Gopal Snacks Ltd (NSE: GOPAL) Q2 2025 Earnings Call dated Oct. 15, 2024
Corporate Participants:
Raj Bipinbhai Hadvani — Whole-time Director & Chief Executive Officer
Mukesh Kumar Shah — Chief Financial Officer
Naveen Gupta — Chief Business Officer
Analysts:
Sumanyu Saraf — Analyst
Navpreet Kaur — Analyst
Nitin Gupta — Analyst
Sanjay Manyal — Analyst
Abneesh Roy — Analyst
Resha Mehta — Analyst
Sukant Garg — Analyst
Palak Bhanushali — Analyst
Shreyas Srinivasan — Analyst
Saloni Jain — Analyst
Ashok Shah — Analyst
Rishi Kothari — Analyst
Dharmil Shah — Analyst
Naman Baradia — Analyst
Yash — Analyst
Bhumin Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Gopal Snacks Limited Q2 FY ’25 Earnings Conference Call, hosted by JM Financials. [Operator Instructions]
I now hand the conference over to Mr. Sumanyu Saraf from JM Financial. Thank you. And over to you, sir.
Sumanyu Saraf — Analyst
Yeah, thank you. Good afternoon to all the participants. We are pleased to host the earnings call of Gopal Snacks Limited for Q2 FY ’25. From the management we have with us Mr. Raj Hadvani, CEO; Mr. Mukesh Shah, CFO; Mr. Naveen Gupta, Chief Business Officer.
I will now hand over the call to the management for opening remarks, post which we will follow-up with the Q&A. Thank you. And over to the management.
Raj Bipinbhai Hadvani — Whole-time Director & Chief Executive Officer
Good afternoon, everyone. My name is Raj Hadvani. Thank you for joining us for the earnings call. We have you all. We hope you all got a chance to go through our investor presentation uploaded on the stock exchange. I will share our key operational highlights for the quarter and half year ended 30 September, 2024.
I am pleased to report that during the second quarter of FY ’25, we delivered strong performance in line with our guidance. Our top-line grew by 13% year-on-year, reflecting our ability to drive sustainable growth through strategic initiatives. This growth was primarily driven by our enhanced market position, which focused on the expansion of our distribution network, innovative product portfolio and strengthened brand visibility.
Looking at the segment performance, our focus on increasing the contribution of Gathiya and Wafers to the revenue mix in both the core and focus market yielded positive results. The Gathiya segment grew by 13% year-on-year, while Wafers witnessed a substantial increase of 47% in Q2 FY ’25. Speaking of H1, Gathiya has shown growth of 12% and Wafers 49%.
Talking about state-wise performance, our core market showed growth of 6% year-on-year in Q2 and 4% in H1 FY ’25. Our focus market continued its growth momentum with revenue growth of 29% Y-o-Y in Q2 and 32% in H1 FY ’25. This was largely a result of our ongoing efforts to expand our distribution network within these regions. During the year, we have added 150 dealers in the focus market. We’re also expanding our footprint in other states where we are well-accepted and witnessed stellar growth.
During the quarter, we also launched a marketing campaign for Cristos brand, reaffirming our commitment to expanding our product offering and strengthening market penetration. As we look ahead, we plan to introduce additional branding and marketing initiatives in the upcoming quarters to increase our brand visibility. In recognization of our strong financial performance, I am pleased to announce that board has approved the first interim dividend of INR1 per share, that is 100% on the face value of INR1 for financial year ’24-’25. This reflects our commitment to delivering value to shareholders, while maintaining our focus on sustainable growth and profitability.
One of the key driver of our success continues to be the robust distribution network. We have expanded our distribution network to 828 distributors, an increase of 161 distributors in the past six months. This growth has been instrumental in driving our revenue and increasing our market share across any region.
From a manufacturing standpoint, our total production capacity now stands 4,10,154 metric tons, which provides us ample headroom for growth. Our current capacity utilization is at 35% to 40%, which ensures that we are well-positioned to scale operation in upcoming two years to three years without significant additional investment. We are confident in the strength of our strategy, which is centered on expanding our market presence, enhancing operational efficiencies and fostering innovation across our product lines. We are well-positioned to capitalize on future opportunities and drive continued success in the quarters ahead.
I will now request Mr. Mukesh to provide his thoughts on quarter gone by.
Mukesh Kumar Shah — Chief Financial Officer
So thank you, Raj Bhai. Good afternoon, everyone. Let me take you through the financial highlights for this quarter and the half year ended 30 September. So I’ll start with revenue first. During Q2 of this year, we have achieved a revenue of some operations of close to INR403 crores, which marks a year-on-year growth of 13% and quarter-on-quarter growth of 14%, which is in line with our guidance which we have been giving in our earning calls, in a couple of calls.
Coming to margin, our gross profit reported at INR117 crores, which reflects a 14% year-on-year growth and 13% quarter-on-quarter increase. Our GP margins remained steady at 29%. We have a slight improvement compared to the same quarter last year and consistent with the previous quarter. In the month of September, the government has raised the import duty of palm oil by 20%, as you all know, from 5% duty, import duty has increased to 25%. To address this inflationary pressure and safeguarding our margin, we have implemented corrective measures in the month of September, which include reducing grammage in our INR5 price point and INR10 price point. And even in a couple of larger pack we have revised the MRP as well, which have kind of nullified the impact of increase in raw material prices.
