Ladies and gentlemen, good day, and welcome to the AWL Agri Business Limited Q4 FY 2026 conference call hosted by ICICI Securities. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Akshay Krishnan from ICICI Securities. Thank you, and over to you, sir.
Hi. Morning and afternoon to all. Thanks for joining in for the Q4 FY 2026 AWL Agri conference call. From the management, we're being represented by Mr. Angshu Mallick, Executive Deputy Chairman; Mr. Shrikant Kanhere, the CEO and MD; Mr. Saumin Sheth, the ED and COO; Pankaj Goyal, Interim Chief Financial Officer. I right now hand over the call to the management for further remarks and process. Good day, and thank you.
Yeah, thank you very much, and a very warm, welcome and good morning to everyone who is attending this call. We'll spend a couple of minutes, maybe 10 minutes, to discuss about the results. We'll run through a small presentation. Then, of course, we'll open the floor for question and answers. We all of us sitting here, we will try and address as much as possible the questions coming in from you all. To start with the macro context, I think, the quarter saw a lot of events happening in and around, and particularly the month of March, where we saw the Iran conflict raging up and had got an impact on many parameters of the business, factors affecting the business rather I would say.
Edible oil prices firmed up, because the crude oil prices went up, and as a result, the edible oil, complex also followed more or less similar same trends. conflict also resulted into, supply chain availability of the vessels. Because of this, the inventories tightness was observed throughout the industry. All the crude-linked, commodities went up, and as a result, chemical, coal, packing material, all costs shot up, in the month of March. Although the impact of all these costs, was not felt too much in the March, I think in the coming quarter, in Q1, most of the industry player will feel the heat of this increased cost. as if, this is not enough for the rupee kept, depreciating. It was a sharp depreciation that we saw in the rupee in the month of March.
Given the fact that we run a quite a significant portfolio of imports and exports, rupee depreciation something is, we watch very carefully. Export disruption continued in the Middle East because of the Iran conflict. All these events were somehow kept the businesses on the tenterhook, and we just try to sail through all these. Edible oil prices flared up particularly in the month of March after the conflict started, with sunflower settling above $1,400 a ton. Soya more or less near to the $1,300 level, and palm ranging between $1,220 - $1,250 kind of level. What we see today is all the elevated price of edible oil complex, which we have not seen at least in last year. On the performance, happy to present a very good set of numbers for the Q4.
We have been able to deliver 14% volume growth and delivered close to 1.9 million volume. We also could able to register our highest ever quarterly revenue of plus of INR 21,000 crore, which is 18% year-on-year growth. Both on operational EBITDA and PAT also company was able to deliver better numbers, with EBITDA growing by 40% and PAT growing by more than 50% year-on-year on quarterly basis. For unit metrics, we have been able to maintain what we have been saying. We have been able to maintain the gross margins per ton plus of INR 12,000 and EBITDA closer to INR 3,400 a ton for the quarter, which is again a growth of 19% and 23% year-on-year for both the metrics.
Similarly, when we look at the full year number, happy to share that we finally closed the full year with 6.8 million metric tons of volumes, which is 4% growth. In this 4%, edible oil grew by 6% mid-single digits, which is also something which we were expecting. We are happy to share that company crossed a highest ever turnover of INR 74,000+ in the year FY 2026, with 17% year-on-year growth.
Operational EBITDA at INR +2,300. PAT, we delivered PAT of INR +1,000 crore, which is in line with the expectation by The Street and the guidance which we have been giving to the analysts for past couple of quarters. Here also for the full year, the per ton metrics on a gross profit per ton as well as EBITDA per ton, we have been able to deliver INR +11,500 per ton for gross profit and EBITDA closer to INR 3,500 per ton. Some of the other highlights for the quarter, Fortune as a brand in oil and food put together grew by 11% year-on-year, which is quite encouraging. Kohinoor brand for the quarter grew by 39% year-on-year.
All our masstige brands like King's and Raag and other brands grew by 18% year-on-year on the volume. On channel, we remain very optimistic about the alternate channel, which is growing very fast for us. It grew by 43% year-on-year for the quarter. HoReCa as a channel on which we are putting focus for last couple of years grew by 64% year-on-year. The branded exports, which is again also a focus area for the company, grew by 48% year-on-year when we talk about the Q4 numbers. Full financial performance on a standalone basis, we did a revenue of plus of INR 20,000 crore with an EBITDA of INR 638 crore, which is 38% +, PAT of INR 268 crore for the quarter.
