Heritage Foods reported a 36.7% year-on-year decline in consolidated net profit for the fourth quarter of FY26, as elevated milk procurement costs and industry-wide supply constraints squeezed margins despite solid revenue growth. The dairy company posted a consolidated net profit of ₹24.16 crore in the January–March 2026 quarter, down from ₹38.17 crore in Q4 FY25, according to its stock exchange filing.

Revenue Grows, But Margins Compress

Revenue from operations climbed 10.4% year-on-year to ₹1,157.56 crore in Q4 FY26, compared to ₹1,048.47 crore in the year-ago quarter. However, the top-line momentum failed to translate into bottom-line gains. EBITDA fell 34.6% to ₹52.23 crore from ₹79.88 crore a year earlier, while the EBITDA margin contracted sharply to 4.5% from 7.6% — a compression of over 300 basis points.

Milk Costs and Supply Crunch at the Core

Heritage Foods attributed the profitability pressure to a severe milk shortage that gripped the industry through much of FY26. Procurement volumes during Q4 FY26 stood at 16.38 lakh litres per day, down 7% year-on-year due to supply-side constraints. The average landed milk cost rose 8% to ₹46.7 per litre amid tight supply and inflationary pressures, as per the company's exchange filing. To partially offset the cost surge, the company raised average milk selling prices by 4% year-on-year to ₹57.80 per litre during the quarter through calibrated pricing actions. Milk sales volumes, however, grew a modest 1% year-on-year to 11.73 lakh litres per day in the March quarter and 2% for the full financial year.

Value-Added Products Emerge as a Bright Spot

Against the challenging backdrop, Heritage Foods' value-added products (VAP) segment stood out as a significant growth driver. VAP revenue jumped 18% year-on-year to ₹396 crore in Q4 FY26, and rose 13% to ₹1,468 crore for the full year. The segment's contribution to overall revenue improved to 35.5% in the March quarter from 32.5% a year ago, and to 35.3% from 32% for the full year — a structural shift that the company is clearly accelerating. Among individual categories, paneer volumes surged 32% year-on-year, ice cream sales rose 26%, and curd volumes grew 11% during the quarter.

New Launches Fuel the VAP Push

The VAP growth was supported by a series of new product launches during the year, including Livo Yogurts, Sampurna A2 Curd, Nourish+ High Protein Paneer, and the Alpenvie ice cream range. These launches reflect Heritage Foods' deliberate strategy to move up the value chain and reduce dependence on commodity milk revenue — a move that could cushion margins in future quarters if input cost pressures ease.

Full-Year Milestone and Outlook

Despite the margin headwinds, Heritage Foods crossed the ₹4,526 crore annual revenue milestone in FY26, underscoring the company's underlying scale. The key question for investors is whether the industry-wide milk supply situation normalises in FY27, which would relieve procurement cost pressure and allow the company's improving VAP mix to fully reflect in profitability. With value-added products now contributing over a third of revenue, the stage is set for a margin recovery — provided raw milk inflation does not persist.