Coming to EBITDA, for the quarter, we reported EBITDA at INR47 crores, which reflects a 3% increase year-on-year and 14% increase quarter-on-quarter. EBITDA margin remained at 11.6%, down from 12.7% last year. While there has been an inflationary pressure because of increase in raw material prices for chana and palm oil and couple of other raw material, but we have negated that by couple of our initiatives, which includes grammage reduction as well as some cost optimization measures.
However, the slight decrease in the margin is on account of two reasons. One is the employee cost, which is increased due to the annual increment. And second is advertisement and promotion cost where we have unveiled our Cristos campaign in Q2 of this year, which has resulted into bit higher cost compared to Q2 of previous year. From a PAT perspective, we stood at INR29 crores, showing 6% increase year-over-year and 19% increase quarter-on-quarter. And PAT margin remained at 7.2%.
Now talking about H1 FY ’25 performance. For H1 FY ’25, we reported revenue from operation of INR757 crores with year-on-year growth of 12%. Gross profit stood at INR219 crores with a gross profit margin of 29%. Gross profit has witnessed a year-on-year growth of 8%. EBITDA on a cumulative six year basis, we reported at INR88 crores with the EBITDA margin of 11.6% compared to 13.9% of last year.
Coming to our balance sheet, we maintained one of our strongest balance sheet in the industry. Our ROCE stands at 16.8%, which is when annualized, it will be close to 33%. The H1 is simply multiplied by two and ROE is 12% on a half year basis, however, annualized basis it will be more than 25%. Our asset turnover ratio for six months is 3.7 times, which is close to 7.5% on an annualized basis, reflecting the current capacity utilization of 36%. We see significant potential to further leverage this capacity as we scale-up in the coming quarters.
From a borrowing perspective, we have judicial — we have been very judicious in managing our cash flows. Our operating cash flow stood at INR77 crores for H1, which was utilized to repay working capital of INR60 crores in the first half and the remaining was allocated towards capital expenditure being incurred during the period. In summary, we remain well positioned to drive future growth, while maintaining financial discipline. Our focus remains on optimizing operational efficiency, enhancing profitability and delivering values to our shareholders.
Thank you. That’s from my side.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Navpreet Kaur from Samar Wealth. Please go ahead.
Navpreet Kaur
Good afternoon, sir.
Raj Bipinbhai Hadvani
Good afternoon.
Navpreet Kaur
Congratulations for good set of numbers, and thank you for giving me the opportunity. I have just two questions from my side. Firstly, could you share some insights on the company’s growth strategy moving forward? Specifically will we focus beyond domestic expanding or growing exports globally or additionally within India will the future growth be driven by core or focus markets or are there any plans to explore new regions?
Naveen Gupta
So good afternoon, Navneet [Phonetic]. This is Naveen Gupta. What I could understand because there is little disturbance in the voice. So your first question is about future growth strategy, right?
Navpreet Kaur
Yes, sir.
Naveen Gupta
And second is whether we intend to go to the other regions as well, right?
Navpreet Kaur
Yes, sir. Yes.
Naveen Gupta
So coming to the growth strategy, we remain focused on three basic pillars which are required in the industry. One is, distribution. So as Mukesh Bhai already shared that we have added more than 161 dealers, which is a strong 25% growth on our base in our distribution network. We remain focused on three basic parameters of the growth strategy. One is distribution network. We will keep expanding on our distribution network.
Second is around product. Whether it is product innovation, whether it is product renovation or product re-engineering. We have been working around all these parameters in product. We have been renovating many, many of our products, introducing new price points, say for example, in last quarter, we launched Soya Stick, which we can say is a national level product. We launched Sabudana Chivda, which is a regional product. We introduced 20 MRP price point, this thing, Wafers and all. Productive, there are multiple things which we are doing. And third is our marketing endeavor. We rolled out our Cristos Campaign in Q2 and results are clearly visible that our Wafers growths are more than 40%.
Now coming to your second question, whether we intend to go to the other regions. Yes, definitely, we intend to go to the places which makes commercial sense to us. We may avoid going in general trade in Kerala or Tamil Nadu. But we are exploring anything and everything which is possible. Say for example, we are ensuring our footprint on all e-commerce platform, in railways. Now we are present at Vendiman machines at Mumbai airport, Delhi airport, Bangalore airport, all the major airports. We are ensuring that we are present at regional modern trade chains as well. So we intend to go to the other regions, but our primary focus will remain anything which is in the vicinity of 500 kilometers of our Nagpur factory will remain our preference.
Navpreet Kaur
Okay, sir. And sir, my last question is regarding the capacity utilization. If I am correct, roughly [Phonetic] 34% for Gathiya and 28% for Namkeen and 11% for Wafers. Do you expect these levels will improve your base company growth? And any guidance for this year’s capacity utilization?
