Freshara Agro — Q4 FY25 earnings call

Call held 20 Jun 2025

Management summary

Freshara Agro Exports Limited reported a transformative FY25, achieving robust financial performance with significant revenue and PAT growth. The company successfully operationalized its second manufacturing facility and diversified its product portfolio, contributing to strong volume growth and improved margins. Despite global headwinds, Freshara maintains a positive outlook, supported by a healthy order book and strategic expansion plans.

Highlights

  • Total revenue for FY25 reached INR260.68 crores, with EBITDA at INR46.23 crores and PAT at INR28.79 crores.

  • Revenue grew by 42.58% over H1 FY25, and PAT increased by 53% in FY25, driven by strong volume growth and improved efficiencies.

  • The second manufacturing facility in Tirupattur was operationalized, adding significant processing capacity of 75-100 metric tons/day.

  • Expanded product portfolio to include high-potential items like green peppercorns, corn kernels, olives, and white onions, which have been well-received.

  • Current order book stands at INR82 crores, providing strong visibility and momentum for the coming months.

Concerns

  • Management noted global headwinds but stated they delivered strongly despite them.

  • Ongoing US duty talks for their products, though management is optimistic about resolution.

Key financials

  1. Revenue ₹260.68 Cr
  2. EBITDA ₹46.23 Cr
  3. PAT ₹28.79 Cr
  4. EBITDA Margin 17.7%

What they filed

₹ Cr · quarterly
Line itemQ2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue104 151 134 179
EBITDA15 25 18 29
Net profit11 17 15 21
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 INR18-20 crores funded through internal approval
    • Second manufacturing facility (land, construction, machinery) ₹30 Cr
    • Second manufacturing facility (land, construction, machinery) ₹35 Cr
    And the investment of around INR30-INR35 crores that we've done, is the entire investment completed, sir, or is some amount remaining? ... Almost 90%-95% is completed. We have the line now doing production. ... So that little bit of investment is there, but what we mentioned has already landed there. ... Through our internal approval, we have funded I think close to about INR18 crores, INR20 crores we have funded from our internal approval and we've constructed in the previous year itself.
  • Debt Gross ₹84 Cr Cost 7.9%
    Our financial foundation remains strong with stable credit rating of CRISIL, BBB, long-term and A3 short-term, supported by about INR84 crores in bank facilities, ensuring we are well-equipped for the future growth. ... See the cost of interest is somewhere around less than 8% for us, because we come under the packing credit facilities.

Guidance & targets

Growth

  • Annual growth Growth · Coming years · High confidence 30%
    Our enhanced infrastructure, diverse portfolio, strong farmer network and expanding global presence gives us confidence to pursue a clearly defined benchmark of 30% annual growth in the coming years.

    — Junaid Ahmed

Capacity Utilization

  • New plant capacity utilization Capacity Utilization · FY26 · High confidence 50%
    So this year, we are expecting at least a plant to function at 50% of its expected capacity with the existing line.

    — Junaid Ahmed

  • New plant capacity utilization Capacity Utilization · End of FY26 · High confidence 100%
    So by end of FY '26, new plant will be 100%, right? It should, yes.

    — Junaid Ahmed

Capacity Expansion

  • New plant capacity increase Capacity Expansion · FY27 · Medium confidence Further increase
    And after financial year 26, we are planning to have another production line in the same plant. ... And then '27 will increase the capacity further? Yes.

    — Junaid Ahmed

Sales Mix

  • Retail packaging contribution Sales Mix · Ongoing · Medium confidence Increase from 15-20%
    And today's contribution of retail packaging is only about 15% or less than 20%. So we are trying to increase the retail packaging contribution, which helps us achieve even further stable margin, irrespective of the global market scenarios.

    — Junaid Ahmed

EBITDA Margin

  • EBITDA Margin EBITDA Margin · Next 2 years · High confidence 18%
    EBITDA margin for around 18%, I think.

