Gopal Snacks

Gopal Snacks reported a challenging Q4 FY25 with revenue from operations at INR 318 crores, a 12% decline year-on-year, primarily due to operational challenges from a fire incident. Gross profit margin for the quarter significantly compressed to 20.2% from 28.1% in Q4 FY24, and EBITDA plummeted to INR 2 crores (0.6% margin) from INR 64 crores (10.8% margin) last year. For the full year FY25, revenue grew 5% to INR 1,468 crores, with gross margin at 25% (down from 28.5% in FY24) and EBITDA at INR 105 crores (7.2% margin, down from 12% in FY24). The company booked an exceptional loss of INR 47 crores in Q4 related to the fire incident, which is covered by insurance.

Key raw material costs, including palm oil (up 54%), potato (up 56%), and maida flour (up 21%), significantly impacted Q4 FY25 margins. In response, the company undertook grammage revisions for INR 5 and INR 10 SKUs and price increases for larger packs. Management noted that palm oil prices have softened from INR 130-132/kg in Q4 to approximately INR 120/kg, and chana prices are down 5%. This softening is expected to positively impact gross margins in Q1 and Q2 FY26. Full-year FY26 gross and EBITDA margins are projected to be better than FY24-FY25, with H1 FY26 margins expected in the mid-to-higher single digits, and H2 margins higher than H1.

Despite Q4 challenges, Gopal Snacks aims for INR 1,800 crores revenue in FY26, representing 20% year-on-year growth, and a 28% growth over two years (FY24-FY26). This growth is expected to be driven by a muted single-digit growth in H1 FY26, followed by a strong 37-40% growth in H2 FY26. State-wise, Gujarat is targeted to grow 15%, focus states 25%, and other states 55%. The company plans to increase its distributor network by 100 new distributors in non-core states, aiming for a total of 1,000, and will double salesmen in Gujarat to increase coverage frequency from weekly to bi-weekly.

The new manufacturing unit at Gondal is operational, enabling the complete phase-out of third-party manufacturing. The Modasa plant, which was impacted by the fire, is expected to commence production by mid-July and be fully operational by the end of August. For FY26, the company anticipates incurring approximately INR 30 crores in capex for Modasa restoration and new Wafer lines, in addition to INR 3-4 crores for maintenance capex, totaling INR 35-40 crores. The fire incident resulted in a loss of INR 90-95 crores, which management is confident will be largely covered by insurance.

The Wafers segment showed strong growth of 41% in FY25, despite a dip in Q4 due to hero products' unavailability impacting throughput. Management is working to narrow the realization gap in Wafers to 4-5% by year-end. The company is actively reducing its dependency on INR 5 MRP packs through marketing endeavors, promoting INR 10 packs, and introducing Standy pouches. International business, currently at INR 10 crores per annum, is targeted to grow to INR 40-50 crores per annum by FY27 through strategic partnerships, with work commencing in Q3 FY26 once domestic production stabilizes.