Similarly, when we look at for the full year, on a standalone basis, we crossed revenue of INR 72,000 with a standalone EBITDA of INR 2,400 crore, and a PAT of little lower than INR 1,000 at INR 981 crore. On standalone, again, the per metric ton metrics, the unit metrics rather I would say continue to be healthy. Gross profit of INR +12,000 and EBITDA of INR +3,500 for the quarter. Whereas for the full year, we are able to deliver a gross profit of INR 11,200 and INR 3,600 on the EBITDA. When we look at a consolidated level, more or less similar story.
As I said earlier, we could achieve highest ever revenue of INR 21,000+ crore in the quarter with a PAT of INR 293 crore, which is 54%+. For the full year, we crossed INR 74,000 crore of revenue with a PAT of INR 1,000+ crore. Here also on the key metrics, we remain more or less same at what the guidance we have been giving to the street. When we look at the segment-wise for Q4, while we delivered a 14% volume growth, in this 14% edible oil grew very encouragingly by 17%. Food and FMCG grew by mid-single digit at 6% and industry essential at 13%. Overall, all the segment delivered the volume growth and also the revenue growth at 18%.
We had a robust operational EBITDA for the quarter stood at INR 628 crore, reflecting a strong growth of 40% year-on-year. What we saw is the margin expansion basically was driven by improved profitability across edible oil and food segment. For the full year, while the volumes grew by 4%, but on segment basis, edible oil grew by 6%, food and FMCG did grew by 4%, and industry essential by 8%. When we normalize these numbers with one-time government to government business that we had last year, the growth is 6%, with edible oil at 6% and food and FMCG at 3% +, and industry essential at 8%. The food performance of single-digit growth is basically coming from two aspects.
One is we had consolidated NBR business, which we had started couple of years back. Now we are going and focusing market specific business and then will slowly grow it. Number one. Number two, during the last full year, the wheat prices were more or less range bound. They didn't go up. In a sense, all the players who bought the inventory or who bought the wheat at the time of harvest were not able to get the carry cost the way the small players were able to because they were buying from the open market and pricing their product. We had a very tough competition from private labels and small players.
I think, as we go forward, in FY 2027, we should be able to overcome this and should be able to deliver a strong growth in wheat flour and rice business put together for them. On other highlights for the Q4, as I said earlier also, alternate channel continues to be very focus area for us as it grew by 43%. Branded exports and HoReCa again remains on our priority list. We had couple of new products launched during the quarter. On edible oil, as I said earlier, Q4 it grew by 17%. We crossed revenue of INR 17,520 crores for edible oil in Q4, which is 19% year-on-year growth.
On market share, we have been able to see consolidation in market share of edible oil for the quarter, where it improved by 60 basis points. In E-com and Q-com also our market share of edible oil continue to remain above 30% level. On FMCG part, in terms of the market share, our wheat flour market share more or less remain flattish at 5.3%, 5.4% kind of number, which we had earlier also. One significant improvement which we saw in the basmati rice, where our market share improved by 330 basis points, and now we are closer to 9% kind of market share from what we had earlier.
Segment also recorded a profitability of close to INR 35 crore in Q4, and for the full year we had a segment result of plus of INR 200 crore. While we have been positive in food, but as we have been saying earlier also that we will continue to drive food aggressively and see to it that we get the top line first, and profitability will certainly follow once we get a volume angle, volume handle on our side. Industry essential, both, oleo and castor continues to grow better. Segment recorded 13% year-on-year volume and 11% year-on-year revenue growth in Q4 FY 2028. Our oleochemical business, which contributes 30% of business, continues to remain key growth driver for the segment.
Our new installation coming up at Krishnapatnam by end of, early, the Q1 of Q4 of 2027 should be able to add more volume to this segment. Gradually, we are diversifying into the specialty chemical, which now contributes close to 7%-8% of the portfolio. On subsidiaries and joint ventures, GD Foods, which was acquired last year, continued to grow. In Q4, the volume grew by 24%, full year volume grew by 15%, revenue growth of 21% for the quarter and 12% for the full year. We continue to maintain the material margin at level of 55% and 54% for the quarter and full year respectively. On general trade distribution our focus continues to play on spreading the distribution.
