Gopal Snacks

Gopal Snacks reported Q1 FY26 revenue from operations at ₹322.2 crores, showing a sequential growth of 1.7% but a 9% year-on-year decline. This decline was primarily attributed to supply chain issues following the Rajkot plant fire. Gross profit stood at ₹83.7 crores, with the gross margin contracting to 26% from 29% in Q1 FY25. EBITDA was ₹15.2 crores, leading to an EBITDA margin of 4.7%, a significant drop from 11.5% in the prior year, influenced by lower gross profitability and increased advertising and sales promotion expenses.

The company is actively working to restore its manufacturing capacity. The Modasa facility is on track to begin trial production by mid-September 2025 and is expected to be fully operational in Q3 FY26. This plant will replace 60% of the lost capacity from the Rajkot fire. The remaining 40% of Rajkot's capacity is planned to be reinstated at the Rajkot facility itself by the end of Q3 and Q4 FY26. The Gondal unit continues to serve as a temporary replacement, operating at over 60% utilization to sustain supply.

Gross margins experienced a 3% YoY contraction, primarily due to the custom duty levied on palm oil by the Government of India in September 2024 and reduced revenue from supply chain issues. However, the company observed a 6% sequential improvement in gross margins. This recovery was driven by a 2% benefit from reduced palm oil prices, a 1% benefit from lower packaging material costs, and a 1% benefit from reduced channa and potato prices. Management anticipates Q2 gross margins to remain stable, within a (+/-1%) range of Q1.

The company's 9% YoY revenue decline is largely a consequence of supply chain disruptions, particularly the challenge of fulfilling complete product baskets from multiple temporary locations (Modasa and Gondal) for distributors. This logistical complexity, termed 'clubbing,' causes distributors to delay orders until they face significant stock-outs across 10-12 SKUs, resulting in an estimated 8-10% business loss in regions like Gujarat. Once the Modasa and Rajkot facilities are fully operational, this business loss is projected to decrease significantly to 1-2%.

Gopal Snacks reaffirmed its FY26 revenue guidance of ₹1,750 crores, targeting a 20% annualized growth. The company projects H1 FY26 revenue to be around ₹730-740 crores, with the remaining ₹1,000-1,020 crores targeted for H2 FY26. Looking ahead, the management aspires to achieve a 20% revenue CAGR over the next three years, driven by expanding the product portfolio, increasing customer reach, and leveraging technology across the value chain.

In Q1 FY26, Gopal Snacks introduced two new products: popcorn and wafer biscuits. Both are non-palm oil-based, aligning with the company's strategy to reduce dependency on palm oil. The company is intensifying its marketing and brand-building efforts through refreshed packaging designs, improved in-store branding, and enhanced visibility across digital platforms and e-commerce channels. The wafer segment, in particular, is targeted for a 20% growth, supported by recent consumer offers and print campaigns.

At the end of Q1 FY26, the company's debt level stood at approximately ₹100 crores, primarily comprising working capital credit. Capex incurred during Q1 for the Modasa facility was ₹15-17 crores, contributing to the total planned ₹30-35 crores for the project. An additional Capex of ₹15-20 crores is anticipated for the Rajkot plant restoration, which is largely expected to be funded by insurance claims. Depreciation is projected to increase by approximately ₹1 crore per quarter going forward^⏳, reflecting the new capacities coming online.