ADF Foods Limited (NSE: ADFFOODS) Q3 2025 Earnings Call dated Feb. 17, 2025
Corporate Participants:
Ravi Udeshi — Investor Relations
Sumer Thakkar — General Manager, Sales & Strategy
Shardul Doshi — Chief Financial Officer
Analysts:
Azharuddin Jariwala — Analyst
Arpit Jain — Analyst
Kuber Chauhan — Analyst
Kumar Saurabh — Analyst
Ravi Naredi — Analyst
Sumit — Analyst
Ashish Agarwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the ADF Foods Limited Q3 and 9 months FY25 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchstone phone. I now hand the conference over to Mr. Ravi Udeshi from EY.
Ravi Udeshi — Investor Relations
Thank you. And over to you sir. Thank you Steve and good morning everyone. We welcome you to the Q3 and 9 months FY25 earnings conference call of ADF Food Limited. To take us through the results and to answer your questions, we have with us the top management of EDF Foods Ltd. Represented by Mr. Sumesh Thakkar, the Promoter and also the General Manager Sales and strategy and Mr. Shahdud 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. Shahdul Doshi will give his comments on the financials. As usual, the the standard safe harbor clause applies while we start the call. With that said, I now hand over the call to Sumed. Over to you Sumer.
Sumer Thakkar — General Manager, Sales & Strategy
Thanks Ravi. Hi, good morning everyone. Coming to the quarter gone by. Our consolidated revenues grew by 13.8% to INR137.5 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 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 sole brand is advancing as scheduled. We’ve established a presence in the quick commerce market and additionally we’ve also expanded into select modern trade outlets of Nature’s Basket, Reliance, Fresh, Heico, Foodsquare, Dhirabji’s and Dmart in the Mumbai and Pume region. Our cold storage facility in Adyad has become operational in the current quarter. This enhances our supply chain capabilities with respect to finished goods storage and the facility is now geared to optimize resources, better planning and more timely order fulfillment. Overall, our core business continues to grow at a consistent pace and our investments in adx, Sold and Truly Indians should start generating momentum over the medium to long term. The expansion of our Surat Greenfield facility to support both new and existing frozen food lines is actively underway and we anticipate to begin operations by the second half of FY26. We’re confident that our ongoing investments will enable our brands and private label businesses to significantly scale in the future. Overall, we remain committed to achieving strong and sustainable financial growth. I now hand over to Sabil, our CFO who will comment on the financials.
Shardul Doshi — Chief Financial Officer
Thank you Sameer and good morning everyone. I’ll first share the standalone performance in Q3FY25 we saw revenues from operations at INR121.1 crores. This marked a 17.3% YNY growth and 3.6% Q1Q decrease. Our EBITDA for this quarter was INR25.5 crores, our YNY decrease of 3.6% and Q on Q decrease of 8%. While our EBITDA margins was at 21%. EBITDA margins decreased 460bps on Y and Y basis and by 100bps on Q1Q basis. The reason for the said decrease has been stated by Sumer in his speech. PAT for the quarter was INR20.2 crores, a 0.4% decrease YNY and 5.5% decrease Q1. Our PAT margin for the quarter stood at 16.7% coming to the nine month FY25 performance. Our revenues from operations were at INR343.8 crores up 20.6%. YNY EBITDA was INR25.9 crores registering an increase of 8.2% Y&Y. EBITDA margin was 22.1%, a decrease of 250bps on Y&Y basis. PAT was INR58.7 crores up 8%. YNY with a PAT margin of 17.1%. Moving on to the consolidated performance, our revenues from operations for Q3FY25 was at INR147.5 crores, an increase of 13.8% YNY and 8.6% decrease from the last quarter. Our EBITDA for Q3FY25 was INR26.4 crores recording a decrease of 2.2% YNY 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 Sumeri Nitsky. We expect our investment in brand building and strengthening management bandwidth will drive continued growth for all our brands and Businesses. Our path for the quarter was INR18.8 crores marking a y and y decrease of 1.8% and Q on Q decrease of 4.6%. For Q3 FY25 PAT margin stood at 12.7% for the nine months ended December 31st, 2024. Consolidated revenues from operations were at INR430.5 crores up 17.4%. YNY and EBITDA was INR73.7 crores. A growth of 4.3% y and y. The EBITDA margin stood at 17.1%. A decrease of 220bps. PAT was INR52.8 crores up 8.3% y and y with a PAT margin of 12.3%. All our capex plans are on schedule. Our capex spend for nine months FY25 were at around 22 crores. Our cold storage facility at Nadiad became operational in the current quarter. Our Surat greenfield facility expansion is well on schedule. We expect our greenfield project to commission by H2FY26. Our balance sheet continues to remain debt free as on date. And we are sitting on the cash balance of Rs. INR143 crore overall. We continue to judiciously invest in our manufacturing capabilities as well as our brand building exercise in order to focus on delivering greater returns in the long term. With this, I now request Ravi to open the floor for question and answer. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to withdraw yourself from the question queue you may press star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Azeruzzin from Samiksha Capital. Please go ahead.