Naveen Gupta
So what we could understand from your question is, the product mix what you’re asking is saying is Gathiya and Namkeen is something which is contributing 54% and Wafers is contributing 11%. And is there a change…
Navpreet Kaur
I’m asking about the…
Naveen Gupta
Hello?
Navpreet Kaur
Actually, sir, I am asking about capacity utilization relating to with the growth of the company.
Naveen Gupta
Yes, capacity utilization is — will improve. So there are two factors which impacts capacity utilization. When we installed our capacity some time two, three, four years back, our INR5 price point we were offering close to 30, 35 grammage of products. Now over a period of years, this 30, 35 grammage has come down to 20 grammage, 22 grammage. So almost 20% of the reduction in the material consumption has led to increase in the availability of the capacity. Another is, for sure with the increase in revenue what we plan this year and going forward by FY ’27, we expect the capacity utilization will be close to 70%.
Operator
Thank you. The next question is from the line of Nitin Gupta from Emkay Global. Please go ahead.
Nitin Gupta
Yeah. Thanks for the opportunity. My question is again related to this capacity utilization. So like for Besan we already reached 78% and Wafers at 70%. So just wanted to gauge on like how we are looking to add capacity or maybe we can shift line and can enhance the capacity for Besan and Wafers? That’s my first question.
Raj Bipinbhai Hadvani
For Wafers, we have already ordered 1,500 kg per hour machine line which is expected to get installed some time in Q1 of next year. Currently, our utilization is close to 65%. Besan is something where we are — we have a plan to have another Besan plant somewhere in Nagpur where we are working on cost benefit analysis, etc. So definitely with the increase in the growth — the point is that Besan is something where these materials are available from the market directly also. So while we are contemplating and will decide on whether we’ll have a plant in Nagpur or not, but that’s not a worry. Definitely for finished product like Wafers, we have already ordered for a machine.
Nitin Gupta
Thank you. And given like we are expanding our footprint, this quarter we have added Odisha also. So any plans we have to sort of have some facility in the Eastern part where like we can cover the larger Eastern region plus we can also maintain the product freshness?
Raj Bipinbhai Hadvani
So we are open for any kind of M&A deals wherever the company gets value out of the acquisition, be it synergy benefit from production, distribution, etc. Even the Eastern part of the country, definitely if we get some opportunity. We have visited couple of plants and we are in process of doing due diligence. But still not very — still the work is on. So we are open. Definitely, whenever there is opportunity, we will look for acquisition in any part of the country. Especially, Eastern and Southern where our footprints are less, we will focus more there.
Nitin Gupta
Can you repeat the last line? Eastern and Southern preference is less you were saying?
Raj Bipinbhai Hadvani
Eastern part of the country.
Nitin Gupta
Okay, okay. Next would be like we have first time provided slide for alternate channel. So can you throw some light in terms of what all actions we are taking here? And how big is this channel for — particularly for this quarter? And what is our aspiration here?
Naveen Gupta
Nitin, hello. Good afternoon. Naveen Gupta this side. As far as alternate trade centers are concerned, our current run rate is INR26 lakhs per month, right? So in absolute value terms or percentage terms, it’s quite low number. We entered into this channel four, five months back only. Today only, we closed our negotiation with one of the largest e-commerce platform who have a national presence across their 20 DCs across India. And Reliance and DMart, we are in advanced stage of negotiations with them to increase our number of SKUs.
We have now slight presence there with very limited SKUs which was not earlier there. Right now, we are present at Amazon, Flipkart and then Jumbotail, Big Basket, Zepto, Blinkit. And we closed our negotiation with this DMart Daily as well, that app. And four, five months back we brought our presence to railways as well. And we got approval from IRCTC as well, because within railways, there are two kinds of businesses which happen. One is through nine railway zones, you can be available at the platforms and through IRCTC you can get inside the trains as well. IRCTC approval we got a month back. We expect all this business to be roughly INR3 crores plus per month by end of this financial year.
Nitin Gupta
Thank you, Naveenji. And lastly, just can you throw some light in terms of how is the profitability of these channels?
Naveen Gupta
See there are two kind of buyers in these alternate trade channels. One is like where we are giving to the consumer and using their platform. That’s a loss-making thing. However, quick commerce like Big Basket, Zepto, Blinkit and DMart Daily, all these channels takes stocks from us on their DC. Wherever we are giving stock at DC level, our profitability is either at par with general trade or rather little higher than general trade. And contribution of DC model channels is more than 80% in these alternate trade channels. As far as railways are concerned, railways, there is always provision of giving different grammages, different price points. So we make reasonable money there as well. None of these channels are loss-making, except couple of platforms where we don’t go by the DC route.
Operator
Thank you. The next question is from the line of Sanjay Manyal from DAM Capital. Please go ahead.
Sanjay Manyal
Hi, sir. Specifically I have question for the particular — for this particular quarter. Our EBITDA margin has contracted during the quarter. You mentioned that it is largely because of the A&P spend. Can you quantify that what kind of A&P spends we do? And is it specifically higher in this particular quarter?
