Orkla India Limited — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Orkla India reported a quarter of healthy volume growth and strong EBITDA expansion, driven by operational efficiencies and digital commerce. However, revenue growth was moderated by deflationary trends in spices and festival timing shifts. The company incurred a one-time exceptional expense impacting PAT. Management expressed confidence in future growth, anticipating an end to the deflationary cycle in spices and continued expansion in core markets and international business.

Highlights

  • Revenue from operations grew 3.4% YoY to ₹636 crores, supported by a healthy 5.4% underlying volume increase.

  • EBITDA increased by 17.7% YoY to ₹102 crores, resulting in a healthy EBITDA margin of 16.1%.

  • Spices category demonstrated strong 10.1% volume growth YoY, driven by penetration and distribution expansion.

  • Digital commerce continued its rapid expansion with 43.4% revenue growth, now contributing 9.5% of total sales.

  • International revenues grew 8.7% YoY, led by strong performance in GCC markets and Convenience Foods.

Concerns

  • PAT before exceptional items grew a modest 3.8% YoY to ₹68 crores, moderated by lower other income following a ₹600 crore dividend payout in FY25.

  • PAT after exceptional items was negative 14% due to a one-time exceptional charge of ₹15.8 crores for gratuity expenses.

  • Deflationary trends in spices, particularly chili (reduced by 50%), continued to weigh on revenue growth, leading to a 7% lower price realization in pure spices.

  • Convenience Foods revenue growth was 6%, with sweets experiencing a temporary decline due to the advancement of the festive season into the prior quarter.

Key financials

  1. Revenue from Operations ₹636 Cr +3.4%YoY
  2. Underlying Volume Growth 5.4%
  3. EBITDA ₹102 Cr +17.7%YoY
  4. EBITDA Margin 16.1%
  5. PAT (before exceptional) ₹68 Cr +3.8%YoY
  6. PAT (after exceptional) — -14%YoY

What they filed

Q1 FY27: revenue up 10.4%, net profit up 11.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue620 615 596 597 650 +5%636 +3%626 +5%659 +10%
EBITDA113 86 95 112 106 −6%103 +20%97 +2%113 +1%
Net profit83 66 35 79 77 −7%57 −14%73 +109%88 +11%
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

  • Spices
    10.1% Volume Growth3.1% Revenue Growth
  • Convenience Foods
    6% Revenue Growth
  • Domestic Revenues
    2.9% Growth
  • International Revenues
    8.7% Growth

Guidance & targets

Raw Materials

  • Inflationary Trend in Spices Raw Materials · Coming year · Medium confidence Inflationary trend
    Early indicators are suggesting that there will be an inflationary trend in spices in the coming year.

    — Sanjay Sharma

Pricing

  • Price Effects from Inflation Pricing · Q4 FY26 and Q1 FY27 · Medium confidence Effects in Q4 and Q1 of next year
    You will see some effects in Q1 sorry in Q4 and in Q1 of next year.

    — Sanjay Sharma

Inventory

  • US Market Stock Levels Inventory · Q1 FY27 · High confidence Normalized levels
    So we've been able to cut the stock levels to we are working to cut the stock levels to normalized levels by the first quarter of this year.

    — Sanjay Sharma

What to watch in Q4 FY26

Spices Price Hike Realization

Q4 FY26 / Q1 FY27
Current Deflationary trends impacting revenue, prices being adjusted.
Target Price effects visible in Q4 FY26 and Q1 FY27.

Why it matters

The realization of price hikes in spices is crucial for improving revenue growth and offsetting past deflationary pressures.

It's too early because the season starts only in the -- in December. So by the time the price effects, it takes us time to execute price effects also. By the time the effects will come, it will be mostly in the first quarter onwards or late first quarter onwards.

Risks & concerns

  • Deflationary trends in spices

    medium

    Two straight years of deflation, over 30% price movement, chili reduced by 50%, impacting value realization and revenue growth in Q3 FY26.

