Summary
Orkla India Limited - Q3 FY 2026 Earnings Call Summary Wednesday, February 11, 2026 5:00 PM
Event Participants
Executives 3 Siddharth Borkar (Head M&A and IR), Suniana Calapa (CFO), Sanjay Sharma (MD and CEO)
Analysts 4 Akshay Darji (Self shine Industries), Ashutosh Joytiraditya (ICICI Securities), Dishant Jain (Quasar Capital), Nitin Shakdher (Green Capital), Rajit Aggarwal (Nilgiri Investment Managers), Resha Mehta (GreenEdge Wealth)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹636 crores | +3.4% YoY; growth supported by volume but offset by price deflation in spices. |
| Volume Growth | 5.4% | YoY increase driven by a 10.1% volume surge in the spices category. |
| EBITDA | ₹102 crores | +17.7% YoY; margin expanded to 16.1% due to operational efficiencies and lower ad-spend. |
| PAT (Before Exceptional) | ₹68 crores | +3.8% YoY; growth moderated by lower other income following a ₹600 crore dividend payout. |
| PAT (After Exceptional) | ₹52.2 crores | -14% YoY; impacted by a ₹15.8 crore one-time charge for gratuity under the new labor code. |
| Digital Commerce Sales | 9.5% of Revenue | +43.4% YoY; driven by quick commerce traction and social media initiatives. |
| Spices Volume Growth | 10.1% | Driven by penetration gains in core markets and rural expansion. |
| Spices Realization | -7% (approx.) | Reflects management’s decision to pass on deflationary raw material costs (Chili -50%). |
| Innovation Rate | 41.6% | Measured as growth in new convenience food concepts and launches. |
Geographic & Segment Commentary
- Spices (Domestic): Delivered 10.1% volume growth but only 3.1% revenue growth due to a two-year deflationary cycle in chili prices. Focus remains on driving penetration in Karnataka and AP, where household reach for MTR has increased to 30.6% and 13% respectively.
- Convenience Foods (Domestic): Grew 6% YoY, led by double-digit growth in Breakfast and Meals, offset by a decline in Sweets due to the earlier timing of the festive season in FY26. The “Minute” portfolio and fresh Idli-Dosa batter remain key growth pillars, with batter now being ready for expansion to other metros.
- International (GCC & Exports): International revenues grew 8.7% YoY, with the GCC market growing at 16.4%. Eastern is now the number one Indian spice brand in UAE household reach, while Arabic-specific masalas now contribute one-third of brand penetration in Saudi Arabia.
Company-Specific & Strategic Commentary
- Dual Brand Strategy: Leverages MTR for Karnataka/AP and Eastern for Kerala/GCC, maintaining market leadership through local cultural relevance.
- Digital-First Brands: Launched “MTR Prakriti,” a premium, single-origin spice brand (e.g., Byadgi Chili, Araku Turmeric) targeting affluent urban consumers via D2C and e-commerce.
- Rural Distribution: Added 53 new rural distributors and 22,000 outlets this quarter, reaching over 5,000 new villages with a focus on ₹5 and ₹10 entry-level packs.
- Synergy Realization: Applied Eastern’s “pure spice” procurement and pricing models to MTR, doubling MTR’s pure spice volumes in three years.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Spice Pricing | Inflationary Trend (Q4 FY26-Q1 FY27) | Lower cropping area as farmers shift to other crops is expected to reverse the deflationary cycle. |
| Revenue Growth | Improved Top-line (FY27) | Anticipated benefits from the “inflationary turn” in spices and higher consumption due to GST 2.0 (5% bracket). |
| M&A | Aggressive pursuit (Ongoing) | Management is actively evaluating inorganic opportunities to expand beyond core South Indian geographies. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Volatility | Spice prices (Chili) have seen unprecedented 30-50% movements; while currently inflationary, sudden shifts impact value realization and margins. |
| Geographic Concentration | High reliance on South India (30% of India’s GDP); while lucrative, it limits national scale unless M&A or digital-first brands succeed elsewhere. |
| Regulatory Impact | New Labor Code implementation led to a ₹15.8 crore exceptional hit this quarter regarding gratuity provisions. |
Q&A Highlights
Revenue & Margins
- Question: Why did EBITDA margins decline sequentially from Q2 to Q3? (Rajit Aggarwal)
- Answer: Primarily due to product mix; Convenience Foods, which carry significantly higher gross margins, saw a softer quarter due to the festive shift, while lower-margin Spices grew (Suniana Calapa).
Spice Deflation
- Question: When will the wide gap between volume and revenue growth close? (Resha Mehta)
- Answer: We expect inflationary effects to surface in Q4 FY26 and more materially in Q1 FY27 as new season crops (Chili, Turmeric) enter the market at higher prices (Sanjay Sharma).
International Strategy
- Question: What is the strategy for the US and European markets? (Nitin Shakdher)
- Answer: We follow “food follows migration.” US/Canada is a focus area, but we avoid a generic commodity approach, instead tailoring products to the specific heat/color preferences of the diaspora and local palettes (Sanjay Sharma).
M&A Strategy
- Question: Are there plans for inorganic acquisitions in other states? (Dishant Jain)
- Answer: M&A has become a major priority to go beyond the local South India agenda. We are aggressively working on several opportunities but cannot share specifics (Sanjay Sharma).
Key Takeaway
Orkla India delivered a steady Q3 FY26 with 3.4% revenue growth, underpinned by a robust 10.1% volume increase in its core Spices segment. While the top line was masked by a prolonged deflationary cycle in chili prices—leading to a 7% drop in realization—EBITDA grew 17.7% to ₹102 crores, reflecting strong operational leverage and the successful integration of the MTR and Eastern businesses. Strategically, the company is pivoting toward premiumization via the “MTR Prakriti” digital brand and expanding its GCC footprint, where it now leads in household reach. Management expects a transition from deflation to inflation in the spice category starting Q4 FY26, which should narrow the volume-value gap and bolster top-line growth. Looking forward, the company remains focused on rural penetration and aggressive M&A to transcend its South Indian stronghold.
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