Raj Bipinbhai Hadvani
Yeah. So overall, this quarter, as I said, in Q2 we had this Cristos Campaign across Gujarat where our Cristos Campaign was available in all the leading OTT channels and then a couple of hoardings in Rajkot, Ahmedabad, Baroda, even at airport site, etc. So we had compared to last year, if I compare last year, we had close to INR2 crores of A&P spend in Q2 which got increased to INR5.5 crores. So there is INR3 crores to INR4 crores of increase which has come in marketing cost. And then there is a natural inflation which is because of the employee increment cost. So overall, the market — the margin is contracted because of these two costs.
Sanjay Manyal
So what is the sustainable level of A&P you want to do going forward?
Raj Bipinbhai Hadvani
Overall, our estimate for FY ’25 is close to 1.5% of our revenue, which will be INR18 crores to INR20 crores this year. And going forward, in FY ’26 also, we will have a higher — close to INR25 crores of revenue — 2% of revenue being spent on advertisement and marketing.
Sanjay Manyal
Right. And sir, one last question on the — specifically you mentioned that you are open for M&A for a geographical expansion. So if you are looking there, in which area, which geography you have been looking for expansion specifically for M&A in particular?
Raj Bipinbhai Hadvani
We have a facility in Rajkot in Gujarat. We have facility in Central India in Nagpur. We don’t have facilities somewhere in Eastern India, UP, in Southern side, even in the Northern side. So we are open for facility anywhere where our footprint is currently not available because we wanted to grow at Pan India and the transportation course, etc., play a very critical role in terms of margin availability in making the product available at the right time to the customers. So we are exploring acquisition across all these locations and we are open there.
Operator
Thank you. The next question is from the line of Abneesh Roy from Nuvama. Please go ahead.
Abneesh Roy
Yeah, thanks. My first question is on the category growth in your state, areas of operation. Is it also similar to the 12%, 13% growth? And are you gaining some share of wallet from, say, noodles, etc., in terms of snacks, because now in many areas, noodles is about INR10 pack? So do you see that as an opportunity? I am speaking about the national players. I know that at INR10 there are regional noodles brand. But the good growth which the category is getting, the snacks category of yours is getting, is it because you are gaining share from noodles, etc.?
Raj Bipinbhai Hadvani
Noodles is largely in INR5 price point, it’s regional player. I mean, they sell at cut-throat pricing. And with increase of palm oil pricing, it will become unsustainable for those regional players as well. As far as INR10 price — our snacks — our Namkeen growth [Foreign Speech] noodles contribution is significant in terms of growth. Our Gathiya has primarily grown by 13.4% which is 15.7% in terms of volume and 13.4% in terms of value. So Gathiya has significantly contributed to our salty snacks category growth. And Wafers has 40% growth in volume and 46% growth in revenue in value terms. Noodles is a sort of — wherever we can take advantage of our distribution strength, we are trying to sell there. We are trying to sell at margins. We are not selling at discounts.
Abneesh Roy
No, my question was different. My question was two essentially. One is, your growth in Gathiya or say in Wafers, what is the market growth rate in your areas of operation? Second, I was not asking on your noodles. I was asking from a consumer preference perspective, is noodles losing share? I know you have a small presence in noodles. I was not asking on your presence. I was asking on the market leaders slow growth in noodles. Is it because customer is shifting towards Bhujia, Wafers, etc.
Raj Bipinbhai Hadvani
Consumer behavior is changing so fast. It’s really difficult to measure whether consumer of noodles is shifting to snacks and salted snacks category. Typically what happens in summer vacation, consumption of noodles goes up when children are at home. And when school time starts, so every snack which is ready to consume, its consumption goes up. And as far as growth of salty snacks category, other players or industry growth are concerned, since we are the market leader in Gathiya and all other players — I mean, there is no major brand as such who can proclaim to be number two or number three in Gathiya. Their numbers are not available whether who is growing at what pace in Gathiya.
Abneesh Roy
Okay, understood. Second is, in the opening remarks you mentioned on the vending machine in airports and the IRCTC. These will be mostly marketing initiatives because I think here there is a lot of visibility which you also get, especially vending machines. Do you make money in this part of the business?
Raj Bipinbhai Hadvani
Vending machine business, yes, we are making money. Even after spending on marketing, net-net, we are making money. And railway products, definitely, we are making money at par with our general trademark.
Abneesh Roy
Okay. That’s all from my side. Thank you.
Operator
Thank you. The next question is from the line of Reshma [Phonetic] Mehta from GreenEdge Wealth. Please go ahead.
Resha Mehta
Yeah. Thank you. It’s Resha. So the first one is on the distribution. So it’s possible to keep adding distributors at say to the tune of 80 distributors per quarter. So do we see this kind of aggressive runway continuing, let’s say, for the next one, two years? And also, a large part of these distributors, are they being specifically added to the focus markets or are we seeing a more uniform kind of expansion across our states? So this is the first question.
Naveen Gupta
Okay. Hello, Resha, Naveen this side. Resha, coming to your first question, whether it is something sustainable that we keep adding 80 distributors every quarter, right?
