Hindustan Foods Limited — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Hindustan Foods delivered its highest-ever quarterly financial performance in Q3 FY26, with strong growth in both revenue and profitability for the quarter and nine months. The company provided robust PAT guidance for FY27, driven by ongoing capacity ramp-ups and operational leverage. While navigating challenges like tepid consumption and GST-induced working capital increases, HFL maintains financial discipline and continues strategic investments in capacity expansion, M&A, and backward integration.

Highlights

  • Highest ever quarterly financial performance in Q3 FY26 with EBITDA of INR93 crores and PAT of INR36 crores.

  • 9M FY26 total income grew 15% YoY to INR3,041 crores, with EBITDA increasing 17% YoY to INR266 crores and PAT rising 31% YoY to INR103 crores.

  • FY27 PAT guidance of INR200-220 crores, indicating strong future growth potential.

  • Net debt to equity at a comfortable 0.77x as of December 2025, well within internal comfort threshold.

  • Successful completion of nearly 5 M&A transactions in the last 3 years and ongoing projects like Aurangabad M&A on track.

Concerns

  • One-time provisioning impact related to the New Labour Code affected Q3 FY26 PAT.

  • GST reduction leading to 'duty inversion' in some categories, causing an increase in working capital requirement.

  • FMCG sector experienced relatively tepid consumption growth for the past couple of years.

Key financials

2 periods

Q3 FY26

  • Total Income
    ₹1,000 Cr
    YoY +13%
  • EBITDA
    ₹93 Cr
    YoY +18%
  • PAT
    ₹36 Cr
    YoY +26%

9M FY26

  • Total Income
    ₹3,041 Cr
    YoY +15%
  • EBITDA
    ₹266 Cr
    YoY +17%
  • PAT
    ₹103 Cr
    YoY +31%

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.

Capital allocation

  • Capex ₹750 Cr through prudent mix of internal accruals, debt and preferential equity issuance
    • Cumulative capital expenditure ₹750 Cr
    • Greenfield HPC project ₹50 Cr
    During FY '26, the company undertook a cumulative capital expenditure of over INR750 crores... The Board has authorized a greenfield HPC, Home & Personal Care, project with an investment of INR50 crores.
  • Debt Debt disclosed
    As of December 31, 2025, cash and cash equivalents stood at INR151 crores, and the net debt to equity was at a comfortable level of 0.77x, well within our internal comfort threshold.
  • M&A Aurangabad M&A Acquisition · On track · Consideration ₹[object Object] (undisclosed)

    Capability building and entry into adjacent categories

    We also leveraged inorganic opportunities, having completed nearly 5 M&A transactions in the last 3 years... The new M&A at Aurangabad remains on track, and we expect to close transaction in this quarter.
  • M&A Cone manufacturing facility Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    Backward integration for ice cream business

    The other thing that we are working on is backward integration. You know that we recently acquired a cone manufacturing facility as well as we set up a stick manufacturing facility for the ice cream business.
  • Liquidity Cash ₹151 Cr
    As of December 31, 2025, cash and cash equivalents stood at INR151 crores

Guidance & targets

Profitability

  • Profit After Tax (PAT) Profitability · FY27 · High confidence INR200-220 crores
    For FY '27, we are guiding a profit after tax range of INR200 crores to INR220 crores, representing approximately 1.4x growth over FY '26 expected.

    — Sameer Kothari

  • PAT Growth over FY26 Profitability · FY27 · High confidence 1.4x

    — Sameer Kothari

  • H1 FY27 PAT Contribution Profitability · FY27 · Medium confidence 43-48%
    We also expect the earnings profile of FY '27 to remain balanced with H1 contributing approximately 43% to 48% of full year profit and H2 contributing to remaining 52% to 57%

    — Sameer Kothari

  • H2 FY27 PAT Contribution Profitability · FY27 · Medium confidence 52-57%

    — Sameer Kothari

Return on Capital

  • Return on Capital Employed (ROCE) Return on Capital · Long-term · High confidence 18-20%
    our goal is to be between 18% and 20% ROCE as a company as a whole.

    — Sameer Kothari

Growth

  • Overall Growth Rate Growth · Per year · High confidence 20%
    So 20% growth is definitely what we are aiming for.

    — Sameer Kothari

Capacity

  • Total Beverage Capacity Capacity · End of financial year · High confidence more than 250,000 kL
    I'm pleased to inform that at the end of this financial year, our total beverage capacity across the country will be more than 250,000 kL.

    — Sameer Kothari

Project Commercialization

  • Silvassa Detergent Facility Commercialization Project Commercialization · Q1 FY '27 · High confidence Commercialization
    The brownfield detergent facility at Silvassa is targeting commercialization in Q1 FY '27.

