Heritage Foods Ltd (NSE: HERITGFOOD) Q4 2025 Earnings Call dated May. 19, 2025
Corporate Participants:
Unidentified Speaker
Brahmani Nara — Executive Director
Sambasiva Rao — Sambasiva Rao
Srideep N Kesavan — Chief Executive Officer
Prabhakara Naidu — Chief Financial Officer
Samba Murthy — Chief Operating Officer
Umakanta Barik — Company Secretary
Analysts:
Unidentified Participant
Sameer Gupta — Analyst
Sandy Mehta — Analyst
Sunil Kothari — Analyst
Resha Mehta — Analyst
Rishi Kothari — Analyst
Ankit Minocha — Analyst
Presentation:
operator
SA. Sat. Sa. Ladies and gentlemen, thank you for your patience here. The conference will begin shortly. Please continue to hold. Thank you ladies and gentlemen. Good day and welcome to Heritage Foods Limited Q4NFY25 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 Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Karima Singler from Coinde Advisors. Thank you. And over to you, Ms. Singlar.
Unidentified Speaker
Thank you. Good afternoon everyone. I am Ganma Singha and it’s my pleasure to welcome you on behalf of Heritage Foods Limited. Thank you for joining us today for quarter four and full year financial year 25 earnings call. This call is being hosted by Goindia Advisors. Please note that today’s discussion may include certain forward looking statements. Therefore they must be viewed in conjunction with the risk that the company faces today. On the call we are joined by. Mr. N. Ramani, Executive Director, Dr. Sambha Shiva Rao, Full Time Director, Mr. Srideep Keswan, CEO Mr. A. Prabhakara Naidu, CFO Mr. J. Samba Murthy, COO Mr. Upendra Pandey, CEO, Heritage Nutri Vet and Mr. Umakanta Barek, Company Secretary and Compliance Officer. Without further delay, I now invite Dr. Rao to present the company’s business outlook and performance. After which we will open the floor for Q and A. Thank you. And over to you sir.
Sambasiva Rao — Sambasiva Rao
Thank you. Good afternoon and a warm welcome to Heritage Foods Q4 and full year FY25 earnings call. FY25 marked a pivotal chapter in the Heritage journey. A year not only of strong performance but of purposeful transformation. It was about more than just financial outcomes. It was about laying the foundation for a future ready consumer centric dairy enterprise. For over three decades, Heritage has earned the trust of millions. Building a brand synonymous with quality, reliability and reach. This year we took bold and deliberate steps to evolve that legacy. Aligning ourselves with the aspirations of a new generation of consumers.
We embraced digital acceleration, strengthened our go to market strategies and significantly expanded our presence in the value added and premium dairy segments. These efforts were executed with both agility and discipline, reflecting our commitment to profitable innovation led growth. FY25 was not just a milestone, it was a momentum builder. We are proud of the progress made and energized by the road ahead as we continue to shape the next era of Heritage with purpose Passion and precision. India continues to be the largest dairy market globally with a fast evolving demand landscape. Consumers today are no longer just buying dairy, they are buying trust, traceability, taste and nutrition.
And in this shift, organized dairy players like Heritage are uniquely positioned to lead. The industry continues to navigate a dynamic and challenging landscape within the dairy sector. This year we saw rising input costs including increased fuel and fodder prices which led to price hikes across the country. In response, we at Heritage Foods made strategic adjustments to our pricing to ensure sustainability for our farmers and to maintain product quality. The government’s focus on strengthening rural dairy economy through subsidies, infrastructure investments and tax exemptions has been a positive step towards supporting the sector. Additionally, innovations in value added products and greater adoption of digital technologies have opened new avenues for the growth.
Our focus this year has been crystal clear that is strengthen our business through operational efficiency and consistent quality. Scaling up our value added products like Paneer, lassi, flavored milk and curd Farmers first approach deepening partnerships to ensure quality at source, sustainable procurement and timely payments, accelerating green operations and digitalization to future proof the business. I’m happy to report that we delivered on every front. FY25 was our strong year yet and Q4 capped it off with robust momentum anchored by healthy volume growth, premiumization and continued margin resilience. Our Q4 revenue of 10,485 million up 10% year on year supported by broad based volume gains.
Not only that, we delivered on all four quarters of the year more than ten thousand million rupees. Full year revenue is 41,346 million, a 9% increase over FY24. Value added products contribution grew 2.3% now accounting for 32% of total revenues without considering fat products. EBITDA 3310 million up 58% year on year with margin expansion of two hundred and forty eight basis points to 8% at 1,833 million, a 77% year on year increase. What truly differentiates Heritage is our deep rooted partnership with over 300,000 farmers built on fairness, trust and mutual growth. In FY25 we processed an average of 1.72 million liters of milk per day with no milk holidays and timely payments.
As a matter of principle, our omnichannel distribution footprint is equally formidable. Retail reach of 180,000 outlets served via 7,300 plus distributors. Our heritage franchisee operated outlets age 159 parlors and 386 happiness points in modern channels. Strong foothold in modern trade, Quick commerce and E Commerce. On the sustainability front, our renewable energy investments now stands at 12.14 megawatt capacity installed, making Heritage one of the very few Indian dairy brands to embed green power directly into its operations. Across our brands Heritage Stone Milk or Heritage Paneer or Heritage Lassi whatever, we have upheld superior standards of quality, traceability and freshness.