Azharuddin Jariwala
Hello. Am I audible? Yes. Yes. Yes please. Yeah. Good morning gentlemen. So thank you for taking my question. So there are multiple questions from my side. First we are making investment in AD at UK Limited, right? So can you please throw some color on that? And what. Where are you planning to use this money?
Sumer Thakkar
The voice is not very clear.
Operator
Sir. Can you please use your answer and speak? Mister.
Azharuddin Jariwala
Okay. Hello. Yes sir. Please go ahead. Yeah. So sorry. Yeah. So we are making investment in ADF UK Limited, right? So can you please show some color on that? And where are we planning to use this money?
Shardul Doshi
So this money will onward invested into our US businesses. 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’re also investing onto truly Indian brand into that market. So we will have to shore up the working capital there. And this is enabling resolution which we have passed and then we will transfer money as and when it is required. Yeah, go ahead.
Sumer Thakkar
Sorry. Just to add, we made strategic changes in our distribution in both the UK market and the US market and in the next couple of quarters we’re seeing enhancements in demand. So just to fulfill that, this is more a working capital infusion.
Azharuddin Jariwala
Yeah. And why did distribution revenue experience a certain fall on to basis?
Shardul Doshi
Yeah. So you know, you remember in fact in the last call also I said that there are certain carry forward in the June quarter there were certain container related issues in terms of availability. So when you look at both standalone as well as distribution business, they have not grown because there were certain carry Forward from the Q1 into Q2. And also what happens is because this distributor stock up goods due to the valley season, they had done it. So you had seen a jump in Q2 and hence there is a drop in Q3 which is a follow on effect. But I think we are very we are seeing good growth happening into this segment in few next quarters to come in. So I don’t see this as an issue at all.
Azharuddin Jariwala
Correct, correct. And margin and revenue going into FY26, are we expecting margins to increase due to freight rate pressurization?
Shardul Doshi
This rate is something which is uncontrollable expense for us. But saying this, when we look at the Jan month or even in the December month, we had seen month on month decrease in December and it has further reduced in the month of January. Freight should come down going forward. If Red Sea issue is also resolved, freight will drastically come down I think after Trump has come in.
Azharuddin Jariwala
Thank you judge.
Operator
Thank you. Participants who wish to ask a question may press star and 1. The next question is from the line of Arpit Jain, an individual investor. Please go ahead.
Arpit Jain
Thank you for the opportunity. Am I audible? Hello, Am I audible? Yes sir, you are? Yes, go ahead. Yes, 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?
Sumer Thakkar
You want to take the volatility more on the supply side thing. 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 supplied, 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 business, they have been very robust in the current financial year.
Arpit Jain
Okay, okay. And my other question is that we have some issues related to that post acquisition issues. So those are resolved or both.
Sumer Thakkar
Sorry, can you just repeat that question? Which are you referring to Vibrant
Arpit Jain
Distribution business? We have some post acquisition issues on one of the player in that segment. So my question is on that, that itc. ITC has given some products like tea and. Or to other distributor.
Sumer Thakkar
So. So I think you’re referring to Vibrant which. Which used to be our 70% company and in the last quarter it became 100% company. Yes, the performance is not up to mark and hence we have completely bought over the stake. And this company actually has been really helpful for overall business of adf. You know, in this market where it operates our share used to be like say one one and a half million. It’s already at 5 million which is the sale routed through this entity. So it’s been really good in terms of strategy. But even on a standalone basis this company has to make money and we are all working towards it. Hence we acquired the 100% stake so that then we can do all strategies which we wanted, which we want to implement over there.
Arpit Jain
Okay. Okay, thank you.
That’s it from myself.
Operator
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. The next question is from the line of Kuber Chuan from Anand Zati.Please go ahead. Y
Kuber Chauhan
Yeah, 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 an. Any kind of more acceptance for truly Indian brand in US? Actually Ideally you mentioned about 1300 new stores were there which we penetrated. So. And the third question is in last con call you told that SOL brand will be placed in modern trade channel as well. So have it. So it has been placed or it’s still remaining. You want to get the first question, I’ll answer two and three.
Shardul Doshi
Yeah. Okay. So in fact Kuber, we 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 distributor start stocking up the goods before the Diwali and that’s how you see a jump in Q2. We are not really. We are seeing good demand for our products across all segments, even on the distribution side. And we are hoping these numbers will be better going forward.
