ADFFOODSNSEFebruary 17, 2025

ADF Foods Limited

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83turns

8analyst exchanges

3executives

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Management on call

Sumer Thakkar

PROMOTER & GENERAL MANAGER, SALES AND STRATEGY

Shardul Doshi

CHIEF FINANCIAL OFFICER

Ravi Udeshi

ERNST & YOUNG

Key numbers — 40 extracted

13.8%

avi. Hi. Good morning, everyone. Coming to the quarter gone by, our consolidated revenues grew by 13.8% to Rs. 147.5 crores on a year-on-year basis. This was driven by secular demand across all our bra

Rs. 147.5 crore

Good morning, everyone. Coming to the quarter gone by, our consolidated revenues grew by 13.8% to Rs. 147.5 crores on a year-on-year basis. This was driven by secular demand across all our brands. We sustained

Rs. 121.1 crore

I will first share the standalone performance: In Q3 FY '25, we saw revenues from operations at Rs. 121.1 crores. This marked a 17.3% Y-on- Y growth and a 3.6% Q-on-Q decrease. Our EBITDA for this quarter was R

17.3%

one performance: In Q3 FY '25, we saw revenues from operations at Rs. 121.1 crores. This marked a 17.3% Y-on- Y growth and a 3.6% Q-on-Q decrease. Our EBITDA for this quarter was Rs. 25.5 crores, a Y-

3.6%

'25, we saw revenues from operations at Rs. 121.1 crores. This marked a 17.3% Y-on- Y growth and a 3.6% Q-on-Q decrease. Our EBITDA for this quarter was Rs. 25.5 crores, a Y- on-Y decrease of 3.6% and Q

Rs. 25.5 crore

es. This marked a 17.3% Y-on- Y growth and a 3.6% Q-on-Q decrease. Our EBITDA for this quarter was Rs. 25.5 crores, a Y- on-Y decrease of 3.6% and Q-on-Q decrease of 8%. While our EBITDA margins were at 21%, EB

Our EBITDA for this quarter was Rs. 25.5 crores, a Y- on-Y decrease of 3.6% and Q-on-Q decrease of 8%. While our EBITDA margins were at 21%, EBITDA margins decreased 460 bps on a Y-on-Y basis and by

21%

5.5 crores, a Y- on-Y decrease of 3.6% and Q-on-Q decrease of 8%. While our EBITDA margins were at 21%, EBITDA margins decreased 460 bps on a Y-on-Y basis and by 100 bps on Q-on-Q basis. The reason

460 bps

of 3.6% and Q-on-Q decrease of 8%. While our EBITDA margins were at 21%, EBITDA margins decreased 460 bps on a Y-on-Y basis and by 100 bps on Q-on-Q basis. The reason for the decrease has been stated by

100 bps

. While our EBITDA margins were at 21%, EBITDA margins decreased 460 bps on a Y-on-Y basis and by 100 bps on Q-on-Q basis. The reason for the decrease has been stated by Sumer in his speech. PAT for the

Rs. 20.2 crore

asis. The reason for the decrease has been stated by Sumer in his speech. PAT for the quarter was Rs. 20.2 crores, a 0.4% decrease Y-on-Y and 5.5% decrease Q-on-Q. Our PAT margin for the quarter stood at 16.7%.

0.4%

r the decrease has been stated by Sumer in his speech. PAT for the quarter was Rs. 20.2 crores, a 0.4% decrease Y-on-Y and 5.5% decrease Q-on-Q. Our PAT margin for the quarter stood at 16.7%. Coming

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Guidance — 20 items

Sumer Thakkar

opening

“The expansion of our Surat greenfield facility to support both new and existing frozen food lines is actively underway, and we anticipate it to begin operations by the second half of FY '26.”

Moving on to the consolidated performance

opening

“We expect our investment in brand building and strengthening management bandwidth will drive continued growth for all our brands and businesses.”

Moving on to the consolidated performance

opening

“We expect our greenfield project to commissioned by H2 FY26.”

Shardul Doshi

“So, this money will be onward invested into our U.S.”

Shardul Doshi

“So, hopefully, freight should come down going forward.”

Kuber Chauhan

“And the third question is, in last concall you told that a SOUL brand will be placed in modern trade channel as well, so it has been placed or it's still remaining?”

Shardul Doshi

“And we are hoping these numbers will be better going forward.”

Sumer Thakkar

“it's still early days, but we feel fairly confident, 1,300 stores will start generating revenue in Q1 and Q2 next year, and we also are looking to increase this number in the short-term.”

Sumer Thakkar

“So we are doing it regionally, first we are starting with Mumbai and Pune, and then we will expand further west.”

Kuber Chauhan

“And can you provide some ballpark guidance for the next year because the international markets are a bit shaky, so how we are looking forward and what are strategies we are adopting to mitigate it and to protect our margins?”