We believe that superior quality commands a premium and our consumers consistently validate that belief with their trust and loyalty. By maintaining the highest standards from sourcing to shelf, we continue to earn our place in millions of households in FY25. We also ramped up our marketing from regional campaigns and digital first activations to seasonal SKUs and customer loyalty initiatives. These efforts are helping us expand our brand recall across both urban and tire2markets. As part of our strategy to scale up our value added portfolio, I am pleased to announce that Heritage Foods has acquired majority stake of Nowandy, transitioning from a joint venture to a subsidiary company.
The state of the art facility near Mumbai previously dedicated to yogurt production is now being repurposed to start a broader portfolio including curd and a diverse range of value added dairy products. This transition reflects our commitment to maximizing asset productivity while aligning with evolving consumer demand. This move strengthens our footprint in Western India and supports our vision to become a nutrition forward innovation led food enterprise. As we look forward towards FY26 and beyond. Heritage is no longer just a dairy company. We are evolving into a nutrition first food enterprise with sustainability embedded as a key enabler of long term growth and operational resilience.
Our strategic focus areas include strengthening the core milk and curd portfolio, scaling up other value added products, expanding urban centric offerings that bridge urban aspirations and rural reach, deepening our green and renewable energy programs, building a resilient future fit balance sheet with strong brands, a farmer first mindset, disciplined governance and a highly motivated team, we are confident in leading the next phase of the growth in India’s dynamic dairy ecosystem. With this I conclude the business update and open the floor for questions. Thank you very much for your attention.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. First question comes from the line of Sameer Gupta with India Infoline. Please go ahead.
Sameer Gupta
Hi sir, Good evening and thanks for Taking my question, sir. Firstly just wanted to get an update on price hike. We’ve seen Amul take a price hike announced 2 rupees per litre on 1 May. And in the analyst meet in March, I remember you had mentioned that you had taken a 1.6 rupees per litre price hike. So have we taken more after Amul has taken any sense on that? Sir.
Srideep N Kesavan
This is Srideep here. May I take this question?
Sameer Gupta
Yes, sure.
Srideep N Kesavan
Yeah. So Sameer. Yes, you’re right. Actually we had already taken up the price increase sometime during the fourth quarter. And the cooperative, some of the leading the brands had increased the prices in the beginning of May. At this point in time we are comfortable in our situation. We are evaluating selectively whether it is in a region level or in a variant level. If there is any opportunity to take any price hikes, we will be looking at it.
Sameer Gupta
Got it, sir. That’s helpful. Secondly, sir, on the employee and other expenses, seeing that this has been growing at a rate which is higher than our overall sales growth now we have been supported by a declining milk prices trend. But now that trend is largely behind. So if you are to continue to expand distribution for vap, that would also mean that employee and other expenses will continue to grow at a faster rate with no benefit of gross margin expansion. Do you see that the EBITDA margin overall should now start moderating from the current level?
Srideep N Kesavan
No, you shouldn’t read, you know, too much into that. See if you see actually the employee cost as a percentage of revenue was growing much faster a few quarters back. And actually the rate of growth has actually slowed down in this quarter. If you compare it with the previous year, same quarter. That said, you’re absolutely right, Sameer, that the currently I believe employee benefits have actually increased at around 14.5% compared to revenue growth which is around 10%. So that is not the desirable scenario. Ideally we would like the employee cost to increase lower than the revenue increase.
But the trend is what you should look at. You see that actually the trend is going the other way around. So you should expect revenue growth to pick up and go ahead of employee cost in the shortest possible time. And I don’t think that this has anything to do with, you know, any. This is, no, not any indication of any change in EBITDA percentages.
Sameer Gupta
Let me rephrase the question, sir. So what I meant was that there was a tailwind in gross margins or input cost which probably allowed you to expand faster and more aggressively. Now with that tailwind no longer there because it is almost anniversarized. Just an outlook on this aggressive growth approach.
Srideep N Kesavan
What makes you feel that there is no tailwind? See, fundamentally. Let me just talk about the tailwind. I understood your question. I was just trying to give a very summarized answer if you would like to dwell a little deep into it. See, the growth opportunity in India has not gone away, right? The GDP growth might have come down from 8% to 6.8%. It doesn’t mean that it is still quite high. And anytime we expect the overall GDP to bounce back to the high growth scenario that we had seen a few quarters back, it should happen.
Secondly, the consumption growth that we had seen post Covid had slowed down a little bit in the past couple of quarters. But doesn’t mean that there is no bounce back possible. We are already hearing great stories of bounce back from industry leaders like Unilever and Nestle and all who are already talking about a bounce back that is visible around the corner. That is the second thing. Third, as far as the raw material prices are concerned, we had a long period of stability, almost 18 months of no price increase as far as the raw material price is concerned or the milk prices are concerned.
So the milk prices having gone up 3% in the last quarter is fairly normal. And I don’t think that there is anything, anything much to read in it. And we have also passed on a large percentage of this increase through consumer price increases in the last quarter. And of course the entirety of that price increase is not reflecting in the quarter because the price increase was taken during the quarter. So the quarter number actually an average of January, February, March. Whereas if you look at the mass numbers, most of the price increases have been affected.
