really targeting growth of at least 30% to 40% in the Kusum business in this particular year.

    — Anand Krishnan

  • Frozen Food Growth Volume · FY26 · High confidence Minimum 35%
    A minimum of 35% is our internal target for this FY'26.

    — Anand Krishnan

  • Guava Pulping Growth (if crop good) Volume · FY26 · Medium confidence 50% minimum
    So if the crop is good, we can make it 50% minimum growth we can expect in this segment

    — Moloy Saha

Revenue

  • Tomato Revenue Revenue · FY26 · High confidence ₹70-90 crores
    we are expecting to hit revenues of around anywhere between Rs. 70 to Rs. 90 crores in FY'26.

    — Anand Krishnan

  • Spray Drying Revenue Revenue · FY26 · High confidence ₹30+ crores

    Previously ₹22 crores (FY25) → ₹30+ crores

    Spray drying division, last year we did around Rs. 22 odd crores, that is in FY'25. And we are expecting that to reach around Rs. 30 odd plus crores in FY'26.

    — Anand Krishnan

  • Pectin Segment Revenue Revenue · FY26 · High confidence ₹6+ crores
    we are expecting around in FY'26 to book around Rs. 6 plus crores of revenue

    — Anand Krishnan

  • Tetra Recart Revenue Revenue · FY26 · High confidence ₹6 crores
    But a minimum or a conservative basis of Rs. 6 crores is what we can actually expect from the Tetra business this year.

    — Anand Krishnan

  • Revenue Target Revenue · FY27 · Medium confidence ₹1800 crores
    By FY'27 is what we had targeted internally as such.

    — Anand Krishnan

Margin

  • EBITDA Margins Margin · Q4 FY26 onwards · Medium confidence Increase
    the absolute gross margin is something that we will increase and as a result of which because of the operating leverage, the EBITDA margins are also expected to increase.

    — Anand Krishnan

Tax

  • Tax Rate Tax · Steady state · High confidence 25.17%

    Previously 34.94% → 25.17%

    So steady state basis you should assume 25.17%. Having said that, if you actually attended our Q2 conference call, we had actually mentioned that we have opted for the new tax regime under section 115BAA, where the new tax rate is at 25.17 as compared to 34.94 earlier.

    — Anand Krishnan

PLI Benefits

  • PLI Benefits PLI Benefits · FY25 · High confidence ₹33.2 crores
    So the incentives are at around Rs. 33.2 crores is what we are actually expecting for FY'25. Rs. 33.2 crores.

    — Anand Krishnan

Capex

  • CAPEX Capex · FY26 · High confidence ₹10-15 crores

    Previously ₹57 crores (FY25) → ₹10-15 crores

    roughly around 10 or maximum of 15 is what you can actually consider in FY'26 as CAPEX.

    — Anand Krishnan

What to watch in Q1 FY26

FOREX Loss Quantification

Next quarter
Current Not as much as Q3's ₹4.2 crores
Target Specific Q1 FY26 FOREX loss figure

Why it matters

To assess the precise impact of currency fluctuations on profitability.

There was a FOREX loss in this quarter as well because the rupee actually, I mean, remained at a depreciated level at that point of time for 31st of March, but the extent is not as much as what it was in Q3. It's the notional one.

Risks & concerns

  • FOREX Fluctuations

    medium

    Rupee depreciation led to notional FOREX losses in Q4 FY25, similar to Q3.

    Both acknowledged

  • Customer Offtake Delays

    medium

    Customers take 15-18 months to lift committed quantities, leading to inventory holding and working capital pressure.

    Both acknowledged

  • Raw Material Price Volatility

    medium

    As an agri-business, raw material prices are not fully in the company's control, impacting revenue and margin predictability.

    Management acknowledged

  • Export Shipping Uncertainties

    medium

    Past issues with shipping lines and ongoing geopolitical events (e.g., Red Sea) can cause delays in export orders, leading to extended lead times.

    Both acknowledged

  • Guava Crop Cyclicality

    low

    The guava crop was not good this year, impacting production, though a good crop is expected from August/September.

    Management acknowledged

Q&A highlights

5 direct
FOREX Loss in Q4 FY25 Partial
There was a FOREX loss in this quarter as well because the rupee actually, I mean, remained at a depreciated level at that point of time for 31st of March, but the extent is not as much as what it was in Q3. It's the notional one.

Analyst sought quantification of Q4 FOREX loss following a significant loss in Q3, but management did not provide an exact figure, only a qualitative comparison.

Asked by Arnav Sakhuja

Pectin Segment Revenue and Timeline Direct
Nothing has been recognized as revenue in the Pectin segment in this particular quarter. And I mean, just as a guidance, we are expecting around in FY'26 to book around Rs. 6 plus crores of revenue

Clarified that the new Pectin segment had no revenue in Q4 FY25 but provided a specific revenue target for FY26, indicating the ramp-up phase.

Asked by Arnav Sakhuja

Overall Growth and Investor Expectations Partial
If you see the performance of last 5 years, yes, we have stagnated a Rs. 1000 crores, but if I do not know at what level you have invested but we have shown growth from Rs. 350 crores to Rs. 650, Rs. 650 to Rs. 1000 and as you would know that anything new that you start any newborn baby you have to give it time for it to kind of get onto his in shape. Basically these are incubation stages.

Analyst questioned the company's ability to meet investor expectations despite diversification. Management acknowledged stagnation at ₹1000 crores but highlighted past growth and attributed current state to 'incubation stages' for new businesses.