Risks & concerns — 2 flagged

As we are doing pretty great in the food processing business, but when it comes to the distribution business, it has been very volatile.

— Arpit Jain

So, how do we see the distribution business going ahead as it is causing a drag in our overall business?

— Arpit Jain

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Q&A — 8 exchanges

So, we are making investment in ADF UK Limited, right? So can you please throw some color on that, and where are you planning to use this money?

Shardul Doshi

So, this money will be onward invested into our U.S. businesses. So there are a few things happening there. We need to shore up working capital because the demand is increasing for the Unilever product. We can see that happening. And we are also investing on to Truly Indian brand into that market. So, we will have to shore up the working capital there. And this is an enabling resolution which we have passed. And then we will transfer money as and when it is required. Okay. And -- Sorry. Just to add, we have made some strategic changes in our distribution in both the UK market and the U.S. mark

Thank you for the opportunity. My question is on the distribution business side. As we are doing pretty great in the food processing business, but when it comes to the distribution business, it has been very volatile. So, how do we see the distribution business going ahead as it is causing a drag in our overall business?

Shardul Doshi

Sumer, do you want to take this? So, like you mentioned, the volatility is more on the supply side of things, demand continues to remain robust. And in terms of why we got into the distribution business in the first place, to help strengthen our own brand, that continues to remain. And it also helps bring down our operating costs. So, once the supply chain is resolved, this business will continue to generate positive returns in the near to long-term. Even if you see the returns coming from this business, they have been very robust in the current financial year. Okay. And my other question is t

Yes. Thank you for taking my question. And I have a couple of questions over here. Actually, I joined the call late, so can you explain me what were the reasons of our sequential dip in our top-line business? And number two, have you seen any kind of more acceptance for Truly Indian brand in U.S.? Actually, ideally you mentioned about 1,300 new stores were there which we penetrated. And the third question is, in last concall you told that a SOUL brand will be placed in modern trade channel as well, so it has been placed or it's still remaining?

Sumer Thakkar

Shardul, do you want to get the first question, I will answer two and three. Yes. Okay. So in fact, Kuber, just I had covered this in the opening remark. But just to give you a perspective here, in Q2, rather in Q1 in the month of June there were container availability issues, and hence there were certain sales which actually they were carried forward from Q1 to Q2, both on the distribution as well as on the processed food segment. This is something which we had mentioned in our call also when we saw a significant jump in Q2. Also what happens is, towards Diwali the distributors start stocking

Yes. I have two, three questions. So first on Truly Indian and SOUL, what are their latest monthly revenue run rates? That is one. And this nine months, how much they have contributed to the losses in terms of percentage or absolute? And what is the revenue level at which they will breakeven? If you can connect all three things for Truly Indian and SOUL.

Shardul Doshi

So Truly Indian has a run rate in U.S. will I think do around $1 million in the current financial year, all in put together. And additionally, whatever we are doing Germany, I think we should be at around Rs. 20-odd crores for Truly Indian. While if you look at SOUL, the current run rate is around Rs. 70-odd lakhs on a monthly basis. Okay. And together combined, have they contributed to losses at EBITDA level? Yes, because we are in an investment mode for both these brands, right? So -- So like, what percentage of total EBITDA they have eaten up? So EBITDA at SOUL will be at around, say, 150%

Thank you very much to give the opportunity. Sir, you have nice management, debt-free, doing hard work by management, took Patanjali agency, doing good agency work of Hindustan Unilever. And in spite of so many efforts you are doing of expansion in capacity, warehouse in USA, PLI from Government of India, we are at same stage in last nine quarters. From December '22, since last nine quarters, we are at same figure in bottom line. So, will you give some hope, what is going on, where we want to go?

Shardul Doshi

No. Sir, in fact, except this quarter, there has been quarter-on-quarter and Y-on-Y growth which we have seen, both on our top-line and bottom-line. Not sure what you are referring, but even top line we have been growing at around 17% to 20% year-on-year. So, I think, I am not sure, when you are saying nine quarters, we have been stagnant. But saying this, the plans are in place. As you are aware, Ashoka has been growing in double-digits for us. Truly Indian and SOUL, there is an investment which is happening and will start giving us a good contribution. And even private label will become a bi

Yes. Hi. Good morning. Thanks for the opportunity. So, sir, you had given a guidance of Rs. 1,000 crores revenue by FY '27, so are we sticking to that guidance?

Shardul Doshi

Yes. Okay. And what kind of blended margins do you expect, broadly, can you give us a range? We have always been saying we will be in high teens when it comes to the EBITDA margin. So, we should be in a position to achieve that. Got it. All right. Thank you.