So I don’t see in the long run how, you know, why we should have any difference in opinion on the potential of growth of the country, potential of growth of consumer industry, potential of growth of dairy industry and within that the potential of growth of value added products. Everything is looking very. There might be some seasonal impacts, there might be some, you know, certain months or quarters where you might have impact due to external factors or seasons. But I don’t think in the long run there is anything that should tell us the story. Otherwise.
Sameer Gupta
Got it, sir. I’ll come back in the queue for any follow ups. Thanks.
operator
Thank you. Next question comes from the line of Disha Kiria with Ashika Institutional Equities. Please go ahead.
Unidentified Participant
Hi. Thank you for giving the opportunity. So my question is regarding the statement. That you made in your opening remarks. That is you are evolving into a nutrition first company, not only a dairy company. Could you explain the rationale behind it? Because unlike our immediate peers, we are not doing geographic expansion, we are doing vertical expansion. So what is the rationale behind it?
Srideep N Kesavan
Ship. Sure sir. So this is Srideep here. The reason why we said nutrition First Company is that the focus of the company is on nutrition. And in terms of the products that we formulate, in terms of our focus on value added products, in terms of the focus on increasing the nutritional value of the food that people consume, that’s primarily the way we are building our product categories and the brand. That is what is the essential story behind that particular statement? I don’t think that that has got anything to do with. Unless if I Misunderstood your question Ms.
Disha, in the core markets where we are operating this is still valid. For example, if the consumer has a basket of consumption which she today in, in which she probably has 8 percentage of the basket or the expenses going towards dairy product, the growth we expect, we expect the growth to come from expanding this 8 percentage to let’s say 10% or 12 percentage. And that primarily will happen by focusing the conversation more on nutrition. Now nutrition is a very large term at this point in time. It could start from micronutrients to macronutrients. As far as micronutrients are concerned, all our milk, 100% of the milk is fortified with vitamin A and D.
So that’s a conversation that we are trying to drive at this point in time. Shifting consumers from unpackaged or non fortified milk towards heritage. Secondly, if we take our value added products, the conversation is around macronutrients such as protein etc. Which is what is the growth for categories like paneer, curd, etc. Even category like flavored milk. We are shifting the conversation towards nutrition and not just you know, let’s say, you know, refreshment. I think that is the broad purpose of that particular line that you mentioned. I hope I’m able to answer.
Unidentified Participant
Yes, sure. Thank you. That’s it from mine.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Sandy Mehta with evaluate research. Please go ahead.
Sandy Mehta
Yeah, congratulations on a strong year overall. Two questions. One is there was an 87 million rupee charge in Q4 and the footnote said it related to novend impairment. Without that charge your fourth quarter profit before the exceptional item was up 15%. So should we look at that charge as a sort of a one off item? It sounds like a one off item and you. And now that you have consolidated Novundi with the majority stake, what sort of revenues do you expect from Novundi going forward?
Brahmani Nara
Hi, this is Brahmani here. You’re right. Our partner has expressed their desire to reduce their stake and this gives Heritage a tremendous opportunity in both yogurts as well as other value added products in a strategically very important location for us. And as we speak, we are also in the process of synergizing these operations with Heritage Foods and also talking to other players for co packing opportunity. And within a quarter or two, we believe that we will be able to turn around the operations and keep growing fast and reach our max capacity utilization very, very soon.
Sandy Mehta
So that charge is. It sounds like a one off charge just with the acquisition. So we should look at the results. Extra charge for a more, you know, sort of ongoing operational view.
Brahmani Nara
That is. Right. It’s a one time charge.
Sandy Mehta
And my. Thank you. And my second question is your EBITDA margin reached 8% earlier, your goal that you had stated for many years was 7 to 8%. On slide number 28 of your presentation that was released yesterday, you talk about higher gross margins by 2028. So margins seem to be going up for the next couple years. That’s what you said in your presentation. So what is your goal on EBITDA margins now? Should we expect 9 to 10% going forward? Thank you.
Srideep N Kesavan
Yeah, this is Srideep here. So one of the things that you should see is the margins expand. It’s natural because we’re doing three things. The first is that we are shifting our business more and more towards value added products. So because of which, you know, surely if you work out the weighted average, the weighted average margins will continue to expand. Right. So that’s a, that’s a no brainer. The second is we are constantly trying to increase the premium that we are able to get from our brands and products. That is the reason why I think Director sir, when he was reading out the opening remarks, he spoke about how we are investing in our brands and some other categories.
The idea of those investments is that we are able to expand the net revenues from those value added product categories. In milk you have a certain disadvantage in terms of pricing beyond a particular point. But in value added products there’s nothing like that. Let’s say, for example, if you have a buttermilk and then we add a probiotic buttermilk, there is a particular revenue premiumization that we are able to do. So that’s the second way in which we will continue to Expand. And the third is the investments that we are making in our capex which is allowing us more and more automation in our factories and reduction in costs which will also expand our EBITDA margin.
And this is a journey. So we should continuously look at expansion of the margin potential in the business. But that said, I think we should be very very conscious that still a good percentage of our cost, you know currently in this quarter 74 percentage of our cost is related to the materials, raw materials. And as long as raw materials continues to be a large percentage of our cost item which is volatile, you understand that the milk prices do go down. Hence these kind of trends are only visible over a very long period in time and it’s unfair to look at it on a quarter to quarter basis.