    — Ganesh Argekar

  • Goa Flavored Yogurt Facility Readiness Project Commercialization · Q2 FY '27 · High confidence Ready
    The one for flavored yogurt at Goa will be ready by Q2 FY '27

    — Ganesh Argekar

  • Bottled Water Facility (West) Commercialization Project Commercialization · Q3 FY '27 · High confidence Commercialization
    The new bottled water facility in the West is also advancing in line with time line with commercialization targeted for Q3 FY '27.

    — Ganesh Argekar

  • Panipat Project Commercialization Project Commercialization · Q1 FY '27 · High confidence Commercialized
    if you look at the Panipat project, for instance. The Panipat project, we are hoping will get commercialized by Q1 of FY '27.

    — Sameer Kothari

What to watch in Q4 FY26

Aurangabad M&A Closing

This quarter (Q4 FY26)
Current On track
Target Transaction closed

Why it matters

Completion of this M&A will contribute to capability building and entry into adjacent categories, impacting future growth.

The new M&A at Aurangabad remains on track, and we expect to close transaction in this quarter.

Risks & concerns

  • Tepid consumption growth in FMCG sector

    medium

    FMCG sector has seen relatively tepid consumption growth for the past couple of years, but company counters with diversification and inorganic opportunities.

    Management acknowledged

  • Duty inversion due to GST rate reductions

    medium

    GST reduction in categories like bottled water, ice cream, and foods leads to duty inversion, increasing working capital requirements, though profitability is protected through commercial model changes.

    Management acknowledged

  • High lead times for export and international business

    medium

    Export business in shoes and OTC Pharma has high lead times (6-8 months) due to fashion and regulatory requirements, delaying revenue realization.

    Management acknowledged

  • One-time provisioning impact from New Labour Code

    low

    Affected Q3 FY26 PAT, but is a non-recurring item.

    Management acknowledged

Q&A highlights

8 direct
Shoe Business Performance and Export Potential Direct
the shoe business was very complex. It took us some time to understand the entire supply chain, etcetera. But I'm reasonably pleased with the performance of the shoe business now... I think this will be the sector which will be most benefited by the trade agreements, both with the EU as well as the U.S. We are definitely very, very optimistic that the shoe business will be the one who will drive our export business.

Addresses a previously complex segment, highlighting improved understanding and future export-driven growth potential, especially with new trade agreements.

Asked by Faisal from H.G Hawa

Entrepreneurial Organization & Backward Integration Initiatives Direct
we've taken 2 initiatives on that front. One is in PET recycling... The other thing that we are working on is backward integration... we recently acquired a cone manufacturing facility as well as we set up a stick manufacturing facility for the ice cream business.

Reveals strategic initiatives beyond core manufacturing, focusing on sustainability (PET recycling) and cost/supply chain control (backward integration), indicating long-term strategic thinking.

Asked by Faisal from H.G Hawa

Impact of Duty Inversion on Working Capital and Revenue Recognition Direct
this reduction is also leading to some unforeseen effect to our business. In some of these categories, we are seeing a duty inversion, which will lead to an increase in the company working capital requirement... whatever agreement we come out with the customer, this will be more of an accounting thing rather than actually a material effect on the profitability of the company.

Highlights a new challenge arising from GST rate reductions, impacting working capital, and explains how the company plans to mitigate it through commercial model changes, clarifying that profitability will not be affected, but revenue recognition might appear optically lower.

Asked by Aejas Lakhani from Unifi AMC

Profitability Growth Beyond FY27 & F&B Investments Direct
will the growth in profitability be reflected beyond FY '27? The answer is definitely, yes. I think what we've done along with all of our capex as we've also mentioned when they will get commercialized... the capex journey will continue in FY '27 as well.

Clarifies that the benefits of current and planned capex will extend beyond FY27, indicating sustained long-term growth potential and ongoing investment.

Asked by Kashyap Javeri from Emkay Investment Managers

Net Debt Trajectory and Capital Allocation Philosophy Direct
net debt now gets limited to the same number as probably the previous quarter despite the growth. At some point of time, let's say, 24 months down the line, would we see that absolute number also declining? ... we will continue to invest in the capex. And with the judicial mix of debt and equity, our internal target is 1:1. So we don't see that coming down drastically in coming years since we are investing in the new capex altogether.

Addresses concerns about debt reduction, clarifying that while some loans will be repaid, continuous capex and a strategic debt-to-equity target mean absolute debt levels are unlikely to decline significantly in the near term, as the company prioritizes growth.