Resha Mehta
Right.
Naveen Gupta
Right. So we intend to have footprint at tehsil level or taluka level within 400 to 500 kilometers vicinity of our Nagpur facility. So that means, by end of this financial year, we’ll have more than 1,000 distributors. And we will continue to add one distributor per working day in next financial year as well. And there is humongous scope. There is humongous scope. Right now we have 170 distributors in rest of Maharashtra. If we just take Vidarbha region, there is a scope of adding another 30, 40 distributors within Vidarbha itself. Then Marathwada, we can add roughly 60 more distributors.
So number of distributors will keep growing. Right now the size of newer distributor is small, but how the business will happen that these small distributors will keep becoming bigger and then we will keep adding the smaller distributor. And as far as this footprint is concerned whether this will be confined to focus markets or specific markets, adding more number of distributors in Gujarat will never be at pace of what the other markets will have. Gujarat, we have a different strategy that we will keep splitting our existing distributor to create more distribution points so that wherever a distributor has challenge of putting more money or infra, so we’ll have more number of distributors definitely in Gujarat as well. But pace of making newer distributor in other states will be 4 times or 5 times versus Gujarat.
Resha Mehta
Right. And also, one related question is that a lot of the new distributors that you have added, some of them are also new to category distributors. So are you seeing any divergence on, let’s say, the performance of these new-to-category distributors versus, let’s say, you all having added a distributor which was already a part, which is already selling this category or familiar with this category. Are [Indecipherable] any materially different from these distributors?
Naveen Gupta
We do not make a single distributor, Resha, who already sells a competitive product. However, anybody who is selling say biscuits or cold drinks or confectionery or rust or bakery, we add those kind of distributors. So no existing distributor can sell the same product.
Operator
Thank you. The next question is from the line of Sukant Garg from Equible Research. Please go ahead.
Sukant Garg
Hi. So my core question is regarding the trade payables and inventories. If I see the presentation that you’ve published, in that, trade payables and inventories have been steeply down from March FY ’24 to H1 FY ’25. And my second question is on PBT and EBITDA. Why PBT and EBITDA is degrowing, while the gross margins are being maintaining? Is there any kind of inefficiencies in below the line products, below the gross margin expense accounts?
Raj Bipinbhai Hadvani
So your first question is on the working capital where you mentioned about the trade payable is increasing, right?
Sukant Garg
Decreasing. Trade payables and inventories have been decreased usually.
Raj Bipinbhai Hadvani
No, no. If you go through the slide, the inventory in fact has increased. If you refer the slide, inventory in terms of number of working days has increased, which used to be 30, 42 days in FY ’23 has increased to 64 days in FY ’25, H1 of FY ’25. And the debtors and creditors is more or less similar at six days and five days. So why the inventory is increased…
Sukant Garg
Sorry, please.
Raj Bipinbhai Hadvani
Why the inventory days has increased is because in the initial part of the year, in Q4 and Q1, we have a procurement of crop. Whenever there is a crop season, we do procure chana, potato and store for seven to eight months of the consumption. So initial first two quarters, you will see increased days of holding of inventory. And over a period of time, as the years progress, the inventory number of days comes down. In terms of creditors and debtors, it is more or less uniform in all the four years. This is the slide. If you are referring to our earning deck, it is at slide number — Page number 23.
Sukant Garg
So I am referring to the Slide number 22, in which inventory that — sorry, the trade payables came down from INR20.9 crores to INR8.3 crores from FY ’24 to H1 FY ’25.
Raj Bipinbhai Hadvani
That is something where we make payment to vendors. So INR8.3 crores is — so there is no outstanding at that point of time. Maximum payment has been carried out. We hardly have trade payables. It is close to two to three days of our creditor. So we are healthy in terms of quick payment to our vendors. So 20 — so it has come down from 21 days to INR8.3 crores. So there is no science as such. It is something where our credit paid to the vendors is within seven days we try to make payment to our vendors.
Operator
Thank you. The next question is from the line of Palak from MIV investment management. Please go ahead.
Palak Bhanushali
Hi, sir. So I have couple of questions. My first question is regarding the competitive intensity that we experience in the State of Gujarat. So — and is the major part of the advertisement expense was for the focus state or was it for the core and focus state? The second question is that this quarter we saw that the focus state grew by 30%. So do you think that this kind of growth is possible for the next two, three years or you can share the expected growth that you see in the core and the focus market for this year and, let’s say, next two to three years?
Naveen Gupta
Okay. So Palak, your first question is around competition intensity, right?
Palak Bhanushali
Yeah.
Naveen Gupta
In our core markets, in Wafers segment, we have been growing at more than 40%. So competition intensity is there. But if competition is trying to eat our market share in our category, we are eating their market share in their category. So as you know that before these two quarters, earlier two years, we had flat growth in our core state. Now whatever corrections we had to take we did in Q1 in this financial year. We are in growth trajectory. And we have ample strategies in place how to not only protect our market share, rather take market share from the competition as well in core state. That will be around our marketing endeavor. Whatever advertisement spends we did were completely focused on our core state. We didn’t go to our focus states even with our marketing spends.