So it is possible that next quarter or in any of the quarters we might have expanded the value added products, we might have premiumized our products, we might have reduced our operating expense but the milk price might have moved against us and the EBITDA might have come down. But over a longer period in time you will see that the expansion of EBITDA is inevitable.
Sandy Mehta
So like with the two year view, as you stated in your own slide, you know something like 9 to 10% is possible then you know in a multi year view.
Srideep N Kesavan
I wouldn’t want to give any numbers but you know we are very ambitious. I should say that.
Sandy Mehta
Okay, all the best. Thank you so much.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Sunil Kothari with the unique pms. Please go ahead.
Sunil Kothari
Thank you sir for opportunity. Sir, congratulations Mr. Rahul Svadeep and team for doing really good job during last 3, 5 years. The way we increase our meal procurement from 8 lakh to more than 17 lakhs. My question is milk cells is not that growing and milk cells is giving a good always gives good roc. So what is the strategy to increase milk milk cells? If you can little elaborate and throw some light on your strategy.
Srideep N Kesavan
Shall I take this question? This is Srideep here or.
Sambasiva Rao
Yes, go ahead.
Srideep N Kesavan
Yeah sure. So yes Sunil, thank you for your compliments, so nice of you. If I can just give you some numbers. Yeah, of course. Milk is growing slower than value added products while value added products are growing in high teens. In fact value added products grew at 20% in the last quarter but milk grew only 4.5%. It is a fact right? So yes, we would like milk to grow at around 7 to 8 percentage, right? You know, that’s ideally what we are also trying to do. There are multiple strategies that we are working on at this point in time.
So one simple straightforward strategy is distribution expansion. Distribution expansion helps us make our products more and more available whether it is in the cities and regions where we operate or newer geographies. Let’s say for example if it is a state like Telangana we are covering now tier 2, tier 3 cities going beyond Hyderabad to smaller towns which is another a lot of district capitals right now which have just suddenly growing and we are seeing potential, we are expanding our presence in these markets and that is what is, which is one of the factors that is driving the growth.
So both geography as well as number of outlets covered. Right. The second is we are coming up with new innovative variants. You must have seen in the investor presentation we have launched a new variant called sarvgun. Sardgun is a variant that we launched in the in this quarter and in the previous quarter. The Sard Guru was a variant that we launched in Delhi NCR and which is actually doing very well. It’s been only a couple of months since we launched and we are getting fantastic response from the market. And we also launched another variant variant called Sampurna.
Sampurna was a variant that we launched in Maharashtra and that is also doing great. Right. So these variants are specially formulated for the taste and expectations of the local population. So we are not expanding just a toned milk or a full cream milk and you know, copy pasting across. We are understanding exactly what the consumer needs and we are creating those formulations uniquely for these markets. So that’s the second aspect that is driving the growth of milk. Together with the new variants as well as market expansion we feel that we will be able to bring milk back to 7 to 8 percentage kind of growth.
Sunil Kothari
Okay, great sir. And second question is say during last three, four years we really invested well on brand establishment expansion or product expansion. New geography and categories. We have done remarkable job on web increase from 20% to 28% and then 32% and now we are targeting another maybe 2, 3 or 40%. Our gross margin expansion also will happen because of that and the loss which we make on some this fat products or some consumer ghee products also should decrease the way we are expanding our size and prices we want to pre match. So it clearly reflects that there should be expansion of margin. So which are the risk factor other than this sudden milk price increase, procurement prices which are other risk factor you see which will prevent the expansion of EBITDA Mar.
Brahmani Nara
This Is Brahmani here? If I may just expand upon Srideep’s previous answer. I think like Srideep has been saying and you also rightly mentioned, we have invested into marketing not just in terms of making our products more visible but also in terms of improving our understanding of the consumer and bringing about more consumer centric approach. So that’s something that’s significantly yielded results in specific markets. For us. Value added products expansion is very significant growth factor. So in fact if we were to combine value added products along with consumer patch such as ghee as well as butter, we’re seeing a significant growth.
So in Q4 the contribution was 37.8% of revenues from value added products and consumer pack pat which was an increase from last year, Q4 which was at about 34.1%. So you know there was about a 3.7% increase year on year when it comes to that. And aside from that a lot of efficiency initiatives are being taken within the organization as mentioned by Srini. And of course I think cutting down fat losses by improving sales of consumer packed fat is something that’s a big initiative. In fact the past financial year we’ve seen a growth in revenues from this particular category of about 35% year on year which is tremendous.
It is big and that will only continue to grow at a fast rate. So as a function of these four initiatives that we are taking in terms of premiumization through scientific marketing efforts, value added products, operational efficiencies and focusing more and more on consumer packed fat sales, we believe that we will be able to get closer to the margins that is expected.
operator
Mr. Kothari, are you done with the questions? Mr. Kothari, are YOU done with the questions? Since there’s no reply from the line of Mr. Kothari, we’ll move to the next. The next participant is Mr. Raghav from Godran. Please go ahead.
Unidentified Participant
Hi, good evening. Thank you for the opportunity. Your earlier in this financial year you had given guidance of 6,000 crore shares in FY27. So what is our stand on that. And how are we going to achieve that?
Srideep N Kesavan
Yeah, Raghav, this is Srideep here. Guidance is a pretty strong word. We have always maintained that it’s our ambition to reach 6000 crores in FY27 which is two years away, right? So we are working towards that. This year we have crossed 4130 crores. So which means that we. We will still gone for getting to that 6,000 crore mark in two steps, right? No, step one is FY26 and FY27, but I wouldn’t call these as guidance. I’m not giving you any guidance. This is just an ambition and we are working hard towards that. That’s all I can say.