Asked by Mulesh Savla

Customer Offtake and Inventory Management Direct
That our desired level agreed, but as per the contract, they have 15 to 18 months for them to lift off and it is at their prerogative to doing about it. So yes, it would have been just wonderful that I manufacture and within 3 months they pick up everything, but while we have been made to create that kind of storage and the facility, warehousing, but the actual users, our customers, they want to lift it just in time for their production.

Addressed a recurring concern about customers delaying off-take of committed quantities, explaining it's part of the contractual terms (15-18 months) and a business reality, impacting inventory cycles.

Asked by Mulesh Savla

EBITDA Margin Outlook and Raw Material Prices Direct
So EBITDA margins are always a function of what my gross margins are and as I have time again explained on various calls that we have been in, the gross margin percentage is not the right way to look at this business. The absolute gross margin is something that we will increase and as a result of which because of the operating leverage, the EBITDA margins are also expected to increase. But having said that, as we have told in the opening remark, the raw material price this year as an in FY'26 is actually slightly lower. So the effect of that will actually start coming in Q4 of FY'26.

Provided a clear explanation of the margin trajectory, linking it to gross margin improvement and operating leverage, with a specific timeline for the positive impact of lower raw material prices.

Asked by Koustubh Shaha

PLI Benefits for FY25 Direct
It's a 34 crores PLI projection for this year. ... So the incentives are at around Rs. 33.2 crores is what we are actually expecting for FY'25. Rs. 33.2 crores.

Clarified the expected PLI benefit for FY25, providing a specific figure after an initial slightly different projection, which is a key financial inflow.

Asked by Koustubh Shaha

Working Capital and Debt Position Direct
So the debt number is something that is already published, I think it's around Rs. 440 odd crores, a breakup is around Rs. 350 crores of working capital - Rs. 355 crores of working capital and the rest is in the form of long term debt.

Provided specific figures for total debt and its breakdown into working capital and long-term debt, which is crucial for assessing financial health.

Asked by Amish Kanani

Export Outlook and Shipping Uncertainty Partial
You would need to first tell me whether there would be uncertainty, whether there is a Suez canal problem or there is a Red Sea problem or if there are any Houthi attacks or you need to give me guidance. Is there any war? So based on that, I might be able to tell you. We wouldn't have a problem if the industry doesn't have a problem. We go in sync. ... So I will just add up generally the customers have taken up an extra lead time, so delays maybe still for a while the uncertainties are there. If it reaches early, we are able to recognize it earlier. So little bit of uncertainties are still there, but hopefully getting back on track.

Analyst asked about export uncertainty. Management initially deflected by asking for external guidance on geopolitical events, then acknowledged that customers are taking extra lead time and uncertainties persist, but hopes for recovery.

Asked by Amish Kanani

2 min read 6 chapters

Detailed narrative

PLI Incentives and Strategic Execution

Foods & Inns received a significant PLI incentive of ₹25.08 crores for FY23-24 on May 19, 2025, a testament to its strategic execution. The company has already met eligibility thresholds for FY24-25 incentives, with a projection of ₹33.2 crores. While approximately 10% of dues from FY21-22 and FY22-23 remain pending, management is actively engaging with authorities for their release, reinforcing the company's contribution to India's food ecosystem under the Atmanirbhar Bharat vision.

Q4 FY25 Performance and FY26 Outlook

The company reported a decent finish to FY25, characterized by a rebound in domestic sales during Q4 and sustained momentum into April. Customer sentiment remains positive, leading to an anticipated healthy uptick in the order book for FY26. Management projects a 15% tonnage growth in mango pulping, ₹70-90 crores revenue from tomato, and over ₹30 crores from spray drying for FY26, alongside a 30-40% growth target for the Kusum brand.

Capacity Expansion and Product Innovation

The spray-dried powder division is currently running at full capacity due to strong demand, prompting plans to add and expand capacity with a new mid-sized plant. The frozen foods segment demonstrated robust performance, growing over 35% in FY25, with new greenfield capacity at Vankal, Gujarat, poised to maintain this growth trajectory. Innovation efforts include the first Tetra Recart export order to Finland and active discussions with major customers, with Tetra Recart revenues conservatively projected at ₹6 crores in FY26.

Raw Material Dynamics and Margin Trajectory

The tomato season concluded strongly, ensuring adequate inventory for FY26, while the Alphonso mango season began with satisfactory crop yields and lower raw material prices compared to last year. Although raw material prices for FY26 are slightly lower, their positive impact on gross and EBITDA margins is expected to be realized from Q4 FY26, as the higher-priced 2024 inventory will be sold in the first nine months. The company operates on a cost-plus model, aiming for improved absolute gross margins year-on-year.

Working Capital and Debt Management

Working capital increased in FY25 due to higher raw material costs during the 2024 inventory crop season and delayed customer call-offs, which can extend up to 15-18 months. Despite these pressures, the company benefits from strong credit relationships with farmers and traders. Total debt as of March 31, 2025, stood at approximately ₹440 crores, with ₹350 crores allocated to working capital and the remainder as long-term debt, indicating a need for larger working capital to support sales growth.

Capital Expenditure and Tax Regime Shift

Capital expenditure for FY25 amounted to ₹57 crores, primarily driven by PLI-related requirements completed by March 2024 and the Tomato CAPEX, which became operational in late 2024. For FY26, CAPEX is projected to be significantly lower, in the range of ₹10-15 crores. The company has successfully transitioned to the new tax regime under section 115BAA, resulting in a reduced steady-state tax rate of 25.17% from the previous 34.94%.

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