Hindustan Foods Limited — Q2 FY26 earnings call

Call held 19 Nov 2025

Management summary

Hindustan Foods reported a strong Q2 and H1 FY26, achieving a significant milestone by crossing ₹1,000 crores in quarterly revenue for the first time. The company demonstrated robust growth across key financial metrics, with Q2 revenue up 18% and PAT up 54% year-on-year, driven by strategic diversification, new customer additions, and M&A. Management expressed optimism about future growth, supported by ongoing capacity expansions and a focus on shared manufacturing to enhance operating leverage.

Highlights

  • Q2 FY26 Total Income: ₹1,043 crores, up 18% YoY.

  • Q2 FY26 EBITDA: ₹90 crores, up 24% YoY.

  • Q2 FY26 PAT: ₹35 crores, up 54% YoY.

  • H1 FY26 Total Income: ₹2,041 crores, up 16% YoY.

  • H1 FY26 EBITDA: ₹173 crores, up 17% YoY.

  • H1 FY26 PAT: ₹67 crores, up 33% YoY.

  • Crossed ₹1,000 crores quarterly revenue for the first time in company history.

  • Net debt to equity at 0.67 as of September 30, 2025.

Key financials

3 periods

Headline

  • Cash and Cash Equivalents
    ₹162 Cr
  • Net Debt to Equity
    0.67
  • Net Cash Flow from Operations
    ₹109 Cr

Q2 FY26

  • Total Income
    ₹1,043 Cr
    YoY +18%
  • EBITDA
    ₹90 Cr
    YoY +24%
  • PAT
    ₹35 Cr
    YoY +54%

H1

  • FY26 Total Income
    ₹2,041 Cr
    YoY +16%
  • FY26 EBITDA
    ₹173 Cr
    YoY +17%
  • FY26 PAT
    ₹67 Cr
    YoY +33%

What they filed

Q1 FY27: revenue up 17.9%, net profit up 34.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue883 880 959 1,019 1,039 +18%1,044 +19%1,117 +16%1,201 +18%
EBITDA70 73 78 81 86 +23%95 +30%100 +28%100 +23%
Net profit23 29 32 32 35 +52%39 +34%42 +31%43 +34%
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.

Guidance & targets

Capacity

  • New Capacity Commissioning Capacity · next couple of quarters · High confidence ₹550 crores plus
    another INR550 crores plus is advancing towards commissioning in the next couple of quarters.

    — Ganesh Argekar

  • Ice Cream - Sandila Facility Full Capacity Utilization Capacity · Q3 end and Q4 beginning and the whole of Q4 · High confidence full capacity
    the Sandila facility is working at its full capacity. Nashik started production in the previous quarter. We are gradually ramping it up, and we should be at full capacity by -- in time for the season, which is Q3 end and Q4 beginning and the whole of Q4 for that matter.

    — Sameer Kothari

  • Ice Cream - Panipat Facility Commercial Production Start Capacity · Q4 FY26 · High confidence Q4 of this financial year
    In terms of the Panipat facility, which is the new facility, we expect to start commercial production by Q4 of this financial year, assuming that it will take a couple of months for ramping up.

    — Sameer Kothari

  • Ice Cream - Panipat Facility Full Capacity Ramp-up Capacity · Q1 FY27 · High confidence Q1 of next financial year
    I think the capacity will be fully ramped up by Q1 of next financial year.

    — Sameer Kothari

Capex - Home and Personal Care

  • Authorized Investment Capex - Home and Personal Care · High confidence ₹120 crores
    The Board has authorized INR120 crores in greenfield and brownfield projects for the Home and Personal Care division

    — Ganesh Argekar

Capex - Ice Cream

  • Existing Capex on Track Capex - Ice Cream · High confidence ₹300 crores
    Existing capex of INR300 crores are on track for Panipat, Sandila and Nashik locations.

    — Ganesh Argekar

Capex - Foods & Beverages

  • Authorized Investment Capex - Foods & Beverages · High confidence ₹80 crores
    The Board has authorized a further investment of INR80 crores for expansion in the Foods and Beverages division.

    — Ganesh Argekar

Capex - Healthcare

  • Existing Capex Progress Capex - Healthcare · High confidence ₹30 crores
    Existing capex of INR30 crores is progressing well at Baddi and will be completed within the time lines as committed.