Unidentified Participant
Okay, thank you.
operator
Thank you. A reminder to all the participants that you may press Star and one to ask a question. Next question comes from the line of Resha Mehta with Green Edge Wealth Services. Please go ahead.
Resha Mehta
Yeah, congratulations to the entire team. I think all the hard work and initiatives, you know, that we’ve taken over the last two years, we’re bearing fruits of that. So good to see that. And I think also versus peers, we’ve done one of the best top line growth just in terms of the dairy business and even margins. I think we’re the only one to expand QoQ and YoY, so that’s great. So see, the first question is on the growth. If we just look at the Q4 numbers, do you think that the growth numbers could have been better had it not been so? We had seen that a bill was passed and there were some social media posts of a particular community boycotting heritage products.
And this demography has a decent population in Hyderabad, which is our core market. And this has turned out to be a risk. If you look at the other MNC brands and the Israel Hamas war was at its peak. So would that be one of the reasons probably why we would have done a 10% kind of growth? And also if you could comment that for Q4, did the unseasonal rains or the erratic summer play, did it play a spoil sport for our WAF revenues in Q? For.
Srideep N Kesavan
This is Srideep here, so if others are okay, I’ll take this question. Reisha, again, thank you very much for your kind words and compliments. Thank you. I’m very surprised by your statement. There is, you know, of course there is always, whenever you have a situation, there are extreme voices. But we should all remember these extreme voices are very minuscule when it comes to percentage population and they have absolutely no, practically little or no impact on business at all. So we had no impact at all. And we’ll have to, we promise you, we reassure you, there is no impact at all on account of any of these things.
See, we have, as a business, we have operated independent. Our founder, our promoter family is. Our founder is a leading political figure, but the business is independent of all the political ups and downs. The, the biggest proof of it is that even when our leader was in opposition, our founder was in opposition at that time. Also our business was doing very well. In fact, actually those were the years of fastest growth. This has no impact whatsoever. Please understand this. Because the brand is loved by millions of consumers, is consumed by millions of consumers every single day.
Consumers actually focus on what the brand brings to them. The value, the quality and our service. That’s what they focus on. And the value that we are able to deliver to them. There was no impact at all. And there will be no impact in the future as well. And you guys have to believe us when we say this. And past is the proof of that. Right. Last 33 years, not able to show it in the last two to three years. And whatever I say may not be of much help. There’s the second question is about seasonality.
And I’ll also link back to a previous person who asked about what risks could be there. Yes, one risk we have, apart from the. What do you call the raw milk price volatility is actually the seasonal volatility. It’s actually. It’s a risk that everybody should be aware of. And it’s not just in our business. This is affecting many businesses. Weather is something that has become totally unpredictable. And especially in south of India, the summer has been like, you know, it’s raining a lot. Yeah. So those kind of things. The business is very strong because when there is no rain, our business, we can see how it bounces back.
But then there is a lot of rain. So that’s actually an uncertainty that we are faced with and we can’t do anything about it except try to expand the business so that the impact of such weather vagaries is minimized.
Resha Mehta
Right. So good to know on the first part. And also. So basically was just trying to understand that the erratic summer did play some spoilsport. Right. I mean in Q4, especially March. And probably we would even be seeing that currently in the current quarter. So that was what I was asking. And also for the full year, worst case, can we assume that we would do a temper. We could do a 10% kind of a revenue growth in FY26. That’s the worst case. I know we don’t give guidance. Our aspirations are much higher, which are in high teens. But I’m just saying from a business scenario internally, like worst case, do you still think that, you know, we can do a 10% kind of revenue growth on this five days? So that’s, that’s.
Srideep N Kesavan
I believe you have answered yourself.
Resha Mehta
All right. All right. And you know, on the margins. Right. So sorry, go ahead. You were saying something.
Brahmani Nara
Yes. And also just wanted to add to What Srideep said, which is the fact that we’re also, you know, again, investing into marketing and awareness building to more and more seasoned proof of products. And that’s where the nutrition proposition is becoming significantly important for us. Our buttermilk is significantly probiotic in our core markets. We are building the awareness of the importance of protein and paneer and hence we’re growing at over 50% year on year in terms of volumes. And they’re proactively taking initiatives in order to make dairy more accessible and improve consumer awareness about the nutrition profile of our products, which are primarily very healthy products.
We’re also ranked among the top products in the country for health benefits or health profile. Secondly, I think what we also want to share is that we are fairly diversified in terms of our channel mix. So we are also strongly present in the fast growing E commerce and MRF space, modern retail format space where we feel that more regular purchases versus impulse purchases of products do happen. And you know, the channels themselves are growing at tremendous rates and we are a very strong partner with most of these players and we are witnessing that growth in terms of season proofing ourselves. Just wanted to add that.
Resha Mehta
Sure, sure. And yes, some of your new products, especially like buttermilk, are outstanding. So the thing is on the margins bit, right? So we’ve maintained or probably actually improved margins both QoQ and YOY in a very challenging quarter. Right. Which probably should that give us kind of enough confidence that, okay, hey, this is like 7 to 10% will be the new margin band from, from the worst daily cycle to the best daily cycle. I mean, can we kind of, you know, take that as the new margin band from here on? And considering that, you know, the remarks that you all made initially that employee and other operating costs, the growth rates would now, you know, slowly, slowly start coming in line with the revenue growth and probably go lower than revenue growth as operating leverage kicks in. So that’s on the margins bit.
