Hindustan Foods

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.

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.

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.

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.

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.

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.

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.