Why Did Heritage Foods’ Q1 Net Profit Plummet by 31% to Rs 40.5 Crore?
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Synopsis
Heritage Foods Limited has reported a significant decrease in net profit, down 30.7% to Rs 40.5 crore for Q1 FY26, despite a 10.1% increase in revenue. The decline in profit is attributed to rising operational costs and unseasonal rains affecting product demand. However, the company remains optimistic about future growth.
Key Takeaways
- Net profit decreased by 30.7% in Q1 FY26.
- Revenue rose by 10.1% year-on-year.
- EBITDA dropped 21.2% to Rs 73.8 crore.
- Unseasonal rains affected demand for value-added products.
- Strategic acquisition of 44.4% stake in HNFPL enhances control.
Mumbai, July 17 (NationPress) - Dairy giant Heritage Foods Limited reported a significant drop in net profit for the first quarter of FY26, announcing a net profit of Rs 40.5 crore for the April–June period, which marks a decline of 30.7% from Rs 58.4 crore in the same quarter last year (Q1 FY25).
This decline in profit occurred despite a 10.1% year-on-year (YoY) revenue increase, with total revenues climbing to Rs 1,136.7 crore from Rs 1,032.6 crore in the comparable period last year, as per the company's filing with the stock exchange.
The company faced margin pressures due to rising input and operational costs, leading to a 21.2% drop in EBITDA, which fell to Rs 73.8 crore from Rs 93.7 crore in the previous year.
Furthermore, the EBITDA margin decreased to 6.5% from 9%, indicating challenges in maintaining profitability.
Following the earnings report, shares of Heritage Foods witnessed a 3.17% decrease on the National Stock Exchange (NSE), closing at Rs 463.65 after hitting an intraday low of Rs 455.85.
In the last five trading days, shares have decreased by Rs 22.9 or 4.7%. However, in the past month, the stock price has seen an increase of Rs 20.7 or 4.67%.
Over a six-month period, shares rose by Rs 30.9 or 7.13%. Year-to-date, the stock has fallen by Rs 19.75 or 4.08%.
Meanwhile, the Heritage Foods board has approved the acquisition of an additional 44.4% stake in Heritage Nutrivet (HNFPL).
This acquisition will increase the company's total stake in HNFPL to 94.4%, granting it strategic control over the yogurt supply chain.
Executive Director Brahmani Nara stated that unseasonal rains in April and May had a temporary negative impact on demand for value-added products (VAP), affecting profitability.
However, she expressed optimism as June exhibited a strong recovery, and the company remains confident in its long-term growth trajectory.
Moreover, she mentioned that the company's greenfield ice cream project is progressing as planned, demonstrating the firm's commitment to expanding its product range.
Point of View
I believe that while Heritage Foods has faced significant challenges in the first quarter, the underlying growth in revenue and strategic acquisitions suggest potential for recovery. The company's ability to navigate these tough conditions will be critical in the coming months.
NationPress
17/07/2025
Frequently Asked Questions
What caused Heritage Foods' profit drop in Q1 FY26?
The profit decline was primarily due to rising input and operational costs, along with unseasonal rains affecting demand for value-added products.
How did Heritage Foods' revenue perform in Q1 FY26?
Despite the profit drop, Heritage Foods reported a 10.1% increase in revenue, rising to Rs 1,136.7 crore compared to Rs 1,032.6 crore in Q1 FY25.
What is the company's strategy moving forward?
Heritage Foods is focusing on strategic acquisitions and expanding its product offerings, including a greenfield ice cream project.
What impact did the profit drop have on the company's shares?
Following the earnings announcement, shares of Heritage Foods fell by 3.17% on the NSE, closing at Rs 463.65.
Is there optimism for future growth at Heritage Foods?
Yes, the company remains confident in its long-term growth prospects, especially with a recovery noted in June.