Now we reach more than 900,000 outlets directly, 9.7, rather I would say. On rural reach, we are there, 63,000 towns listed. Of those 63, close to 55,000 outlets get built every three months, and this is the area where we would continue to focus and grow. Overall, direct plus indirect reach as per the Nielsen is now 2.6 million, so we are reaching close to 26,000 outlet, which is still not the level where we would want to have because the universe of overall outlet is more than four million. There is a lot of headroom for us to grow, which we will continue to do in next couple of years. Alternate channels, I'll not spend much time.
I think we have spoken earlier that it is continued to grow at 43%, revenue growth of 51%. Now the quick commerce which is one of the, like part of the alternate channel, contributes close to 32% of the overall alternate channel volumes. There were a couple of new product launches. We launched our new series, Fortune Premio or premium brand under which we launched Olive Oil and also launched Cold Press Mustard Oil. This is something which we will develop. Currently we have launched a new range in Delhi, Hyderabad, Mumbai and Bangalore markets, which is where we find customers are there for such kind of products.
As we go further, we will be tapping more metro and 50 lakh plus population towns to see that this category also expands. Now we have quite a few products at a premium range as well as health and convenience-focused foods, which include soya nuggets, Biryani Kit, Kohinoor Brown Rice, and then premium Cold Press oils. Apart from that, now we have a brand Blended Oil portfolio, which is more focused on the health and convenience. We will continue to develop this portfolio. That is all from my side as far as the update on the Q4 numbers as well as performance is concerned. I have with me Mr. Mallick, who is Deputy Chairman. Mr. Saumin Sheth, who is our Chief Operating Officer, and Pankaj, who is our Interim CFO here.
I request now operator to open the floor for question and answer. We'll take questions one by one and try to answer. Thank you.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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 will wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama Wealth. Please go ahead.
Yeah, thank you. Firstly, congrats on good recovery. First is, in terms of Iran crisis, we saw two, three levels of impact on the sector. One was, of course, gas availability to a lot of the canteens and restaurants was severely restricted for few days. We obviously saw inflation in edible oil, et cetera. A lot of the local edible oil players would not have been able to manage the working capital sourcing for a few days, the way you would have managed. If you could tell us on a overall basis, did you gain or did you lose? Because in HoReCa, I think there could have been some adverse impact. If you could clarify on that.
Second, of course, convenience food, there was some up-stocking for few days because some consumers got worried that availability itself could get impacted. Overall holistic level, what is the impact in Q4 of Iran crisis?
See, Abneesh, on the Q4 per se, if I say, I think the impact is not that much because the prices, while prices went up in March, but it also saw a recovery of significant demand in the month of March because trade tried to accumulate a lot of inventory, and therefore we saw huge amount of demand coming in the month of March. That, to some extent, offsetted any issues with respect to the pricing and other things. One. Second, yes, the prices of lot of things has gone up, like packing material, chemicals and coal.
I think all this will get reflected in the Q1 number because this real cost which has gone up will actually hit because month of March, most of the players were having the inventory, sufficient inventories to take care of the cost. This will be impacting in Q1. Initially, we did saw some demand destruction because of this LPG shortage and other things, after that we didn't saw. Yes, when we got into April, we did see some of the sluggishness in the demand because a lot of people who had accumulated inventories in the month of March are now consuming it, and therefore we see not a very encouraging demand scenario as far as the April is concerned.
I'm very sure that in the month of May and June, it will recover, and we will have a fairly good quarter, Q1 as well.
Okay. Till now, how much price hike, you have taken pre-Iran versus now across your products, if you could tell us, given packaging cost will be, say, 20% of your broad, raw material. How much hike you would have taken across different parts of the portfolio, specific each, if you can tell?
The packing cost, as I said, will start hitting you actually from the month of April, so there is no question of taking any price hike because of the packing material.
April volume I'm asking now.
Yeah. In general, the edible oil complex went up close to 10%, I think that 10% of increased prices and every player has passed it on to the consumer somewhere in mid of March or end of March. That is already happened. As far as the packing material is concerned, I think slowly people will start passing it on. Packing material for us is, you know, close to, I would say 2%, 2.5% , 3% of our overall cost, not more than that. If it has gone up by 10%, 15%, the overall impact per se would not be more than a quarter basis or a 50 basis point.