Asked by Kashyap Javeri from Emkay Investment Managers

Underutilized Assets and ROCE Calculation Methodology Direct
Underutilized for us would be very clearly structural underutilization. Structural underutilization would refer to the timing of the asset coming on board, let's say, an asset comes on board post the season... And that would be underutilization.

Provides clarity on how the company defines and accounts for 'underutilized assets' in its ROCE calculations, distinguishing between operational inefficiencies and structural timing issues, which is crucial for understanding reported profitability metrics.

Asked by Mayur from Wealth Managers India Private Limited

Guidance Focus: Profitability vs. Revenue Direct
we've been steadfast about our suggestion to all people who follow the company that don't get obsessed with our revenues... Our profitability is protected from that perspective, which is why we've given the guidance of the PAT and not of the revenues... with the complication of GST, we will frankly steer away from giving any guidance in terms of revenue.

Reaffirms the company's focus on profitability (PAT) over revenue, especially given the pass-through nature of raw material costs and the complexities introduced by GST changes, guiding investors to focus on profit metrics.

Asked by Mayur from Wealth Managers India Private Limited

Ice Cream Business Seasonality and Profitability Protection Direct
a large part of our business in ice creams is dedicated, which means that our profitability is not subject to the vagaries of the season. However, there could be a timing difference in terms of Q1, Q2, Q3, Q4, depending on how we perform how the season performs. But at the end of the year, our number as far as ice creams is concerned is protected irrespective of whether it is a hot summer or a cold one.

Clarifies that while ice cream sales have seasonality, the dedicated nature of their business ensures overall annual profitability is protected, mitigating concerns about weather-dependent performance.

Asked by Mayur from Wealth Managers India Private Limited

2 min read 6 chapters

Detailed narrative

Q3 & 9M FY26 Financial Performance Highlights

Hindustan Foods achieved its highest-ever quarterly financial performance in Q3 FY26, reporting an EBITDA of INR93 crores, an 18% year-on-year increase, and a PAT of INR36 crores, up 26% year-on-year, despite a one-time provisioning impact related to the New Labour Code. For the nine months ended December FY26, the company's total income reached INR3,041 crores, marking a 15% year-on-year growth. EBITDA for the same period increased by 17% to INR266 crores, and PAT grew by 31% to INR103 crores, reflecting sustained operational efficiency.

Strategic Capex and Foundation for Future Growth

In FY26, Hindustan Foods undertook a cumulative capital expenditure exceeding INR750 crores, representing over 60% of its opening gross block. This investment was strategically deployed, with all projects evaluated against an internal return threshold of 18% ROCE. The company has authorized a new greenfield HPC project with an investment of INR50 crores, signaling continued expansion. This capacity ramp-up, commencing from Q4 FY26, is expected to provide a robust foundation for the next phase of growth, with management aiming for a 20% annual growth rate.

FY27 Outlook and Profitability-Focused Guidance

For FY27, Hindustan Foods is guiding for a Profit After Tax (PAT) in the range of INR200-220 crores, which is approximately 1.4 times the expected FY26 PAT. The company anticipates a balanced earnings profile, with H1 FY27 contributing 43-48% and H2 FY27 contributing 52-57% of the full-year profit. This guidance is underpinned by the progressive ramp-up and normalization of commissioned assets, along with continued operating leverage benefits, and a long-term goal of achieving 18-20% ROCE.

Impact of GST Changes and Working Capital Management

Recent GST framework changes, particularly rate reductions in categories like bottled water, ice cream, and foods, are expected to stimulate consumption and demand. However, these reductions have also led to a 'duty inversion' in some categories, necessitating an increase in working capital requirements. To mitigate this, the company is actively discussing with customers to transition to conversion-based business models, which will ensure that profitability remains unaffected, although revenue recognition may appear optically lower.

Operational Excellence and Project Pipeline Progress

The company highlighted its strong operational discipline, with all projects completed on time and without cost overruns. Key upcoming commercializations include the brownfield detergent facility at Silvassa in Q1 FY27, the flavored yogurt facility at Goa by Q2 FY27, and the new bottled water facility in the West by Q3 FY27. The new M&A at Aurangabad is on track to close this quarter, further expanding the company's capabilities and market reach.

International Business and Backward Integration Initiatives

Hindustan Foods has established an international business division to drive export growth, particularly in the shoe segment, which is expected to benefit significantly from new trade agreements with the EU and U.S. The company is also pursuing backward integration, having recently acquired a cone manufacturing facility and set up a stick manufacturing facility for ice cream. Additionally, it is exploring PET recycling opportunities, aiming to enhance efficiency and control across its supply chain.

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