KRBL Limited — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

KRBL reported its highest ever quarterly revenue in Q3 FY25, driven by a robust 104% growth in export sales, while domestic revenue saw a 4% decline. The company significantly reduced its net debt to ₹92 crores. Despite strong market share gains in the domestic segment and new product launches, margins faced pressure from declining basmati paddy prices and higher freight costs, leading to a 12% EBITDA margin.

Highlights

  • Highest ever quarterly revenue of ₹1,682 crores.

  • Export revenue grew 104% YoY to ₹567 crores in Q3 FY25.

  • Total income for Q3 FY25 stood at ₹1,690 crores, higher by 15% YoY.

  • Net debt reduced to ₹92 crores as of December 31, 2024, from ₹901 crores last year.

  • Core gross margin improved to 23.6% in Q3 FY25 from 23.3% in Q3 FY24 (excluding other income).

  • Domestic market share gained 360 bps in General Trade to 38.2%.

  • Domestic market share gained 140 bps in Modern Trade to 42.3%.

  • Domestic market share gained 470 bps in E-commerce to 42.8%.

  • Household penetration increased by 400 basis points YoY.

  • Basmati rice production hit an all-time high, exceeding 16 million tons.

Concerns

  • Basmati paddy prices declined 20% compared to last year.

  • Basmati export realizations declined 7%, reflecting price pressure in the international market.

  • Average price realization declined 15% over 18-20 months (from ₹93,000/MT in Feb 2023 to ₹79,500/MT in Nov 2024).

  • Domestic revenue declined 4% in Q3 FY25 due to regional rice portfolio optimization and temporary softness in bulk pack realizations.

  • EBITDA margin for Q3 FY25 was 12% compared to 14.1% in Q3 FY24, impacted by higher freight on sales (2% impact).

  • Gross margin for Q3 FY25 was 24% compared to 24.8% in Q3 FY24.

Key financials

  1. Total Income ₹1,690 Cr +15%YoY
  2. Export Revenue ₹567 Cr +104%YoY
  3. Domestic Revenue Growth -4% -4%YoY
  4. Gross Margin 24%
  5. EBITDA ₹203 Cr
  6. EBITDA Margin 12%
  7. PAT ₹133 Cr
  8. Finance Cost ₹1.2 Cr

What they filed

Q1 FY27: revenue down 5.6%, net profit up 72.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,270 1,682 1,442 1,584 1,511 +19%1,477 −12%1,526 +6%1,496 −6%
EBITDA123 195 224 193 226 +84%229 +17%229 +2%308 +60%
Net profit103 133 154 151 172 +67%170 +28%155 +1%261 +73%
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

  • Export
    ₹567 Cr Revenue
  • Domestic
    -4% Revenue Growth

Capital allocation

high confidence
  • Debt Net ₹92 Cr
    Our sharp reduction in net debt, which now stands at INR 92 crores as of December 31, '2024, down from INR 901 crores last year.
  • Liquidity Liquidity disclosed Total inventory as of December 31, 2024, stood at INR 4,278 crores, reflecting an optimization of stock levels. This included INR 1,241 crores of paddy inventory and INR 2,877 crores in rice inventory.
    Our total inventory as of December 31, 2024, stood at INR 4,278 crores, reflecting an optimization of stock levels. This included INR 1,241 crores of paddy inventory, which was at INR 2,156 crores in December '2023 and INR 2,877 crores in rice inventory, which was at INR 2,554 crores in December '2023.

Guidance & targets

Market Share

  • Domestic Market Share Market Share · years to come · Medium confidence 50%-55%
    We want to maintain that trajectory and our objective is to reach a 50%-55% market share in years to come.

    — Ayush Gupta

Volume

  • Regional Rice Sales Volume Volume · next 3 years · High confidence 1 lakh metric ton
    Our goal remains to achieve 1 lakh metric ton in regional sales within the next 3 years, while ensuring this segment delivers equal or better gross margin compared to our basmati business.

    — Ayush Gupta

Revenue

  • Edible Oil Segment Revenue Revenue · next 3 to 5 years · Medium confidence ₹300 crores
    We are targeting INR 300 crores revenue milestone in this segment, while simultaneously working on expanding Uplife into a comprehensive health and wellness platform over the next 3 to 5 years.

    — Ayush Gupta

  • Overall Revenue Growth Revenue · next year · Medium confidence slightly grow over the previous year
    I think we are expecting the revenue to be slightly grow over the previous year. That's the view as of now.

    — Ashish Jain

Margin

  • Gross Margins Margin · Q1 FY26 · Medium confidence improve
    See, the gross margins are low due to the paddy prices were low this year in the opening during the month of October and that has reflected in the price. That is why the gross margins are low, but they are going to improve in the first quarter of '2025-'26.