As we approach to the end of April, I think, we will take the corrections accordingly.
Sure. My second and last question is on alternate channels. If you could tell us total alternate channels as a portion of domestic business, how much it is, and how is the profitability versus overall business? Is it better? Is it slightly worse? Second, question will be part of this. On Kohinoor, we have seen a spectacular recovery. Of course, first few quarters were very challenging, so which means base is quite favorable here. So if you could tell us ex of the base effect, are you now happy with this performance? Because the base had seen declines and now it's a growth. Are you happy till now, whatever has happened in terms of the acquisition, is it something you are satisfied or still a lot of things left to do here?
See, on alternate channel, I will answer, and then for Kohinoor, I will request Mr. Mallick to revert to your question. On alternate channel now, in edible oil, we sell close to 15% of our volumes comes from the alternate channel, and as I said earlier, it is growing by 40%-44%. Similarly, for the food, it is close to 25% of volume which comes from the alternate channel. This channel are certainly more profitable than any other channel, whether it is a general trade or whether it is export. I think we will continue to grow on this. I request Mr. Mallick to specifically answer your Kohinoor related query.
On Kohinoor, we clocked around 50,000+ tons this year, FY 2025-2026, showing a growth of almost 20% over the last year. Kohinoor as a brand has its own salience and very strong in South and Western India. We have concentrated in these markets more, because of AWL's distribution strength, we have taken it to entire country. We see good traction coming from Eastern India, where the brand had a good traction earlier, but in between there were no supplies by the earlier companies. We have taken it, and we are now doing it well. This year also, I expect this momentum to continue and even do more. Our HoReCa brand is Kohinoor Chef's Choice, which has a legacy in hotels and restaurants, and many top hotels wants our flagship brand, Kohinoor Trophy.
That way, if you ask me, Kohinoor has come back into full action, and we will see more growth coming in days to come.
Understood. Sure, sir. That's all from my side. Thank you.
Thank you. The next question is from the line of Manoj Menon from ICICI Securities. Please go ahead.
Hi, sir. I have only one question. You know, which is, let's say, going into, you know, the later half of FY 2027, what's your world view on inflation, specifically agri inflation? Right. Are there pockets, you know, given the disruptions which are currently, which can impact sowing, et cetera, just your world view on agri inflation in general, going into fiscal 2027 later part. Thank you.
See, today, CPI is at close to 3.5, in which, food contributes significant 40% of the weightage, and food itself, which wherein you have all these edible oil and other foodstuff is there. It's actually sitting at 3.5. Very difficult to estimate anything right now because in today's world, it's too much of dynamism there. I think I don't know how is the things are going to pan out tomorrow. If edible oil complex more or less remains same, I think the inflation rate of this 3.5 CPI, of this 3.5-3.75 should remain same.
Whether this will have any impact on the demand, I think our industry is more of an essential products rather than discretionary products. The demand disruption generally doesn't happen in our case. What, in our case, happens is downgrading, for which we have requisite brand architecture in place. Where if consumer wants to buy a lower brand, we have that brand also to offer to him. The customer remains within our scheme of the things. Yes, if inflation goes up, the more impacted are the discretionary spend FMCG products, where customer would try to cut.
Thank you. Thank you, sir.
Thank you. The next question is from the line of Dhiraj Mistry from Jefferies. Please go ahead.
Yeah. Hi, good morning, and congrats on good set of numbers. My first question is related to foods. The kind of improvement what, in terms of margin, what we have witnessed in FY 2026, because of restructuring. Can we assume that, now this kind of profitability is a new base going ahead? If not material improvement from year on, it can stay at current level?
See, that's what, we have been saying that, the food profitability is something which all depends upon what kind of opportunity that we will get in the market to, you know, grow the top line. Our first focus, of course, will remain to grow the volume. We have been saying this, that at least till end of FY 2027, the priority will always be a top line and not the bottom line. Whatever level we are today, I think we should be able to continue. Maybe we may become little aggressive, as the opportunity comes during FY 2027 to see that we give priority to the volume over the margins.
Got it. Got it. In terms of new product launches in food segment, that the kind of premiumization what you are trying to do in edible oil with the recent launch, is there any particular action you would like to highlight in food segment where you are trying to drive premiumization and improve your gross margin as well as overall profitability?
