Hindustan Foods Limited — Q4 FY25 earnings call

Call held 27 May 2025

Management summary

Hindustan Foods reported strong financial performance for Q4 and full-year FY25, with total income and PAT showing significant year-over-year growth. The company achieved a landmark PAT of over INR100 crores for the first time. Key operational highlights include the footwear division turning profitable and the commencement of production at the new Nashik ice cream factory. Management expressed cautious optimism regarding consumer demand but highlighted strategic investments in diversified categories and a focus on shared manufacturing for improved margins.

Highlights

  • Total income for Q4 FY25 increased by 27% YoY to INR936 crores.

  • PAT for Q4 FY25 grew by 34% YoY to INR31 crores.

  • Total income for FY25 increased by 30% YoY to INR3,579 crores.

  • PAT for FY25 reached INR110 crores, up 18% YoY, marking the first time PAT surpassed INR100 crores.

  • Footwear division achieved operational profitability in Q4 FY25, with full-year revenues of INR390 crores.

  • Cash flow from operations for FY25 was INR113 crores.

  • Net debt-to-equity ratio stood at 0.79 for FY25.

  • New ice cream factory in Nashik commenced commercial production in May 2025.

Key financials

2 periods

Q4 FY25

  • Total Income
    ₹936 Cr
    YoY +27.5%
  • PAT
    ₹31 Cr
    YoY +34.7%

FY25

  • Total Income
    ₹3,579 Cr
    YoY +29.5%
  • PAT
    ₹110 Cr
    YoY +18.2%
  • Cash Flow from Operations
    ₹113 Cr
  • Net Debt-to-Equity Ratio
    0.79
  • Gross Block
    ₹1,412 Cr
  • Net Worth
    ₹891 Cr

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.

Segment breakdown

  • Footwear Division
    ₹390 Cr Revenue (FY25)— Operational Profitability (Q4 FY25)₹11 Cr Losses (FY25, incl. ESOP)

Guidance & targets

Gross Block

  • Gross Block Gross Block · FY26 · Medium confidence INR1,800 crores
    We continue to work towards our goal of doubling our gross block to INR1,800 crores by the end of this financial year.

    — Mayank Samdani, Group CFO

Footwear Revenue

  • Footwear Revenue Footwear Revenue · FY27 · Medium confidence INR1,000 crores
    In terms of the shoe business overall, let me be upfront that getting to INR1,000 crores in FY '26 is impossible. While we all are working extremely hard, the shoe business is an extremely manually intensive business, ramping up to double of where we are right now, would involve doubling up of the manpower, which would involve hiring and training nearly 5,000 additional people. As you can imagine, not an easy thing to do. We are definitely in the mode of expansion, but the pace of expansion may be a little slower than what you are saying. ... INR1,000 crores is our target as well. Whether it will happen -- I mean, it will definitely not happen in this financial year, whether it will happen by the next financial year or the year after, I think it's too early for me to be able to comment on that because like I said, a lot of operational issues.

    — Sameer Kothari, Managing Director

Footwear Margin

  • EBITDA Margin Footwear Margin · Medium Term · High confidence 9%
    Yes, your understanding is quite correct quite fair, Akhil, that we can generate a 9% EBITDA margin in this.

    — Mayank Samdani, Group CFO

Footwear Capacity (South)

  • Production Share Footwear Capacity (South) · Q1 FY26 or Q2 FY26 · Medium confidence 30% of North production
    So Akhil, in terms of the South facilities, we are hoping that the South facilities by the end of this quarter or latest by the next quarter will account for nearly 30% of the production, which is happening in the North.

    — Sameer Kothari, Managing Director

Ice Cream Business

  • Gross Block Investment Ice Cream Business · FY27 · High confidence INR650-700 crores
    we had indicated that by next financial year, which is FY '27, nearly 1/3 of our gross block, which is close to about INR650 crores, INR700 crores would have been invested in the ice cream business.