    — Junaid Ahmed

Production Volume

  • Production volume (old plant) Production Volume · Next financial year · High confidence 75-100 metric tons/day
    And, hopefully, by next financial year, we should be able to touch about 75 to 100 metric tons a day.

    — Junaid Ahmed

  • Total production/sales volume Production Volume · Future · Medium confidence 50,000 metric tons
    may hit something like 50,000 metric tons of production or sales volume. Are we still on track there? Or do you think the new plant will help us excel that number? ... So yes, the plant will surely help us do about 50,000, I think.

    — Junaid Ahmed

Production Line Expansion

  • New processing line (old plant) Production Line Expansion · Next financial year · High confidence Grow another 30%
    And, by then, we want to by next year financial year, we want to have another processing line, which will help us to grow another 30 percent from that particular plant.

    — Junaid Ahmed

Market Share

  • Gherkin market share Market Share · Current · High confidence 10-14%
    I am at about, I think 10% to 14% of some market share I have for the gherkin industry.

    — Junaid Ahmed

  • Other products market share Market Share · Current, future · High confidence 1-2% (current), target 10-15%
    The other products, I am only doing about 1% or 2% market share and I think that can easily climb up to 10%, 15%.

    — Junaid Ahmed

What to watch in Q1 FY26

New plant capacity utilization

Next quarter/H2 FY26
Current Expected 50% in FY26
Target Progress towards 100% by end of FY26

Why it matters

Key driver for volume growth and revenue, essential for achieving overall growth targets.

So this year, we are expecting at least a plant to function at 50% of its expected capacity with the existing line. ... So by end of FY '26, new plant will be 100%, right? It should, yes.

Risks & concerns

  • Competition in large markets

    medium

    Management noted high competition in large markets, especially for white label products, but believes their scale and efficiency allow for sustainable margins.

    Management acknowledged

  • US duty talks

    medium

    Ongoing duty talks for products entering the US market, but management is optimistic that resolution will aid growth.

    Management acknowledged

  • Global headwinds

    low

    Management stated they delivered strongly despite global headwinds in FY25.

    Management acknowledged

  • Geopolitical tensions

    low

    Management views geopolitical tensions as creating opportunities in the food supply chain and does not see direct risk for their key markets like Iraq.

    Management downplayed

Q&A highlights

6 direct
Working capital requirement for sales Direct
We are able to rotate the funds two and a half to three times. Roughly, if you have about INR35 crores, we should be able to do 100.

Clarifies the capital efficiency for generating revenue, indicating INR35 crores working capital for INR100 crores sales.

Asked by Kumar Saurabh

Conversion of EBITDA to cash profit Partial
I mean, it is difficult to speculate like this because, one, we are trying to work with new products, new territories, and we are trying to be aggressive in the market. As a thumb rule, maybe it is possible...

Highlights the challenges in predicting cash conversion due to new product launches and market aggression, suggesting variability.

Asked by Kumar Saurabh

Composition of INR30-35 crores capex Direct
It is including the land, but the only thing is this land may not have the current value. As you know, this land was purchased about 5-6 years ago. So today the value application is very high.

Confirms that the reported capex includes land, but notes the land's current value is higher than its historical purchase price.

Asked by Kumar Saurabh

Supply chain risk management for raw materials and pricing Direct
We do, our sourcing is based on contract farming, most of it. ... This fixed procurement of raw material helps us, have the same numbers throughout the years. The price of products wouldn't swing very, very high. ... These freights are compensated by the customer.

Explains how contract farming and customer compensation for freight costs stabilize raw material and end product pricing, mitigating supply chain risks.

Asked by Kumar Saurabh

New plant capacity utilization timeline Direct
So this year, we are expecting at least a plant to function at 50% of its expected capacity with the existing line. ... by end of FY '26, new plant will be 100%, right? It should, yes.

Provides clear timelines for the new plant's capacity ramp-up, with 50% in FY26 and full utilization by end of FY26.

Asked by Shaurya Punyani

Operating profit margin expectations Partial
At operating levels, I am not sure because, as I mentioned, we are trying to be aggressive. We are trying to get into biddings of contracts. And in food industry, generally, you can never expect 15% or 20% margins, gross margins.