    — Ganesh Argekar

Profitability

  • Shoe Business PAT at optimum levels Profitability · sooner than later · Medium confidence 5%
    our target is that this business should deliver close to 5% PAT once we reach our optimum levels. So let's just say that we are working towards it, and it should happen sooner than later.

    — Sameer Kothari

Revenue

  • Ice Cream - Cone Manufacturing Turnover Revenue · High confidence ₹50 crores
    So the cones manufacturing business, Akhil, should be able to generate about INR50-odd crores of turnover.

    — Sameer Kothari

  • Ice Cream - Sticks Manufacturing Turnover Revenue · High confidence ₹10 crores
    And the sticks is a lower value item, should generate about INR10 crores odd of revenues

    — Sameer Kothari

  • Compounded Top Line Growth Revenue · next unforeseeable future · Medium confidence 20% to 25%
    So that's the endeavour. And if you look at the categories that we are in, we believe that irrespective of whatever happens in the macro environment in terms of slowdown, etc., I think we should be shielded from it. And we should be able to deliver at a company level the kind of numbers that we are aiming for, yes.

    — Sameer Kothari

Gross Block

  • Gross Block Target Gross Block · by the end of FY '26 · High confidence ₹2,000 crores
    we have already achieved a gross block of or we would be achieving a gross block of INR2,000 crores by the end of FY '26 as indicated in the presentation.

    — Abhishek Mathur

Debt

  • Acceptable Debt-Equity Ratio Debt · High confidence 1:1
    the Board has approved to take the 1:1 debt equity ratio. So we will certainly leverage this internal accruals to the prudent debt, which can go up to 1:1 here.

    — Mayank Samdani

Cash Flow

  • Annual Cash Flow from Operations Cash Flow · in a year · Medium confidence ₹200-225 crores
    Assuming that we maintain the same run rate, that's about INR200 crores in a year, hopefully the second half, like Ganesh was referring earlier, should be better than the first half, in which case, if you're talking about INR200 crores, INR225 crores of internal accruals in terms of cash generation plus the headroom in terms of debt, that's what Mayank was referring to.

    — Sameer Kothari

Risks & concerns

  • Ramping up new facilities and associated learning curves for new capacities.

    medium

    Setting up a new factory with significant investment (e.g., ₹250 crores, 500 people) entails a ramp-up period, impacting immediate full utilization and profitability, as seen with the South shoe factory.

    Management acknowledged

  • Operating leverage risk in shared manufacturing, potentially leading to losses.

    medium

    While shared manufacturing offers operating leverage, the operating risk is entirely on HFL, as evidenced by losses incurred in the shoes business last year.

    Management acknowledged

  • Discrepancy in reported gross block numbers compared to audited financials.

    low

    An analyst noted a significant ₹300 crore difference between the company's stated gross block and audited numbers, which management attributed to accounting adjustments and promised to reconcile.

    Analyst acknowledged

Areas of evasion (3)

  • Specific long-term revenue/PAT numbers for individual segments beyond immediate targets
  • Exact reconciliation of gross block numbers (promised later)
  • Specific global peer comparisons for business model

Q&A highlights

1 direct
Long-term growth rates, return ratios (ROE/ROCE), and cash flow generation over the next 2-3 years, especially with the shift to shared manufacturing. Partial
So Akhil, your understanding is correct. But I will put a caution to this that as we move towards the more shared manufacturing, it is the operating leverage is entirely upon us. As we have seen last year in the shoes business, we have suffered some losses in it..

This question seeks clarity on the company's strategic direction and financial performance trajectory beyond the immediate fiscal year, especially with the shift to shared manufacturing, and management acknowledged the operating leverage risk.

Asked by Akhil Parekh from B&K Securities

Reconciliation of capex intensity with sales growth, particularly given the impact of job work contracts and commodity deflation on top-line numbers. Direct
So I would urge you not to get too fussed about the top line number. As I said, our EBITDA number as well as our PAT number should grow in sync with the capex. And given the changing nature of the business in terms of shared manufacturing, etc., we are hoping that, that should grow even faster because of the operating leverage and unlocking of the efficiencies in case of our shared manufacturing. That's, I think, the bottom line.

Addresses a common investor concern about why sales growth might lag capex, clarifying the business model's nuances and redirecting focus to profitability metrics like EBITDA and PAT.