    — Anil Kumar Mittal

Export Revenue

  • Saudi Market Revenue Export Revenue · FY26 · High confidence ₹500 crores plus
    No, no. I think so in FY '2026, we will reach around INR500crores plus through Saudi alone. No problem.

    — Anil Kumar Mittal

Distribution

  • Numeric Distribution Reach Distribution · 18 to 24 months · Medium confidence 70%
    Our objective is to reach at least a 70% numeric distribution, which will yield at least 85%, 90% coverage in terms of weighted distribution. So that will be about 1 lakh-1.2 lakh outlets more coverage that we'll be aiming. ... I would say an 18 to 24 months would be an ideal time line to achieve the balance.

    — Ayush Gupta

Growth

  • Domestic Bulk Pack Growth Growth · year-over-year · Medium confidence 10% to 12%
    In the bulk pack business, we have been posting good 10% to 12% growth year-over-year. And we continue to see that trend going on.

    — Ayush Gupta

Market context

  • Domestic Consumer Pack Growth Growth · future years · Medium confidence double-digit
    So with that kind of aspiration, I would say, a healthy double-digit growth in consumer pack is to be seen.

    — Ayush Gupta

What to watch in Q4 FY25

Saudi export business growth

Q4 FY25
Current Started exporting, good level expected
Target Good level of business achieved

Why it matters

Saudi market re-entry is a key growth driver for exports, and Q4 performance will indicate initial success.

I know that our investors are more interested to know about Saudi. In particular, we have started exporting to Saudi and we hope to reach a good level of business in coming quarters, including Q4.

Risks & concerns

  • Basmati paddy price decline

    high

    20% decline compared to last year, impacting price realizations and gross margins.

    Management acknowledged

  • Monsoon impact on future paddy prices and inventory

    high

    Good monsoon could lead to lower paddy prices, making current inventory more expensive and impacting future margins.

    Analyst acknowledged

  • Basmati export realization pressure

    medium

    7% decline in export realizations and 15% overall price realization decline over 18-20 months due to increased supply outlook, trade policy, and geopolitical factors.

    Management acknowledged

  • Domestic revenue decline

    medium

    4% decline in Q3 FY25 driven by regional rice portfolio optimization and temporary softness in bulk pack realizations.

    Management acknowledged

  • Higher freight on sales

    medium

    Contributed to a 2% impact on EBITDA margin due to higher export volume, higher freight rates, and increased CIF sales domestically.

    Management acknowledged

  • Competition in regional rice market

    medium

    Vastly unorganized market with many unbranded players and low margin potential for many varieties, requiring strategic consolidation of portfolio.

    Management acknowledged

  • Surplus rice production

    medium

    Total rice production of 9 million tons vs demand of 8 million tons, leading to a 1 million ton surplus and downward pressure on prices.

    Management acknowledged

  • Competition in West domestic market

    medium

    West is an economy segment dominated, price-sensitive market with many local brands, making penetration challenging and potentially diluting gross margins.

    Analyst acknowledged

Q&A highlights

6 direct
Saudi Arabia market entry strategy and channels Direct
As far as our exports are concerned, it is through distributing channels. And we are doing good in those channels which we have recently signed and started making our export. ... It is not a onetime business. It will be coming and it will be continuing also, but it is mostly to the wholesalers.

Clarifies the initial approach to the re-entered Saudi market is through wholesalers and is expected to be sustained, not temporary.

Asked by Amit Aggarwal

Gross margin outlook and impact of paddy prices Direct
See, the gross margins are low due to the paddy prices were low this year in the opening during the month of October and that has reflected in the price. That is why the gross margins are low, but they are going to improve in the first quarter of '2025-'26.

Provides a clear timeline for expected gross margin improvement, linking it directly to paddy price trends.

Asked by Amit Aggarwal

Strategy for regional rice business and new category entry (edible oils) Direct
So what we've realized as we've entered that a lot of the varieties that are available in the market, the margin potential for the company is very less. ... now we've consolidated our focus on 2-3 varieties where we've seen that margin potential and value creation for the brand is possible. ... our main objective is that any business that we deliver in regional rice, we don't want it to dilute our gross margins.

Explains the strategic shift in the regional rice business to focus on higher-margin varieties and the rationale for entering edible oils as a health platform, emphasizing margin protection.

Asked by Himanshu Upadhyay

Paddy price trends and inventory valuation Direct
Prices have come down drastically. From November also, the prices in the season have come down by at least 10% to 12%. So we are buying now the crop 90%, 95% of the crop has already come, but the remaining 5% crop will come till February end, but we are buying in the market at the current prices, which is lesser by 10% to 12% of the season.

