ADF Foods Limited Q3 FY25 Earnings Call Summary

Summary

ADF Foods Limited - Q3 FY 2025-26 Earnings Call Summary Thursday, February 05, 2026, 4:00 PM IST

Event Participants

Executives 3 Bimal Thakkar (Promoter, Chairman, MD & CEO), Srinivas Ayyagari (CFO), Sumer Thakkar (Promoter, VP Sales & Strategy)

Analysts 8 Ankur Gulati, Ashish Agarwal, Avnish Tiwari, Bharat Sheth, Charchit Maloo, Hitesh Randhawa, Pallavi, Priyanka, Raman, Siddharth Bhattacharya

Financials & KPIs

Geographic & Segment Commentary

• United States: Showed substantial progress following distributor-level changes and sales force enhancements. The “Truly Indian” brand is now available in over 2,000 stores, including major chains like Costco and Whole Foods. Management noted demand remains robust even with previous tariff volatility.
• Europe & U.K.: Contributing approximately 30% of sales with ongoing expansion into Eastern and Western Europe. New listings secured in Netherlands and Germany supermarkets. The “Truly Indian” brand recently launched frozen products in Germany to drive further penetration.
• Processed & Frozen Foods: Frozen remains the fastest-growing category, accounting for 40%+ of total revenue. Management achieved a 10% YoY growth in frozen volumes. This segment typically yields higher gross margins (60-70%) compared to ambient products.
• Distribution Business: Steady-state margins normalized at 12-14%. The segment saw a significant revenue bump this quarter due to the success of subsidiary-led sales in the U.S. and promotional supports.

Company-Specific & Strategic Commentary

• Surat Greenfield Expansion: Pilot runs completed; Phase 1 is on track to be fully operational by Q4 FY26. Phase 1 adds a new frozen bread line, with a second new product line scheduled for Q2 FY27.
• Brand Transition (Truly Indian): Positioned as a premium mainstream brand with 65-70% gross margins. Currently in a 3-year investment phase; management expects breakeven at the subsidiary level in 3 years, though combined (Standalone + Subsidiary) breakeven may occur in 18 months.
• Domestic Market Re-strategy: The “Soul” brand currently generates ₹50 lakhs/month in limited Mumbai channels. A new sales head joined in December 2025 to overhaul the domestic business plan, with new guidance expected in Q1 FY27.
• Pricing & Tariffs: Management clarified that 50% import tariffs (when active) translate to ~25% MRP increases. ADF maintains C&F pricing to distributors; thus, any tariff reductions will take 2-3 months to reflect at the consumer level due to inventory lag.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Revenue Variability & Seasonality

• Question: What explains the variability in YoY growth across quarters? (Pritesh)
• Answer: Growth is influenced by the timing of new retail listings and festive seasons (Diwali, Ramadan). Q1 FY26 was also impacted by external GPCB issues, creating a lower base (Bimal Thakkar).

Truly Indian Profitability

• Question: When will the Truly Indian brand turn EBITDA positive? (Bharat Sheth)
• Answer: At a consolidated level (including standalone manufacturing margins), breakeven is expected in 18 months. As a standalone subsidiary, it requires a 3-year investment window (Bimal Thakkar).

Tariff Impact on Margins

• Question: Can the company retain margins if tariffs are reduced but consumer prices stay high? (Hitesh Randhawa)
• Answer: ADF sells at a transparent C&F price to distributors. While lower tariffs might increase volume uptake, the price benefit sits primarily with the distributor and consumer (Bimal Thakkar).

Volume vs. Value Growth

• Question: What was the split between volume and value growth this quarter? (Ashish Agarwal)
• Answer: Volume growth accounted for roughly 70% of the total revenue increase, with the remaining 30% coming from price/value growth (Srinivas Ayyagari).

Key Takeaway

ADF Foods delivered a record-breaking Q3 FY26, with consolidated revenues reaching ₹191 crores, up 29.5% YoY, and standalone EBITDA margins expanding to 25.1%. Performance was anchored by the successful scaling of the “Truly Indian” brand in the U.S. mainstream market, now present in over 2,000 stores. Strategically, the company has addressed previous capacity constraints through debottlenecking and is transitioning to its next growth phase with the Surat greenfield plant, which begins operations in Q4 FY26. Management has maintained its FY27 revenue target of ₹925-₹1,000 crores, contingent on a successful domestic market relaunch. While heavy marketing investments for Truly Indian (up 24%) may keep consolidated margins in the high teens, the shift toward higher-margin frozen products and direct retail listings provides a robust structural tailwind. Investors should monitor the ramp-up of the Surat facility and the efficiency of marketing spends as the company pursues its ₹1,000 crore milestone.