    Management acknowledged

  • Festival timing shifts

    low

    Advancement of the festival season in 2024 (end Oct/early Nov) impacted Q3 FY26 results, particularly for the sweets portfolio, as sales were captured in the prior quarter.

    Management acknowledged

  • Exceptional gratuity expenses

    low

    A one-time charge of ₹15.8 crores related to gratuity expenses due to the implementation of the new labor code, impacting PAT after exceptional items negatively by 14%.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Sequential Volume Growth (Q2 to Q3 FY26) Direct
In metric tons. Okay. So it is slightly down, Rajit. It is versus sequential quarter-on-quarter, the growth is minus 4%.

Clarified that the sequential decline in revenue was primarily driven by a -4% volume de-growth, not just price, and also influenced by festival timing shifts.

Asked by Rajit Aggarwal

EBITDA Margin Comparison (Q2 vs Q3 FY26) Direct
Yes, so that is also primarily led by gross margins. We've seen softening of gross margins primarily related to mix effects. convenience foods comes at significantly better gross margins. So we've seen some softening in the gross margins and that's led to the EBITDA margins being slightly softer versus the previous quarter.

Explained that the Q3 EBITDA margin being slightly lower than Q2 was due to softening gross margins, specifically from mix effects, as convenience foods (with better margins) saw a temporary decline.

Asked by Rajit Aggarwal

Reduction in Employee and Other Expenses (Q2 vs Q3 FY26) Direct
Q2 was slightly higher because we had some one-off expenses related to the IPO etcetera, sitting in September. Plus we've also done some off-rolling of manpower in some of our locations, and that's also led to reduction and therefore that's, you know, permanent in nature.

Provided specific reasons for the reduction in expenses, attributing it to one-off IPO-related costs in Q2 and permanent manpower restructuring, indicating sustainable cost savings.

Asked by Rajit Aggarwal

International Markets Growth (excluding GCC) Partial
On the rest of the markets, I think on US markets and the North American markets we are I think flat in terms of -- there's a decline in our growth out there, largely on account of the fact that last year we changed our distribution network and there's been a little bit -- and also the Red Sea crisis was there last year.

Addressed the flat/declining growth in non-GCC international markets, attributing it to past distribution changes and the Red Sea crisis, while clarifying that consumer offtakes were not impacted.

Asked by Dishant Jain

Inorganic Acquisitions for State Expansion Evasive
Yes, so as far as M&A is concerned, I think it's an important strategy for our growth to go beyond our local agenda. But we don't make any comments about M&A. As you know, the nature of the beast by itself is quite fickle and we are I can assure you that that has now become a major priority for us and we are working quite aggressively with a few opportunities that we are looking at.

Management confirmed M&A as a priority for growth beyond local agenda and is actively pursuing opportunities, but declined to provide specific details, signaling potential future M&A activity.

Asked by Dishant Jain

Inflationary Trends in Spices and Price Hikes Direct
Yes, so based on our mandi buying we participate in the mandi 52 weeks in a year. So we are starting to see that the rates are starting to go up. We are participating in the mandi at this point of time and the materials are coming in. We're also sitting on covers for raw materials in our business. And therefore, based on how the trends are moving as far as the mandis are concerned, we are looking we have we are continuously adjusting our prices.

Confirmed that mandi rates for spices are rising and the company is actively adjusting prices, indicating a shift from deflationary pressures to potential price-led growth in the near future.

Asked by Resha Mehta

Cross-Learning from Eastern Acquisition for MTR Pure Spices Direct
After we acquired Eastern, we got to understand how to how to deal with the market when we deal with pure spices. And Eastern had a very good system by which they did it. Part of which was how we bought in the market and how the buying and the selling supply chain was linked and what was the basis of doing pricing and being active in the market.