    — Sameer Kothari, Managing Director

Capex (Nashik Ice Cream)

  • Capitalization Capex (Nashik Ice Cream) · FY26 · High confidence INR150-200 crores
    So this year, the ice cream plant of Nashik will be capitalized to around INR150 crores, INR200 crores of capitalization there.

    — Mayank Samdani, Group CFO

Capex (North Ice Cream)

  • Investment Capex (North Ice Cream) · FY26 (commercialized Q1 FY26) · High confidence INR200 crores
    This year, we will start investing in the North ice cream project, which will we are saying that it will be commercialized in Q1 FY '26. So that is around INR200 crores more.

    — Mayank Samdani, Group CFO

Capex (Shoes Karnataka)

  • Investment Capex (Shoes Karnataka) · FY26 · High confidence INR50 crores
    And we are also saying that we will invest in some part of shoes in Karnataka, which is around INR50 crores

    — Mayank Samdani, Group CFO

Capex (Home & Personal Care)

  • Investment Capex (Home & Personal Care) · FY26 · High confidence INR100 crores
    and we will also invest in our Home and Personal Care business around INR100 crores. This is the capex plan now, Priyank.

    — Mayank Samdani, Group CFO

Kabadiwala Investment

  • Investment Kabadiwala Investment · Next few months · High confidence up to INR5 crores
    So the proposal right now, Faisal, is to invest up to INR5 crores in Kabadiwala, which gives us a substantial minority stake.

    — Sameer Kothari, Managing Director

Risks & concerns

  • Softening consumer demand and macroeconomic headwinds

    medium

    Management noted ongoing softening consumer demand and macroeconomic headwinds impacting the business.

    Management acknowledged

  • Deflationary pressures and subdued consumption trends

    medium

    Ganesh Argekar mentioned ongoing deflationary pressures and subdued consumption trends in certain categories.

    Management acknowledged

  • Geopolitical tariffs impacting sourcing/exports

    medium

    Management is cautiously optimistic about increased sourcing from India due to tariffs on China, but acknowledged the uncertainty of the tariff situation.

    Management acknowledged

  • Operational challenges and learning curve in shoe business

    medium

    Integration of 5 shoe plants, hiring/training 5,000 additional people, and a steep learning curve for quality in premium brands are significant challenges impacting ramp-up speed and P&L.

    Management acknowledged

  • Erratic weather impacting seasonal product sales

    low

    Untimely rains have recently hit sales of seasonal products like ice cream, despite strong underlying demand.

    Management acknowledged

Areas of evasion (1)

  • Specific revenue share of product categories (e.g., ice cream, beverages) and capacity numbers for dedicated factories to avoid divulging customer information.

Q&A highlights

2 direct
Dr. Scholl's facility utilization, export potential, and shoe business revenue target Partial
In terms of the shoe business overall, let me be upfront that getting to INR1,000 crores in FY '26 is impossible. While we all are working extremely hard, the shoe business is an extremely manually intensive business, ramping up to double of where we are right now, would involve doubling up of the manpower, which would involve hiring and training nearly 5,000 additional people.

Management clarified that the INR1,000 crore revenue target for the shoe business is not achievable by FY26 due to operational complexities and manpower requirements, pushing it to a later timeframe.

Asked by Faisal Hawa

Challenges in integrating acquired shoe plants, capacity expansion, and operational profitability Direct
it's been exactly 15 months since we took over the KNS facilities up north, right? There are 5 units which we took over and each unit was handling a different set of activities. That itself is a big challenge. I mean one unit was handling sticking, one unit was handling sole manufacturing, one unit was handling cutting and one unit down up north in Poanta was handling the assembly part, I mean, the final packing. All put together 5,000 employees on our role in one shot, a complete change of -- integration of new system, new ERP, which took a lot of time.

Management provided detailed insights into the significant operational challenges faced during the integration of the acquired shoe manufacturing facilities, explaining the time and effort required to achieve profitability.