Srideep N Kesavan
Yeah. So see, I, you know, if you ask me, Reisha, we have, the business is stronger in Q4 compared to, let’s say, Q1, you know, I mean, last. Last year. Okay. So every quarter, because, you know, we, we are continuously working on several initiatives to improve our business. Right. And Q1 of last year would have been better than Q1 of previous year. But if you actually look at the numbers, if you look at the margins per se, the margin from Q1 to Q4 had dipped. You’ve seen that. Right. And that’s primarily a function of raw material prices going up, etcetera Etc.
And mix change and several other variables. And this is why I’m saying that it’s such a complex business that you know, there are so many factors that are impacting. So you know, my suggestion is that if I could just say put it in this way that irrespective of competitive scenario or irrespective of the market volatility and the external forces going forward, we would be stronger and stronger in our ability to withstand those external forces and be driving our performance based on internal parameters. That’s what eventually we want to take. You know, imagine a scenario, I don’t know how many years it will take our decades.
But imagine if you’re able to build a truly FMCG dairy FMCG company where the brand equity is such that you know, we are able to price out price or products and then, you know, which has no relation to what is happening in the market and all of that, then we’ll be unaffected by anything that happens around. Right. That’s a north star, you know, but, but we still continue to have 50% plus contribution coming from milk. So these are things that cannot happen overnight. But that’s what we are working hard towards. And that is why we’ll say that, we say that over a long period in time the impact of external forces acting on us will kind of diminish and that is where we’ll have more commanding control over the EBITDA that we deliver.
Resha Mehta
Sure. And there’s a last one, you know, on the margins bit. Again see no one be if we see, you know, after so many years, I think this JV was formed in 2018. Maybe we had a hiccup with COVID which caused delays but you know, after so many years we see that it’s you know, just a 6 to 7 crore top line business and PBT loss is now 25 crores. Now after we consolidate this with our numbers going forward, right, this pbt loss of 25 crores or maybe if it is higher it will just hit us completely. Right. And that could severely impact margins, you know, PBT margins by around 70 80bps. Right. So what is the plan here? Do we have any hard timeline here that you know, let’s say if we are not able to turn around this business by the end of next two to four quarters, are we ready to you know, kind of abort this project or are we very confident that okay, you know, in the next two quarters we are going to kind of break even or some, some basically perspective and some thoughts if you can share Yours.
Brahmani Nara
Yeah, Reshma Brahmani here. Thanks for the question. And I just wanted to repeat that the PBT loss that you are mentioning also in includes a one time impairment cost which is probably which contributes half of that number and it’s purely one time cost that we’ve taken on our P and L and that will continue to be there. Secondly, it opens up an interesting opportunity like I said, in a very important location of Maharashtra wherein we are more efficiently able to consolidate the operations not just in yogurt but other value added products without existing operations and absorb overheads more efficiently and immediately.
Be it logistics, be it S and D, be IT plant operations etc. So in addition to that there are very interesting opportunities almost immediately coming up in the co packing space and we believe that the plant utilization will go north of 50% almost immediately and within a quarter or two itself we should be able to turn around the operations very comfortably. And please also note that the JV plant is actually located in the same premises where Heritage’s mother plant in Maharashtra is based. So basically the operations teams will be more or less the same and synergies will be significant and overheads will be immediately absorbed within our operations.
In addition it gives us an opportunity to provide a wider, more attractive range of products to our customers in the Maharashtra market immediately and other markets. So please don’t be under the impression that any losses will continue. We expect to turn around our operations there within a quarter or so.
operator
Thank you. Ms. Mehta, please rejoin the queue for more questions. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Rishi Kothari with PI Square Investments. Please go ahead.
Rishi Kothari
Thank you so much for the opportunity and congratulations on good set of numbers for the whole FIU 25. I had some specific questions regarding the actual we actually generally don’t give the geographical split for our distribution that we have for the products. But can you just give me a brief idea because as we are now expanding out of Hyderabad and different north and northeast of India, can we have some sort of split? What exactly revenue is coming from the outside Hyderabad market for us and what exactly was it probably two, three years ago before we just initially we entered at that time.
Brahmani Nara
So just wanted to mention that of course you know our Telugu states are the biggest markets but the fastest growing markets are the newer markets for us and also outside of the core markets in the surrounding areas. More specific numbers can be shared one on one when we meet. But we are seeing exciting growth in our newer markets.
Rishi Kothari
But justice, can you give me a. Which states are we looking at for this expansion? Growth? Of course not numbers for now. We can talk about this later over some different calls. But in general, if at all want to have what states we are looking at for the growth market.
Brahmani Nara
Going forward, we intend to focus on the existing states of operations itself. We believe that there is huge untapped potential in milk as well as value added products.
Rishi Kothari
Okay, interesting. And on the question was regarding this, the same acquisitions that increase in staking Mama Yoa. Right. So we are saying that within a quarter will make this turnaround, make it a profitable which will be beneficial for us. But what exactly is the value added for this this company? Are we just looking like a contract manufacturing for this? How exactly is it?