Now coming to your next question, focus states, which are our four focus states like Maharashtra, UP, Rajasthan and MP. We have grown there by 30%. So whether this kind of growth is sustainable or not? I previously answered probably to Resha’s question that we intend to add one distributor per working day, at least for next 500 days. So we will keep getting organic growth through our existing product growth plus addition of new products, plus inorganic growth through addition of newer distributors. So this kind of growth is definitely sustainable in focus states as well other states.
Operator
Thank you. The next question is from the line of Shreyas Srinivas from Bain Capital. Please go ahead.
Shreyas Srinivasan
Hi. Good afternoon. So you said your EBITDA margin was down slightly from last year. And you said it’s driven by broadly your employee cost and marketing spends. [Foreign Speech] essentially what you did is because raw materials went up you implemented some corrective measures by reducing grammage in INR5, INR10 and then revising your MRP in larger packs. Now the question that I have is, how quick were you to implement this reduction in grammage and pass it on to the consumer? And B, do you expect raw material prices to cool down in the coming quarters or if not, when do you expect them to start cooling down or correcting?
Raj Bipinbhai Hadvani
So I’ll take your first question. The grammar correction, etc., it is a very quick implementation time for us because it is all digitally maintained in terms of the grammage of raw material to put it into the SKU. So it is something where when we take a call it can be implemented the next day.
Shreyas Srinivasan
Got it.
Raj Bipinbhai Hadvani
In terms of your next question, which was on — can you repeat your next question?
Shreyas Srinivasan
The next question was around raw material prices. So raw material prices, like you said, have increased over the last few quarters. Now the question is, if you look at all of the key raw materials, especially for Namkeen, all of them have gone up in FY ’25 versus ’24. The question is, when will they — when do you see them correcting over time?
Raj Bipinbhai Hadvani
Q4 is the quarter where we — where again, the crop of chana will come. And looking at a favorable monsoon which see last month, I think Q4 is a time where we’ll see the ease in the raw material prices, specifically in chana and potato. Palm oil is something which is because of increase in the import duty which government has imposed some time in September. So wait and see. I see, there has been ample supply of palm oil in Malaysia, etc. But because of the duty — incremental duty which has come, the price — there is an increase in the price of palm oil. This is something we have to wait and see. But I think Q4 is a time where again the revision in import duty is expected is what my guess. So Q4 will be the time where the raw material prices again is going to get ease off.
Yeah, Naveen, wants to add.
Shreyas Srinivasan
And — sorry, go ahead.
Naveen Gupta
I would like to rather add one point to this. Typically in our industry, brand like us or company like us is okay with RM prices hike because it gives us opportunity to take market share from unorganized players. So whenever palm oil prices, edible oil prices are like this, so that helps us to gain market share from unorganized players.
Shreyas Srinivasan
Correct.
Naveen Gupta
It’s okay with us.
Shreyas Srinivasan
Understood. Okay. Another question I had is, sorry, can you just repeat what was the import duty on palm oil before and what it did go to now?
Naveen Gupta
From the 5% it has gone to 25% in September.
Shreyas Srinivasan
Got it. Okay, understood. Helpful. Thank you.
Operator
Thank you. The next question is from the line of Saloni Jain from Nirmal Bang PMS. Please go ahead.
Saloni Jain
Hello, sir. Am I audible?
Operator
Ma’am, I would request you to please use your handset.
Saloni Jain
Hello?
Operator
Yes, ma’am, please go ahead.
Raj Bipinbhai Hadvani
Yeah, it’s better now.
Saloni Jain
All right. Sir, my first question is on your plans to expand exports since they are only 0.2% of our sales this quarter. And what kind of fraction can we see in Indian ethnic snacks in our export markets?
Raj Bipinbhai Hadvani
Yes, Saloni, right?
Saloni Jain
Yeah.
Raj Bipinbhai Hadvani
We are in process of doing a lot of correction in our product basket in terms of grammage, in terms of design, in terms of key line dimension, etc. Export remains on our radar. But we have so many other low hanging fruits that we purposely deferred our export focus for Q1 next financial year. Because for that, right now, our approach will be to go through some sort of unconventional arrangement, say for example, we met a guy in Mumbai who is doing roughly INR3 crores, INR4 crores Chikki export. He has some export base. We rather — right now, we’ll go through from this unconventional route that we’ll use some others’ platform to maintain our run rate in exports. But our focus in exports will start coming from Q1 next financial year.
Saloni Jain
Okay, sir. And sir, my next question is, so you mentioned that we are expecting 70% capacity utilization by FY ’27. So at this capacity, what is the peak revenue that we can expect? And what would be the sustainable margins here after operating leverage is also playing out?
Raj Bipinbhai Hadvani
FY ’27 — by end of FY ’27, we are expecting revenue to be in the range of INR2,150 crores to INR2,200 crores. And our EBITDA margin will be in the range of 14% to 14.5%.
Operator
Thank you. The next question is from the line of Ashok Shah from Elara Securities. Please go ahead.
Ashok Shah
Thanks for taking my question. Sir, are we doing something for the Diwali season? Something like sweets or something we are planning to launch?
