Q1 2027 ADF Foods Ltd Earnings Call Transcript
Key Points
- ADF Foods Ltd (BOM:519183) delivered its fourth consecutive quarter of strong double-digit growth, with consolidated revenue up 25.9% YoY to INR 167.31 crores.
- The company received the highest AEO T3 certification from CBIC, which will enable faster customs clearances, reduced inspections, and improved export efficiency.
- The Surat greenfield facility has commenced commercial deliveries and initial container shipments, expanding frozen food manufacturing capabilities.
- The company received a tariff refund of USD 2.08 million from the US government, with a portion booked in Q1 P&L and the balance in the balance sheet.
- Management has started passing on freight increases to customers (upwards of 65-70% of business), which is expected to help improve EBITDA margins going forward.
- The Truly Indian brand is now present in over 3,000 stores in the US, with repeat orders and new listings validating consumer acceptance.
- The company maintains a strong order book, described as the strongest in its history for June, July, and August, supporting the FY27 revenue target of INR 900+ crores.
- Elevated freight costs due to geopolitical uncertainties, vessel shortages, and supply chain disruptions negatively impacted consolidated EBITDA margins by approximately 3%.
- The company faced shipment delays due to non-availability of ships and containers, with about 30% of ready goods unable to be shipped in June.
- Consolidated EBITDA margin was 17.7%, but excluding the tariff refund, the adjusted margin was lower at approximately 13.4%.
- The Surat facility is expected to take 2-3 years to reach full capacity utilization, with only about 30% utilization expected in FY27.
- The PLI benefit of approximately INR 16 crores is in its final year, and its discontinuation could impact margins unless offset by reduced brand investments.
- The company faces ongoing uncertainty regarding US import tariffs, with the 10% tariff continuing and future developments unpredictable.
- The domestic brand Soul has been slow to gain traction, requiring continued investment and strategic changes to drive growth.
Ladies and gentlemen, good day and welcome to the ADF Foods Limited Q1 FY27 Conference Call.
(Operator Instructions) I now hand the conference over to Mr. Sumit from EY. Thank you, and over to you, sir.
Thank you, Sumit, and good afternoon, everyone. We welcome you to the Q1 FY27 earnings conference call of ADF Foods Limited. To take us through the results and to answer your questions, we have with us today the top management of ADF Foods, represented by Mr. Bimal Thakkar, the Promoter, Chairman, Managing Director and Chief Executive Officer; Mr. Sumer Thakkar, the Promoter, Vice President, Sales and Strategy; and Mr. Srinivas Ayyagari, the Chief Financial Officer. We will start the call with an overview of the business and recent updates by Mr. Bimal Thakkar, and then Mr. Srinivas will give his comments on the financials. As usual, the standard safe harbor clause applies when we start the call. Over to you.
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