Yes. Thanks for the opportunity. I had two questions. So, basically, our main business is in the USA, whether we take Ashoka or Truly Indian. I mean, a lot of the revenue comes from the U.S. Now, based on the tariffs that are anticipated or coming up, what is the plan to safeguard our margins? That's the question number one. And second question is, basically, you said that in SOUL we have launched frozen food categories in last month, I think, January, this quarter. So what are the various products that we have launched? And how many SKUs we have launched in the frozen category? That's it. Tho

Shardul Doshi

So if you look at, I think, Indian government is working with U.S. government to see how this will work. But anyways, regardless, whenever it happens, it will happen for the entire industry. It's not only like we will be the only one who will be impacted. We are already paying duties as IDr FOODS LTD. CJudt119 tlie-w<)ild,. such. It's not that we are not paying duty in U.S. We will have to see how much incremental duties will come in. But if it is happening for the industry, I think most of us will pass it on to the customer because, anyway, the pricing of our products, they are in all single-

Thank you everyone for joining in. Thanks.

Shardul Doshi

Thank you.

Speaking time

Shardul Doshi

Sumer Thakkar

Moderator

Kuber Chauhan

Kumar Saurabh

Azharuddin Jariwala

Arpit Jain

Ravi Naredi

Sumit Chandwani

Ashish Agrawal

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Opening remarks

Ravi Udeshi

Thank you, Steve. And good morning, everyone. We welcome you to Q3 and nine months FY '25 earnings conference call of ADF Foods Limited. To take us through the results and to answer your questions we have with us the top management of ADF Foods Limited, represented by Mr. Sumer Thakkar, the Promoter and also the General Manager, Sales and Strategy; and Mr. Shardul Doshi, the Chief Financial Officer. We will start the call with an overview of the business and the current business update by Mr. Sumer Thakkar, and then Mr. Shardul Doshi will give his comments on the financials. As usual, the standard Safe Harbor clause applies while we start the call. With that said, I now hand over the call to Sumer. Over to you Sumer.

Sumer Thakkar

Thanks, Ravi. Hi. Good morning, everyone. Coming to the quarter gone by, our consolidated revenues grew by 13.8% to Rs. 147.5 crores on a year-on-year basis. This was driven by secular demand across all our brands. We sustained EBITDA margins in the high teens despite ongoing investments in brand development and strengthening of our management teams. In addition to this, we faced increases in raw material prices and freight costs. However, stringent cost control measures, process efficiencies and the rupee depreciation helped minimize the margin impact. Our strategy to broaden the reach of our India-focused ADF SOUL brand is advancing as scheduled. We have established a presence in the quick commerce market. And additionally, we have also expanded into select modern trade outlets of Nature's Basket, Reliance Fresh, Haiko, Food Square, Dorabjee's and DMart in the Mumbai and Pune region. Our cold storage facility at Nadiad has become operational in the current quarter. This enhances our

I will first share the standalone performance

In Q3 FY '25, we saw revenues from operations at Rs. 121.1 crores. This marked a 17.3% Y-on- Y growth and a 3.6% Q-on-Q decrease. Our EBITDA for this quarter was Rs. 25.5 crores, a Y- on-Y decrease of 3.6% and Q-on-Q decrease of 8%. While our EBITDA margins were at 21%, EBITDA margins decreased 460 bps on a Y-on-Y basis and by 100 bps on Q-on-Q basis. The reason for the decrease has been stated by Sumer in his speech. PAT for the quarter was Rs. 20.2 crores, a 0.4% decrease Y-on-Y and 5.5% decrease Q-on-Q. Our PAT margin for the quarter stood at 16.7%. Coming to the nine months FY '25 performance: Our revenues from operations were at Rs. 343.8 crores, up 20.6% Y-on-Y. EBITDA was Rs. 75.9 crores, registering an increase of 8.2% Y-on-Y. EBITDA margin was 22.1%, a decrease of 250 bps on Y-on-Y basis. PAT was Rs. 58.7 crores, up 8% Y-on-Y with a PAT margin of 17.1%.

Moving on to the consolidated performance

Our revenues from operations for Q3 FY '25 was at Rs. 147.5 crores, an increase of 13.8% Y- on-Y and 8.6% decrease from the last quarter. Our EBITDA for Q3 FY '25 was Rs. 26.4 crores, recording a decrease of 2.2% Y-on-Y and a decrease of 4.7% from the previous quarter. Our EBITDA margin stood at 17.9%, a decrease of 290 basis points on a yearly basis. The reason has already been explained by Sumer in his speech. We expect our investment in brand building and strengthening management bandwidth will drive continued growth for all our brands and businesses. Our PAT for the quarter was Rs. 18.8 crores, IDr FOODS LTD. CJudt119 tlie-w<)ild,. marking a Y-on-Y decrease of 1.8% and Q-on-Q decrease of 4.6%. For Q3 FY '25, PAT margin stood at 12.7%. For the nine months ended December 31, 2024, consolidated revenues from operations were at Rs. 430.5 crores, up 17.4% Y-on-Y, and EBITDA was Rs. 73.7 crores, a growth of 4.3% Y-on- Y. The EBITDA margin stood at 17.1%, a decrease of 220 bps Y-on-Y. PAT

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