Raj Bipinbhai Hadvani
No, Ashok Bhai, don’t intend to come out with sweets category, at least this financial year. It needs lot of preparation and the preparation has to start from the month of April if we have to do something in Diwali. We are not doing anything in sweets category for Diwali.
Ashok Shah
Thank you. That’s all from my side. Thank you.
Operator
Thank you. The next question is from the line of Rishi Kothari from Pi Square Investments. Please go ahead.
Rishi Kothari
Hi. Thank you so much for the opportunity, and congratulations on good set of numbers. So I was going through the quarterly results and quarter-on-quarter growth is actually very promising for the company. It seems like the company is on revival after two years of muted growth and all. So what type of quarterly growth we are expecting, let’s say, two, three years’ quarter down the line? Right now, we see a top-line of 13%, 14% and PAT of what 20%, 21% odd. So what are the targets for next two to three quarters in terms of growth?
Raj Bipinbhai Hadvani
In this financial year, Rishi, we will — on annualized basis, our growth rate will be more than 14%.
Rishi Kothari
More than 14%?
Raj Bipinbhai Hadvani
So we can easily do our reverse calculation. Q1 we grew by 11.2%, Q2 we grew by 12.6%. So definitely, we are — we have a clear plan in our hand that we’ll grow by 14% in Q3 and 16% in Q4. So that will translate into an annualized growth of 14% plus. On next financial year, we intend to do our A&M spends by 2%. And whatever investment this financial year we are doing either in people or in products, that will start yielding us good results right from Q1 next financial year. So next financial year, we intend to have a growth of 18% to 20%.
Rishi Kothari
18% to 20%. Okay, makes sense. And we do have the similar target of INR2,150 crores to INR2,200 crores of top-line by FY ’27?
Raj Bipinbhai Hadvani
We have to deliver that because since there was no growth in last two financial years, I mean, that made our base flat. I mean, we have to plan that kind of growth. So everything — every platform which is required to deliver that kind of growth, we are working on each of the platforms.
Operator
Thank you. The next question is from the line of Dharmil Shah from Dalmus Capital Management. Please go ahead.
Dharmil Shah
Hi, sir. Thank you for taking my questions. So first question is more on the distribution side. So I mean, Gopal has already added 80 distributors last year and 160 distributors in the current year, which is almost 30% to 35% on the base of last year. So in context of this, I mean, just wanted to understand why is the revenue growth is lower at 14% or 18%? And how much time does a new distributor take to get to a point where he is contributing to a level where a matured distributor is right now?
Naveen Gupta
Yeah. Hello, Dharmil. See, there are two things. One, on weighted average contribution, Gujarat was contributing more than 71% in last financial year. The contribution from Gujarat as such has come down by 5, 6 bps. So if you see revenue growth has largely come from focus states. So initially every new distributor — there’s a ladder which gets created. Every new distributor starts from a basic working capital of INR1.5 lakhs, INR2 lakhs. And then it takes him three months to six months to move to an average business of INR3 lakhs. After INR5 lakhs per month business, his breakeven starts coming. And this is how the ladder start getting building up.
So precisely when we talk about 18%, 20% kind of growth next financial year, so everything which we are working right now, whether it is product, whether it is distribution, whether it is marketing endeavor, so all these three things will start giving its own result. The distribution platform which we are building right now, its reflection in revenue will start actually coming in Q4 and in Q1 onwards.
Dharmil Shah
Understood. But broadly, if I see the current number of distributors, broadly we get around INR2 crores per distributor as a run rate for the entire year. So how much time does a new distributor take to reach to that level, I mean, in terms of years? Is it within one or two years or it takes slightly longer time?
Naveen Gupta
I mean, it takes — it definitely takes — you mean to say INR2 crores per annum means INR15 lakhs, INR18 lakhs per month, right?
Raj Bipinbhai Hadvani
So this is valid for Gujarat where you see average revenue from dealer is more than close to INR2 crores in a year. But when it comes to outside Gujarat State, the numbers is slightly lower. And it takes — the breakeven point is something what Naveenji said, it is three to six months once the dealer is onboarded. And then there are a lot of efforts which we have to put in terms of increasing the range, selling — upselling to a various retail touch point, increasing the retailers at a distributor end. So it takes close to one…
Naveen Gupta
Dharmil, let me put it like this. In Rajasthan, our run rate was INR2.5 crores. Number of dealers were 27. I’m talking six months back. Right now we have 54 distributors. Our run rate is INR3.25 crores. We can say number of distributors have doubled, but the turnover has gone up just by 35% in Rajasthan. So that clearly shows that newer distributors average revenue contribution is roughly INR2.5 lakhs only.
Now contrary to that, if I go to Chhattisgarh, Chhattisgarh my number of distributors were 35 and my value business was just INR70 lakhs. My number of distributors in Chhattisgarh, 28. So earlier it was 24. It has come to 28 whereas revenue has gone up from INR70 lakhs to INR2 crores per month. And very good signs in state like Chhattisgarh, 52% contribution is coming from larger packs in Chhattisgarh. So it will differ from place to place. But generally, it takes three to six months to come to a breakeven point to a new dealer. And for coming to a level of INR2 crores per annum, it may take two years to three years, Dharmil.