Highlighted a key strategic benefit of the Eastern acquisition, enabling MTR to effectively enter and grow in the pure spices category by leveraging Eastern's market knowledge and supply chain practices, leading to significant penetration gains.

Asked by Resha Mehta

Growth Plan for Next Two Years Direct
I think our growth strategies are very clearly articulated. I think first is, we have two brands which is MTR and Eastern. We still believe that there is a strong potential to grow as far as both these brands are concerned in its core market. As you know that MTR is the number one brand in Karnataka and is the number two brand in Andhra Pradesh. Eastern is the number one brand in Kerala.

Management outlined a multi-pronged growth strategy focusing on core market penetration, leveraging South India's high per capita spend, expanding convenience foods via e-commerce, and strengthening international business, providing a clear roadmap for future performance.

Asked by Akshay Darji

3 min read 6 chapters

Detailed narrative

Macroeconomic Environment and Raw Material Trends

India's economic growth is projected at approximately 7%, supported by government initiatives like GST 2.0 reductions, which now cover 100% of Orkla's products in the 5% bracket. While the Convenience Food portfolio experienced manageable inflation in wheat and SMP, the spices category faced two consecutive years of deflation, with prices reducing over 30% and chili by 50%. However, early indicators suggest an inflationary trend in spices for the coming year, with price effects expected in Q4 FY26 and Q1 FY27.

Q3 FY26 Business Performance Overview

Orkla India delivered a 4.1% revenue growth to ₹636 crores, underpinned by a healthy 5.4% underlying volume increase. EBITDA grew significantly by 17.7% to ₹102 crores, achieving a 16.1% margin. This performance was driven by volume-led growth, lower advertising spend due to festive shifts, and operational efficiencies. Excluding production-linked incentives, EBITDA growth would have been 23.2%. PAT before exceptional items grew 3.8% to ₹68 crores, but a one-time gratuity expense of ₹15.8 crores led to a 14% negative PAT after exceptional items.

Spices Category Performance and Strategic Learnings

The spices portfolio demonstrated robust 10.1% volume growth, despite revenue growth being a modest 3.1% due to deflationary raw material prices, leading to a 7% lower price realization in pure spices. Strategic learnings from the Eastern acquisition enabled MTR to effectively enter and grow in the pure spices category, doubling MTR's volumes in Karnataka and Andhra Pradesh. Penetration in Karnataka increased from 20.3% in 2022 to 30.6% in 2025, and in Andhra Pradesh from 4.3% to 13% over the same period.

Convenience Foods and Distribution Expansion

The Convenience Foods portfolio grew 6% in revenue, with strong double-digit growth in the breakfast and meals segments. The sweets portfolio saw a temporary decline due to the festival season shifting to the prior quarter, though ready-to-eat sweets grew 47.5% over the combined festive season. MTR expanded its distribution by adding 22,000 outlets in Karnataka and Andhra Pradesh, and rural infrastructure was strengthened with 53 new distributors, reaching over 5,000 new villages.

International Business and Digital Commerce Growth

International operations contributed approximately 21% to consolidated revenues, growing 8.7% YoY in Q3 FY26, primarily led by GCC markets (16.4% growth). The strategy involves transforming Eastern's offerings from pure spices to a total food brand for Malayali consumers and launching Arabic masalas for local populations. Digital commerce continued its strong trajectory, growing 43.4% YoY and now accounts for 9.5% of total sales, with initiatives like MTR Prakriti targeting affluent young consumers through a dedicated D2C site.

Operational Efficiencies and Future Outlook

The company's sustained focus on operational efficiencies and lower advertising spend contributed to the strong EBITDA margin. Management expressed confidence in an improved top-line performance, strong volume development, and a turning deflationary cycle in spices. They highlighted a long runway for growth in South India, citing high per capita income and packaged food consumption. Future growth pillars include deepening penetration in core markets, expanding convenience foods through e-commerce, and strengthening international business, particularly in GCC and US markets.

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

More Fast Moving Consumer Goods earnings calls