Brahmani Nara
Yeah. So the company will continue to manufacture yogurts, you know, within the same brand, within other brands. Like I mentioned earlier, Heritage could also manufacture yogurts and other products. And of course, contract manufacturing like how we had a relationship with Nestling is also an opportunity. In fact, as we speak now, we are also in the advanced stages of closing out on an agreement with a prominent layout.
operator
Thank you, Mr. Kothari. Please rejoin the queue for more questions. Next question comes from the line of Ankur Gulati with Genuity Capital. Please go ahead.
Unidentified Participant
Hi. Thanks. First of all, congratulate for great, great results and very sensible capital allocation. Just from a strategy perspective, you guys. Have a brand, you have a distribution network. Any thoughts on using this platform to. Push non dairy products? Even if it entails using contract manufacturing. So broader strategy. Any thoughts on non dairy products being pushed through?
Srideep N Kesavan
Yep. Ankur, this is Srideep. At this point in time it’s very tempting. I agree with you. But at this point in time, no is the answer. The reason is that we value, you know, opportunity loss more than an opportunity that we could have. So we still have a long way to go as far as daily is concerned. So we are not looking at any non dairy at this point.
Unidentified Participant
And in the last question you mentioned. You are discussing something with another partner or anything. If you can give me more details. Is this acquisition or is this distribution? What?
Brahmani Nara
Yeah, yeah, I can. I can take that question.
Srideep N Kesavan
That is about the. Sure. It’s about the yogurt thing. Okay. Yeah.
Brahmani Nara
Yes. Yeah. So what I was saying, Gur, is that there are several opportunities including contract manufacturing opportunities to maximize capacity utilization of the JV plant which is based in our existing premises in Maharashtra.
operator
Thank you. Next question comes from the line of Kiran Kumar with Green Investors. Please go ahead.
Unidentified Participant
Hello, I’M audible, right?
Srideep N Kesavan
Yes, sir. Yes, we can hear you. Yeah.
Unidentified Participant
So firstly congratulations on this full set of numbers. My question is more than the numbers like in the portal. Revenue growth, how much is like because of that bulk? Like for Q4 of this 25. What was the total bulk sale in value and volume.
Prabhakara Naidu
By 25 total bulk sale is 125.4 crores. Whereas in FY24 it was 159 crores.
Unidentified Participant
Sorry, you are not audible.
Prabhakara Naidu
Q4 it is 38.6 crores.
Unidentified Participant
For last year.
Prabhakara Naidu
Last year it was the 34 crores.
Unidentified Participant
Okay. So this is not having a huge impact on overall growth.
Unidentified Speaker
I don’t think your voice is very clear. Can you please be clear? Mr. Kiran Kumar, we can’t hear you very well.
Unidentified Participant
Okay. I just asked about the numbers regarding. The bulk sale and I was. I got the numbers. Thank you.
Unidentified Speaker
Okay. Thank you.
operator
Thank you. Next question comes from the line of Aditya with securities investment manager. Please go ahead. Yeah. Hi sir.
Unidentified Participant
Thanks for the opportunity. We have seen an increase in procurement prices this quarter. So have the procurement prices stabilized or. We are witnessing further increase in April and May.
Srideep N Kesavan
Yes, Aditya, this is Srideep here. Yes, the procurement prices more or less has stable is the way I’d like to answer. But that is only at this point in time. It’s very difficult to predict over a very long period in time. As you know that we are in the cusp of flush season in the south of India. We will have to see how the flush progresses. How the demand in the market continue. At the end of the day it is just a demand and a supply. Demand supply equation. Right. So we like to see how it works out. And the. The. The buffalo flush happens later in the year, calendar year starting from October number onwards. So that also is yet to be seen. But at this point in time, in this moment it is stable.
Unidentified Participant
And sir, just wanted to understand when. Does the cow start in the south? And with unseasonal things happening shouldn’t it. Be beneficial for a better cow flush in May or June?
Srideep N Kesavan
Yeah. It’s. It’s. It started and it started. The flushes started and. And we are also hoping that it is beneficial. We’ll have to see. But then there are lots of factors. Yeah.
Unidentified Participant
Understood sir.
operator
Thank you. Next question comes from the line of Ankit Minocha with Adezy Venture Family office. Please go ahead.
Ankit Minocha
Hi. I joined in a little late. So sorry if this is a repeat. But if you can just give an outlook on considering the current situation on ground with milk prices, with your prices etc. What is the EBITDA margin outlook that you’re looking at for this Q1 and Q2 currently?
Srideep N Kesavan
Yep. So this is Srideep here. So yeah. So Ankit, if I summarize what’s happened in the quarter that we just concluded quarter four we had raw milk prices which had increased by 3% or so compared to previous year, same quarter and market milk prices had gone up. We had corrected the milk prices also relatively during this period by about 1.4% and that and various value added products in the range of 4 to 5 percentage. And this price correction is an average of January, February, March because the price correction started sometime from end of Jan or beginning or middle of February.
So we didn’t see the full impact of the price corrections which you will see from quarter one onwards. So which means if I could just summarize large part of the raw milk price increases we have passed on to the consumers. So the net impact of due to price is minimal There. It is there because we have not completely passed on the entire price increase on the raw milk side to the consumer. A little bit of which we have absorbed which is what you will see in terms of margins. In terms of milk, the milk margins have actually come down a little bit by about 0.5 0.6 percentage due to this.