Asked by Mayur Parkeria from Wealth Managers India Private Limited

The market's valuation of Hindustan Foods since 2021 and whether management perceives a disconnect, along with potential global peers for comparison. Partial
We completely understand your question. So let me address 2 points, right? Obviously, the market valuation is something that I can't address and the understanding of the market, I can't address. What we can do is improve our disclosures. We can do is better explain our business model. We started that journey with our investor presentation this quarter, and we expect to do that further, and that's how we will address that problem.

Highlights a perceived disconnect between the company's performance and its market valuation, prompting management to commit to better disclosures for improved investor understanding, while deferring on direct valuation commentary.

Asked by Sanjay Mahajan from Wealthwise Capital

3 min read 7 chapters

Detailed narrative

Q2 & H1 FY26 Performance Highlights

Hindustan Foods achieved a significant milestone in Q2 FY26, crossing ₹1,000 crores in quarterly revenue for the first time, reaching ₹1,043 crores, an 18% YoY increase. This strong performance contributed to H1 FY26 total income of ₹2,041 crores, up 16% YoY. Profitability also saw robust growth, with Q2 EBITDA rising 24% to ₹90 crores and PAT surging 54% to ₹35 crores. For H1, EBITDA grew 17% to ₹173 crores and PAT increased 33% to ₹67 crores, reflecting sustained operational efficiency and improved cost management.

Strategic Diversification and Business Model Evolution

The company's growth over the last four years, with a compounded growth of 22% in revenues, 32% in EBITDA, and 30% in PAT, is attributed to strategic diversification across product categories like foods and beverages, ice creams, healthcare, and footwear. HFL has successfully added new-age brands while retaining large FMCG incumbents. The business model is evolving from primarily dedicated manufacturing to increased exposure to shared manufacturing, which management believes will improve returns and performance parameters, with Q2 results being the first tangible outcome.

Capex and Capacity Expansion Initiatives

Hindustan Foods is aggressively expanding its capacity, with ₹550 crores plus new capacity advancing towards commissioning in the next couple of quarters, in addition to ₹200 crores commercialized in H1 FY26. Specific authorizations include ₹120 crores for Home and Personal Care greenfield/brownfield projects, ₹80 crores for Foods & Beverages expansion (flavored yogurt, bottled water), and ₹30 crores for Healthcare at Baddi. Existing capex of ₹300 crores for Ice Cream facilities (Panipat, Sandila, Nashik) is on track, with Panipat expected to start commercial production by Q4 FY26 and reach full capacity by Q1 FY27.

Shoe Business Turnaround and Profitability Targets

The Shoes division delivered its highest-ever quarterly revenue of ₹133 crores in Q2 FY26 and is now PAT positive after incurring losses last year. Management confirmed that the 'worst is behind us' regarding supply chain and new capacity ramp-up issues. The target is for the shoe business to achieve close to 5% PAT once it reaches optimum levels, which is expected 'sooner than later.' The company continues to allocate capital to this business, indicating confidence in its growth potential.

Backward Integration in Ice Cream and GST Impact

HFL is pursuing a backward integration strategy in the ice cream vertical, having recently acquired a cone manufacturing plant and a sticks plant. These acquisitions are expected to generate approximately ₹50 crores in turnover from cones and ₹10 crores from sticks annually. Management emphasized that this move is symbolic of shifting towards a vendor relationship model, allowing for gross and net margin responsibility and operating leverage benefits. The company also anticipates significant benefits from GST rationalization in ice creams and bottled beverages, expecting increased consumption and a level playing field against unorganized players.

Financial Position and Capital Allocation Strategy

As of September 30, 2025, Hindustan Foods maintained a strong financial position with ₹162 crores in cash and cash equivalents and a comfortable net debt to equity ratio of 0.67. Net cash flow from operations rose nearly 50% YoY to ₹109 crores in H1 FY26. The company is well-equipped to fund the planned ₹550 crores capex through a mix of internal accruals and prudent debt, with the Board approving a debt-equity ratio up to 1:1. Management aims to generate approximately ₹200-225 crores in annual cash flow from operations.

Investor Relations and Market Perception

Management acknowledged analyst concerns regarding the market's valuation of Hindustan Foods since 2021, stating they 'completely understand your question.' While they cannot directly address market valuation, they committed to improving disclosures and better explaining their business model, starting with the revised investor presentation. They also highlighted their efforts to adapt to the evolving FMCG ecosystem, including engaging with newer brands, increasing wallet share with traditional incumbents, and allocating capital to high-growth segments.

This is an AI-generated summary of a publicly available earnings call transcript.
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