Indicates that while current margins are good, aggressive market strategies and industry dynamics make it challenging to commit to higher operating margins.

Asked by Tejas Khandelwal

Impact of geopolitical disturbances on Iraq revenue Direct
I don't think so. Iraq doesn't come under any kind of favorability either with Iran or with Israel. ... And in fact, Iraq is a neutral party in this. So I don't think there should be any issue in the ongoing war.

Reassures that the 12% revenue from Iraq is not at risk from current geopolitical tensions, citing Iraq's neutral stance and direct banking channels.

Asked by Varun Agarwal

Seasonality of the industry Direct
See, seasonality, we are now in 3 geographies. So every geography has its own crop. ... So basically, the word seasonality really doesn't apply here when you are able to cover all 3 districts.

Explains how geographical diversification across three states and multiple vegetables mitigates the impact of seasonality on raw material availability.

Asked by Balaji

3 min read 7 chapters

Detailed narrative

Strong FY25 Financial Performance

Freshara Agro Exports Limited achieved a total revenue of INR260.68 crores in FY25, marking a significant 42.58% growth over H1. EBITDA stood at INR46.23 crores, with PAT increasing by 53% to INR28.79 crores. This robust performance was attributed to strong volume growth, operational discipline, and improved efficiencies, resulting in an EBITDA margin of approximately 17.73% for the fiscal year.

Second Manufacturing Facility Operationalization

A major milestone in FY25 was the operationalization of the second manufacturing facility in Tirupattur, Tamil Nadu. This eight-acre facility offers a processing capacity of 75-100 metric tons per day and a scalable retail packaging line of 18,000 jars per hour. The INR30-35 crore investment, which is 90-95% complete, includes land, construction, and machinery, with INR18-20 crores funded internally. The new plant is expected to reach 50% utilization in FY26 and 100% by the end of FY26, with further expansion planned for FY27.

Product Portfolio Diversification and Market Strategy

Freshara expanded its product portfolio to include high-potential items such as green peppercorns, corn kernels, olives, and white onions, which have been well-received in global markets. The company primarily operates on a white-label B2B model, serving industrial, food service, and retail segments. While gherkins remain a core product with an estimated 10-14% market share, other products currently hold 1-2% market share, with a target to grow to 10-15%.

Stable Supply Chain and Margin Management

The company's supply chain is characterized by contract farming, which ensures stable raw material prices for 70-80% of its inputs. Freight costs, contributing 10-15% to the final product price, are typically passed on to customers, ensuring stable margins. Freshara aims to maintain an EBITDA margin of around 18% for the next two years, reflecting its focus on cost optimization and quality-driven growth. Multi-state sourcing across Tamil Nadu, Karnataka, and Andhra Pradesh mitigates seasonality risks and ensures consistent raw material supply.

International Expansion and Market Dynamics

Freshara serves over 40 countries, including Europe, USA, and Russia. The US market currently accounts for 5-6% of sales, with ongoing duty talks expected to settle and aid growth. The company recently secured a new contract in Hungary and is actively exploring other new export markets. Management believes geopolitical tensions, such as the Iran-Israel situation, do not pose a direct risk to their Iraq revenue (12% of total) due to Iraq's neutral stance and direct banking channels.

Domestic Market Exploration

The company has initiated groundwork for entering the domestic market, acknowledging it requires a different strategy compared to exports due to varying competition and margin structures. Freshara is taking a step-by-step approach, focusing on products with decent profit margins and leveraging its existing infrastructure and sourcing capabilities. Specific details on domestic expansion plans are expected in coming months.

Financial Foundation and Growth Outlook

Freshara's financial foundation is strong, supported by INR84 crores in bank facilities and a stable credit rating. The company targets a 30% annual growth rate for the coming years. The current order book of INR82 crores provides strong visibility for the next 3-4 months, with expectations of consistently closing orders worth approximately INR80 crores each quarter.

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