But that said, while I was answering the previous person who asked question on outlook, currently it is stable at this point in time. But does that mean that the prices will further go up or come down? We are not sure. We are watching and just in the beginning of this month, month of May, the leading cooperative brands also increase our prices, consumer prices by about 2 rupees per liter. We have not taken up the prices but we might look at selective increasing of prices in the coming months and quarters. So we will have to see all of that. The margin will be an evolution of all of that.
operator
Thank you Mr. Minoka. Please rejoin the queue for more questions. Next question comes from the line of Rohit with Samatwa Investment. Please go ahead.
Unidentified Participant
Good evening and thank you for the opportunity. So my first question is on the value added products. So if I look in the last. One year, year and a half the horizontal expansion has been pretty aggressive in the value added part. So I just wanted to know what are your plans going forward? Are we going to start consolidating the. Products that we have or are we. Going to continue to, you know, get into new product categories?
Srideep N Kesavan
Yeah, thank you Rohit for that nice comment. Yes we are see we are doing multiple things, right? As in, if I can say there are three things that we are doing. One is we are building categories. What I mean by building categories, the growth that we are getting is by converting unpackaged or unorganized consumption to organized branded consumption. That is the primary growth driver. Let’s say for example, a product like Curd. I don’t think there is a anyone in the country who hasn’t eaten Curd. Like it’s not. We are not selling things like cookies or you know, laundry detergents and all of that which like, you know, you’ll still find lots of people who have never had that product, right?
In our case, all the products everybody has had, it’s just that they haven’t had it in a branded form or in a package form, right? We are accelerating the transition from unorganized to organized and that too under heritage brand by offering certain advantages through our brand, right? So that’s the category building that we are doing at this point in time or in the last two or three years we were significantly focused on building Curd and Paneer.
These two categories. These were the two categories that we have significantly invested in building, right? Whether it is advertising or whether it is distribution, whether it is in terms of new products, new innovations, new packaging, etc, etc, right? And it has actually paid feel great returns. Our executive director Brahmani some time back said that the Paneer has been consistently growing upwards of 50% for us for quite a long time now. So these all have paid dividends. Now we are expanding, we are looking at newer categories. Right now we are in the middle of reviving the whole drinkables category with investing and creating a new brand called as Livo.
Levo is our new flavored milk brand. This we hope will help revive the flavored milk category itself. Milk is a fantastic. Flavored milk is a fantastic beverage to have. When you think about sustained energy as in today the market is full of all carbonated and non carbonated sweetened artificial beverages. Compare that with the nutritious milk based energy drink that it could have, right? That is Levo. So we are working on relaunching and repurposing that brand. So that will give us renewed growth in drinkables as a category. The other categories that we are thinking of building over the next few years would be ice creams is one we have made a capex investment in enhancing our capacity of ice cream plant which which will get commissioned by the end of this calendar year and next financial year.
We will have the full force of that new capex investment. So along with the Capex, we are also investing in building ice cream as a category. Right? You know, creating new products, innovations, brand, etc. And the fifth one category that we will be investing in the future would be Ghee. Ghee is also something that we need to invest in building, growing in terms of increasing the consumer value so that we are able to reduce the losses, in fact, actually turn around and make it a hugely profitable business for us. So these are all things that we will do.
So while Curd and Paneer are our mainstay as of today, we want to create more and more mainstay in terms of value added products, which will actually expand the portfolio over the years to come.
Unidentified Participant
So the reason for me asking this. Question is to build a brand, it takes time, it takes money and it may have a, you know, short term impact on our profitability. So, so that was my reason for. So you say Curd and Paneer, it’s been quite some time, but these new products that you have just said, you. Know, drinkables and ice creams. So in terms of profitability, you know. How much of a hit are we going to take? You know, because drinkables, it’s been some time.
Srideep N Kesavan
That’s not how we do. Okay, I get, I guess you’re asking. Yeah, so see, we are very judicious in doing all of these things. As in previously, a lot of people who questions congratulated us on expanding our EBITDA margin. Right. What you did not notice probably is that in the meantime, while we expanded our EBITDA margin, we also increased our marketing spends by about 0.8% of revenue. So despite increasing our marketing investments by about 0.8% of revenue, we were able to expand EBITDA margin also. So it’s a matter of judiciously taking those calls on what to spend, when to spend, how much to spend.
So it’s not like going all out and spending without a plan, which is why we are taking category by category. And, and our expenses in advertising and marketing is also very judiciously done. For example, in terms of ice creams, large part of the investments that we’ll be making will be in innovations and not necessarily in above the line advertising, if you get my point. Right. So it’ll be mostly in creating fantastic products, in creating wider placements, that, that is where probably we’ll end up investing our monies and not in, let’s say above the line advertising.
Ghee could be a different story where we will require some amount of money in terms of advertising. Again, flavored milk is also. So each one has a choice, each one has a different uniqueness. And we’ll be making very judicious calls so that we will drive growth, not at the expense of margins.
operator
Thank you, ladies and gentlemen. Due to time constraints, we have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
Sambasiva Rao
Thank you very much to all the participants for your continued interest and very active participation. We take all the feedback positively and move forward. Thank you very much.
operator
Thank you on behalf of Heritage Foods Ltd. That concludes this conference. Thank you for joining us. You may now disconnect your lines. Sam.