Sumer Thakkar
Yeah, Kuber. So on the second question for truly Indian, we remain at the 1300 store mark. It’s still early days. It’s not even been six months. But we ran certain promotions in the last quarter and we saw good action in secondary sales. In fact, we saw a huge markup. But like I mentioned, it’s still early days. But we feel Fairly confident the 1300 stores will start generating revenue in Q1 and Q2 of next year. And we also are looking increase this number in the short term. With regards to Seoul, we have entered modern trade, so we’ve entered Nature’s Basket. So we’re doing it regionally first starting with Mumbai and Pune and then we’ll expand further west. So we’ve entered Reliance, Nature’s Basket, Dima Haiko and Dhirabji in Mumbai and Pune.
Kuber Chauhan
Okay, okay. And provide some ballpark guidance for the next year because you know, the international markets are a bit shaky. So how we are looking forward and how. And what are strategies we are adopting, you know, to mitigate it and to protect our margins.
Sumer Thakkar
So in the next financial year we see that Truly Indian and Seoul will start contributing in a better way than the current year because of all the things which have happened with both this brand in terms of successful listings across the stores as well as on the online platforms. Ashoka also has been giving us a good growth. And we are also simultaneously saying that when we are approaching big retailers for Truly Indian, there is a private label business also which is coming into us. So we see good growth happening on all these segments in the next financial year.
Kuber Chauhan
Okay. And have we listed our SKUs on Amazon?
Sumer Thakkar
Yeah, we have. So we’re on. Sorry, is this Amazon India? We’re on Amazon India. We’re on Amazon US. We do Amazon EU and we’re just starting in the UK as well.
Kuber Chauhan
So have we increased our SKUs or the existing ones are only been
Sumer Thakkar
Again, I’m not sure which market you’re referring to but adf all in India, it’s across. I mean we have all our SKUs listed apart from Frozen which is a new one.
Kuber Chauhan
Okay, so we have this Frozen right?
Sumer Thakkar
Not, not at the moment. We’ve just launched Frozen. It’s gone into modern trade this month. Okay. But yeah we do have plans on getting into E commerce and E commerce.
Kuber Chauhan
Okay. Okay. That’s it from my side. Thank you.
Operator
Thank you. The next question is from the line of Kumar Saurabh from Scientific Investing. Please go ahead.
Kumar Saurabh
Yeah, 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, you know in terms of percentage or absolute and what is the revenue level at which they will break even? If you can you know connect all three things
Shardul Doshi
For Truly Indian and so on has a run rate in US at around I think do around 1 million in the current financial year all in put together and additionally whatever we are doing. German, Germany I think we should be at around 20 odd crores for tooling then while if you look at Seoul the current run rate is around 70 odd lakhs rupees on a monthly basis.
Kumar Saurabh
Okay. Okay. And together combined have they contributed to losses at EBITDA level?
Shardul Doshi
Yes, because we are in an investment mode in both for both these brands. Right.
Kumar Saurabh
So. So like what percentage of total EBITDA they have eaten up?
Shardul Doshi
So EBITDA at Seoul will be at around say 150% when it comes to the top line. This includes all the marketing spend, the people cost, what we have employed there. While Truly Indian will be around say 30 or 30 to 40%.
Kumar Saurabh
Okay. And at what revenue level you expect them to break even at a beta level.
Shardul Doshi
See Truly Indian and Seoul both are high margin business. So as soon as we are able to reduce the marketing spend there, both these brands will become like they will start breaking you
Kumar Saurabh
Any tentative timeline. I’m not looking for exact time but Maybe you know 6 to 12 month window or 1 to 2 years like where you are expecting that this would happen.
Shardul Doshi
So Seoul should take another 12 odd months for us to break even while Truly Indian maybe six to eight months.
Kumar Saurabh
And my last question is in the margin like if you compare December to December the margins have dipped and you have given reasons like freight. But we are also investing. We have built a leadership team. So if you can you for the difference of whatever 3, 4% margin gap, if you can provide the details what has impacted how much percentage of margin
Shardul Doshi
The freight itself was around 3%, had a 3% impact. In terms of our margin, our marketing spend will be around say one and a half percent. And your cost of goods, the raw material will be around one and a half percent. So that’s broadly the breakup and of course the, the overall EBITDA will not add up. But there are some savings which we have done because of the on other expenses. Then the fixed cost get apportioned over the higher term.