Confirms the significant decline in paddy prices and the company's current procurement strategy, which impacts future cost of goods.

Asked by Himanshu Upadhyay

Export margin profile, especially for Saudi market Direct
See, as far as Saudi is concerned, we are satisfied looking at our results on the Q3 turnover and the margins. As far as exports is concerned and even in domestic also, India Gate brand, we have been aging the rice for more than 1 year and certain varieties for 2 years. So up to June-July, this old crop will be supplied in the export market to Saudi and other places. And the margins of profits are intact.

Reassures investors about the profitability of export sales, particularly to Saudi, by leveraging aged rice inventory.

Asked by Dhwanil Desai

Domestic volume growth for basmati and non-basmati Direct
So I think I should have touched on it. But from a branded business point of view, our basmati volume was lower by 1% on a year-on-year basis. Non-basmati volume was lower by a larger number.

Provides specific volume growth figures for domestic basmati and non-basmati, indicating a slight decline in branded basmati and a larger decline in non-basmati.

Asked by Yash

ROCE in the Indian business given lower margins Partial
See, we don't compute it separately for each business. But overall, the return would be slightly lower, I mean, largely because of the margin profile is totally different from exports.

Highlights that the ROCE for the domestic business is likely lower than the overall company due to different margin profiles, but a specific number is not provided.

Asked by Shubham Jain

3 min read 6 chapters

Detailed narrative

Global and Indian Rice Market Outlook

The USDA projects global rice production at 534 million metric tons for 2024-25, an increase from 522 million metric tons in the preceding year, with consumption also rising to 530 million metric tons. This indicates global supply stability. India's rice production is estimated at a record 145 million metric tons for 2024-25, up from 138 million tons last year. Basmati rice production also reached an all-time high of over 16 million tons, a 10% increase YoY, driven by expanded cultivated area, strong yields, and new disease-resistant varieties.

Q3 FY25 Performance Highlights

KRBL reported its highest ever quarterly revenue of ₹1,682 crores in Q3 FY25, with total income at ₹1,690 crores, a 15% YoY increase. This was primarily driven by a 104% growth in export revenue, reaching ₹567 crores. However, domestic revenue declined by 4%. Gross margin stood at 24% (vs 24.8% in Q3 FY24), and EBITDA margin was 12% (vs 14.1% in Q3 FY24), impacted by higher freight costs. PAT for the quarter was ₹133 crores. Net debt significantly reduced to ₹92 crores as of December 31, 2024, from ₹901 crores last year.

Domestic Business Strategy & Market Share Gains

Despite a 4% decline in domestic revenue, KRBL demonstrated strong market share gains. In general trade, market share increased by 360 basis points to 38.2%. In modern trade, it grew by 140 basis points to 42.3%, and in e-commerce, it gained 470 basis points to 42.8%. The company's retail reach expanded to 4.15 lakh outlets, a net increase of 40,000 stores. KRBL aims to achieve 1 lakh metric ton in regional sales within the next three years, focusing on high-potential varieties with better gross margins.

Export Performance and Saudi Market Re-entry

Export revenue surged by 104% YoY in Q3 FY25, reaching ₹567 crores. This growth was supported by the removal of the minimum export price of $950 per metric ton for basmati rice in September 2024, making Indian basmati more competitive. KRBL has re-entered the Saudi market through distributing channels and expects to reach over ₹500 crores in revenue from Saudi alone by FY26. Despite a 7% decline in basmati export realizations, the company maintains that margins on aged rice exports remain intact.

New Product Launches: Regional Rice & Edible Oils

KRBL is strategically consolidating its regional rice portfolio to focus on 2-3 high-potential varieties like Gobindobhog, Jeera Rice, Wada Kolam, and Sona Masoori, aiming for equal or better gross margins than basmati. The company also launched 'Uplife', a new health-focused brand, entering the edible oils category with 'Uplife Lite' and 'Uplife Gut Pro'. The edible oil market is valued at ₹1,800 crores annually, and KRBL targets a ₹300 crore revenue milestone in this segment within 3-5 years, expanding Uplife into a broader health and wellness platform.

Margin Dynamics and Inventory Management

Gross margins for Q3 FY25 were 24%, slightly down from 24.8% YoY, primarily due to lower other income and pressure from declining basmati paddy prices (20% YoY). Core gross margin, excluding other income, improved to 23.6% from 23.3%. EBITDA margin was 12% (vs 14.1% YoY), impacted by higher freight on sales (2% impact). The company expects gross margins to improve in Q1 FY26. Total inventory as of December 31, 2024, stood at ₹4,278 crores, with paddy inventory at ₹1,241 crores and rice inventory at ₹2,877 crores, reflecting lower per-unit costs.

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