Operator
Thank you. The next question is from the line of Naman from RV Investments. Please go ahead.
Naman Baradia
Hello?
Operator
Mr. Naman?
Raj Bipinbhai Hadvani
Yeah, Naman.
Naman Baradia
Sir, my question is on the market outlook. How do you expect the market to go from here?
Raj Bipinbhai Hadvani
Market outlook is, Naman, very positive for us. We will grow in our existing product — with our existing product baskets, as well, we will keep introducing newer products in line with urbanization trend. The way consumer behavior is changing in terms of consumption, similarly buying patterns are also changing. So market outlook is quite positive. Indian consumption story remains intact. Per capita income is going up. So per capita consumption will also keep going up. Earlier frequency of consumption of meals was say thrice in a day. Now people have meals thrice in a day and then in between snacks probably three times in a day. So still, India’s per capita consumption of snacks is just 35% to 40% of developed country. So market outlook is quite positive.
Naman Baradia
Thank you, sir.
Operator
Thank you. The next question is from the line of Yash from Stallion Asset. Please go ahead.
Yash
Hi. Thank you for the opportunity. So I just wanted to understand that we’ve seen good volume growth across all the [Technical Issue] Gathiya, Namkeen, Wafers, but for pellets and extruded snacks, I see there’s a 5% degrowth on a half year basis. So what has happened on this category?
Raj Bipinbhai Hadvani
Yeah. I was wondering that nobody asked this question from me. Yash, see, we know — exactly we know the reason why we have declined in snack pellets and we already have action plan and we have initiated that action plan. Let me give you glimpse of what two action plans we have just initiated. We were selling in a strip size of eight pieces in a strip unlike competition who were selling 12 pieces in a strip. We have already done a course correction whereas in 50% of our snack pellet items, in first week of October, we started selling in 12 pieces strip. So that will increase our depth at an outlet.
And the second one is, our snack pellets are typically traditional snack pellets, like ponga, katori, etc. So I will not disclose name of the product, but we will introduce a very upmarket kind of snack pellet within next 15 to 20 days. So that is targeted at the urban consumer. Price point will remain INR5, INR10 only, but the product is upmarket product. So the snack pellet category also you will see in positive greener numbers in next quarter as well as in this H2.
Operator
Thank you. The next question is from the line of Bhumin Shah from Sameeksha Capital. Please go ahead.
Bhumin Shah
Hi, sir. Good afternoon. Sir, can you provide the break-up of Wafers sales in core market and focus market out of INR45 crores?
Raj Bipinbhai Hadvani
Hi, Bhumin. So if we have to break-up in terms of core market and focus market, overall revenue is close to — so from core market it is INR21 crores, INR22 crores. And from Wafers focus market, the number is — just a second. It’s about INR18 crores, so INR21 crores plus INR18 crores. And the balance is for [Indecipherable] market.
Bhumin Shah
Okay. So where we are seeing the more traction, in the core market or the focus market? Because in core market, there is a one leader which is having around majority market share, wherein focus market, it will be a same player.
Raj Bipinbhai Hadvani
Growth is there in all the markets for Wafers segment. But the maximum growth in terms of percentage growth, if I say, the growth has come from the focus market.
Bhumin Shah
Okay. And one more question is regarding the EBITDA margin. So we have already spent around INR5 crores this quarter on advertising and promotion and we are planning to spend more, another INR10 crores for next two quarters. So what would be the EBITDA margin? Like, it will remain around 11.67% or we can see the operating leverage playing out over here?
Raj Bipinbhai Hadvani
So my estimate is that it will be bit higher than Q2, maybe in the range of 12% provided the raw material prices, etc., remains in the current range. We will get to a 12% margin in Q3.
Bhumin Shah
Okay. That’s it for myself. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Dharmil Shah from Dalmus Capital Management. Please go ahead.
Dharmil Shah
Hi, sir. Like you mentioned, for pellets and extruded snacks, Namkeen products as well has been growing slightly at lower rates. So any reason why the growth is lower?
Raj Bipinbhai Hadvani
Namkeen segment compared to Gathiya it is little lower. Namkeen, we understand that there is a need of marketing, some sort of marketing spend. So we understand that we need to grow in Namkeen segment. Namkeen segment, growth will come from two, three elements. One is our larger pack contribution through modern trade and e-commerce platform will start coming. We are in process of developing sandy pouches, larger sandy pouches like 400 grams, INR100 price points. And as far as smaller packs are concerned, we are in process of improving our designs and pack sizes and introducing few new contemporary products as well. So Namkeen segment also we will see a growth in double-digits in coming quarters.
Operator
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Raj Bipinbhai Hadvani
Yeah. So thank you, everyone. I hope we have given satisfactory response to all your questions. For any further information, I request you to please get in touch with our Investor Relations team. Stay safe, stay healthy and thank you once again all of you for joining to us. Thank you.
Operator
[Operator Closing Remarks]