Kumar Saurabh
Okay, and my last question, the distribution side of business. Like I’m not bothered about the quarterly fluctuations but can we say at the annual level, 12 month level given last quarter things changed and you know the hope was now this business will continue to do well. So if we keep the quarterly fluctuations aside, can we be assured that on a yearly level, you know, things will be good on the distribution side from here on?
Sumer Thakkar
So it will be. In fact I was saying once the, once the supply chain issues are resolved and if we get continued supply of goods, we’re fairly confident this business can generate honest estate anywhere between 12 to 14 million dollars annually.
Kumar Saurabh
Great, thanks. Thanks a lot and wish you all the best.
Operator
Thank you. The next question is from the line of Ravi Naridi from Naridi Investments. Please go ahead.
Ravi Naredi
Thank you very much. To give the opportunity. Sir, you have nice management. Debt free doing hard work by management Patanjali Agency doing good agency work of Hindustan Unilever. 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 nine last ninth quarter from December 22nd. Since last ninth quarter 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. So in fact except this there has been quarter on quarter and growth which we have seen both on our top line and bottom line. Not sure what you’re seeing but even top line we have been growing at around 17 to 20% year on year. So I think we can. I’m 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 digit for us through the Indian and Seoul. There is an investment which is happening and will start giving us a good contribution. And even private label will become a bigger business for us. That’s what we are expecting to happen in the year to follow. Even on the margin side, as I explained, freight has come down, your dollar rate has improved. So hopefully even margin wise we should Be better off despite our investments which we are on marketing as well as manpower. So I think we are seeing the next financial year we will have a much better number compared to what we have right now.
Ravi Naredi
That is okay. But in December 22 we have 19 crore the bottom line and today also 19 crore. So just I have asked you gave 1000 crore top line target for financial year 27. So many point to ask whether at 1000 crore our margin will be same increase or likely to decrease. That commentary we need from you.
Shardul Doshi
Yeah, as I explained in fact so many things we are doing in terms of investment on our brand as well as we can see cost coming down which is main important is the freight. RM is of course still and the foreign exchange rate is also favoring us. So margin profile should also be better for us going forward.
Ravi Naredi
Okay, thank you. The next question is from the line of Sumit from Art Equity. Please go ahead.
Sumit
Yeah. Hi, good morning. Thanks for the opportunity. So you had given a guidance of thousand crore revenue by FY27. So are we sticking to that guidance? Yes. Okay. And what kind of blended margins you expect broadly or can you give us a range?
Shardul Doshi
We have always been saying we will be in a high teens when it comes to the EBITDA market. So I believe we should be in a position to achieve that.
Sumit
All right, thank you.
Operator
Thank you. The next question is from the line of Ashish Agarwal, an individual investor. Please go ahead.
Ashish Agarwal
Yeah, thanks for the opportunity. I had two questions. So basically with the. Our main business is in usa. Whether we take Ashoka or truly Indian, I mean is a part of the revenue comes from us 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 Seoul we have launched frozen food category in last month. I think January this quarter. So what are the various products that we have learned and how many SPMs we have launched in the frozen category?
Shardul Doshi
So if you look at the I think tariff anyway Indian government is working with US government to see how this will work. But anyway 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 such. It’s not that we are not paying duty in us we’ll have to see how much incremental duties will come in. But if, if it is happening for the industry, I think most of us will pass it on to the customer because. And anyway the pricing of our products, they are in all single digit dollar number. So it will not really impact as such when it comes to the market. It may slightly had an impact but we don’t see any major impact happening. We are waiting to see how things are anyway developing on this front and we will talk about it once we have a complete clarity on this aspect
Sumer Thakkar
And just to add to that. So I mean the way we a couple years ago when trade costs went up, our brands have very strong brand equities. We are able to pass on price increases if need be. Yeah, yeah, good. So yeah. So last month we launched a range of frozen bread. So this includes stuffed parathas, kulchas, naans and a few snacks like paneer pakoras, various mimosas. We’re doing the frozen lunch in two phases but it’s mostly spread across breads and snacks. And over the next three months it will be a range of about 15 sqvs.
Ashish Agarwal
Okay. And it’s launched as a pilot in some cities or across our modern trade and e commerce.
Sumer Thakkar
So it’s marketing across quick commerce. So Zepto Instamart as well as few select modern trade outlets in Mumbai and Pune.
Ashish Agarwal
Yeah, that’s it. Thank you. Thank you. A reminder to all participants that you may press Star and one to ask a question. Ladies and gentlemen, if you wish to ask a question to the management, you may press star and 1. At this time, participants who wish to ask a question may press Star and one on their touchdown telephone. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
Sumer Thakkar
Thank you everyone for joining in. Thanks.
Shardul Doshi
Thank you.
Operator
Thank you. On behalf of ADF Foods limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.