Asked by Akhil Parekh

Impact of consumer slowdown on OEMs and flexibility of take-or-pay contracts Direct
In terms of our take-or-pay, the letter and the spirit of that take-or-pay is quite sacrosanct. And one of the reasons why we've been able to service our customers for such a long time is that because we both the customers as well as us understand the ground realities and have worked around it. And while this sounds very grandiose, what it basically means is that, yes, in difficult times, we end up supporting each other.

Management reassured that despite macroeconomic headwinds, their take-or-pay contracts are honored, indicating strong customer relationships and a resilient business model against demand fluctuations.

Asked by Gautam Trivedi

3 min read 7 chapters

Detailed narrative

Strong Financial Performance in Q4 and FY25

Hindustan Foods reported robust financial results for Q4 FY25, with total income increasing by 27% YoY to INR936 crores and PAT growing by 34% YoY to INR31 crores. For the full fiscal year 2025, total income rose by 30% to INR3,579 crores, and PAT increased by 18% to INR110 crores, marking a significant milestone as PAT crossed INR100 crores for the first time. These results were driven by seasonal highs in Ice Cream and Beverages, and the breakeven of the Footwear segment.

Footwear Division Achieves Operational Profitability

The Footwear division achieved operational profitability in Q4 FY25, contributing positively to the company's performance. For the full year, the business recorded revenues of INR390 crores. Management acknowledged that the FY25 PAT of INR110 crores includes approximately INR11 crores in losses from the shoe business, primarily due to integration issues and ESOP accounting impact. The long-term target for the shoe business is to reach INR1,000 crores in revenue, though this is deemed impossible by FY26 due to the labor-intensive nature and significant manpower requirements.

Strategic Expansion in Ice Cream and Beverages

The beverage segment emerged as a key growth engine, with the Mysuru facility recording its highest-ever output in Q4 FY25. The new ice cream factory in Nashik commenced commercial production in May 2025. The company plans to invest approximately INR650-700 crores in the ice cream business by FY27, representing nearly one-third of its gross block. A new greenfield ice cream plant in North India is also planned to begin operations by Q1 FY27.

Capex Plans for FY26

Hindustan Foods has outlined significant capital expenditure plans for FY26. This includes INR150-200 crores for the capitalization of the Nashik ice cream plant, approximately INR200 crores for the North ice cream project (to be commercialized in Q1 FY26), INR50 crores for shoe business expansion in Karnataka, and INR100 crores for the Home and Personal Care business. The company aims to increase its gross block to INR1,800 crores, though the 'doubling' claim is inconsistent with the current INR1,412 crores.

Focus on Shared Manufacturing and Margin Improvement

The company is increasingly focusing on shared manufacturing, which is expected to lead to better margins and an increase in Return on Equity (ROE). While dedicated manufacturing provides stability, shared manufacturing allows for operating leverage. The shoe business, a large part of shared manufacturing, is expected to achieve a 9% EBITDA margin. Management stated that ROE expectations for shared manufacturing are at least double that of dedicated manufacturing.

Investment in EPR Compliance and Waste Management

Hindustan Foods plans to invest up to INR5 crores in Kabadiwala, acquiring a substantial minority stake. This strategic investment aims to enhance the company's Extended Producer Responsibility (EPR) compliance by tying up with a waste management expert. This move is seen as symbiotic, helping uplift the informal waste ecosystem while ensuring traceability and compliance with evolving regulatory landscapes in India.

Macroeconomic Headwinds and Take-or-Pay Contracts

Management acknowledged softening consumer demand and macroeconomic headwinds, stating they are 'still not out of the woods.' Despite these challenges, the company emphasized the sacrosanct nature of its take-or-pay arrangements with customers. They highlighted a mutual understanding and support with customers during difficult times, ensuring that bottom lines are not significantly affected by seasonal variations or top-line changes in dedicated manufacturing.

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