Yeah, absolutely. I mean, this category of premium products will certainly has got a better margin profile on the gross margin as well as EBITDA. Right now they are at a very small scale, so doesn't change the metrics at a overall scheme of the things. Premiumization is something, it's not only limited to this niche products which we are launching. This niche product is just a beginning. I think over the years we will develop this into a bigger category. Premiumization we continue to do in other products also, which is our normal Fortune brand, where we have both the under-indexed market and over-indexed market. The markets where we are very strong, we try to work out how can we improve the margins from there.
That process is continuous, should reflect on the pattern or unit metrics, which we have been communicating.
Got it. Sir, my next question is related to the balance sheet. What we have seen is that there is a significant decline in inventory, while there is an increase in trade credit, what we avail to buy edible oil. How do we read these two line items?
Basically the trade credit and the borrowings keep exchanging between the lines, and therefore, what you should be looking at is that overall inventory plus receivable as compared to the borrowings. If you compare these two set of numbers, you will find more or less no major movement within these two. Sometime we opt for a buyer's credit rather than a trade credit, and sometime we opt for a trade credit as rather than a buyer's credit. That number keeps fluctuating between the schedules. If you look at the current liabilities versus current assets, I think we are quite comfortably placed.
Got it. Got it. Sir, one request. Can you explain the divergence in your quarterly press release, what you highlighted, where you said that the food volume growth would be around 1% and top line growth would be in a mid-single digit, while what you reported is 6% volume growth and 18% top line growth. Thank you. That's it from myself.
I think what you are talking is basically between the stand and console. The consolidated, I think what we are saying is that the food volumes were actually 3% growth after normalizing that G2G business. Standalone is what we are saying, that it is a year as the growth.
Got it. Thank you very much, sir.
Thank you. The next question is from the line of [Harsh] from Bandhan Mutual Fund. Please go ahead.
Hi, sir. Good morning. Am I audible?
Good morning. Good morning, everybody.
Hi, sir. Just continuing on the comment which you made on the previous participant question that in the foods business you will prioritize volumes over margins. Or, if an opportunity comes, especially here, basically wanted to know at what volumes would you be able to maintain the margins? Let's say if-
To answer your question very straight, I don't think that we can quantify now because many a times opportunity comes in and you are able to grow also and without you know without diluting on the margin. That's something which is very difficult to say. What we are actually trying to communicate is that we will have priority on the volume because we would certainly want in FY 2027 food volumes to grow in double digit, at least in mid-teens kind of number, which we are looking at. Profitability, I mean, that should be the first. However, if we have any constraint on that, we will certainly give a priority to the top line.
Therefore it's difficult to say up to what volume you would be profitable, up to after what volume you will not be. Because it all depends upon what kind of opportunity that we will get in the market. As I was saying in my initial commentary that last year we didn't get any opportunity in wheat flour business because wheat prices didn't go up, and therefore we had a significant competition coming in from the smaller players. Now, this is an opportunity which was not there. If this opportunity comes in this year, I think we will grow volume as well as profitability also.
Okay. Where I was coming from is that, is it fair to assume that, as you mentioned, that your ambition is somewhere to be, to grow in mid-teens? Basically, is that the base case for you in your AOP? You know, when you make your AOP, that okay, fine, this is something which we grow. Let's say if the additional opportunity, as you mentioned in wheat, let's say from what we are seeing currently, the prices are firming up there. Would that be an add-on to, what you are building as your base case of mid-teens growth or volume growth?
Yeah, of course, the base case, we certainly double-digit growth, which is mid-teens kind of growth for food. Opportunity strikes, and the things come favorably to us, so we would certainly try and make it even better than this. That's not an
And in, in that case-
That of course is there.
In that case, whatever that three odd percent margins which we have done would be slightly lower.
Maybe, yeah.
Sir, again, FY 2026 as well is probably characterized by, you know, reversing too many opportunistic calls which we had taken in the previous years, right? When you talk about these opportunities, right, are these short-term tactical opportunities or these are something, you know, where these are areas where you can create a structural edge or benefit and then build on it? Because we would not want to see that reversal, you know, going ahead as well.
No, no, of course, these are all structural changes that we want to do. I mean, there are only two things which happened last year when with respect to the food. One is, of course, that one time government-to-government business which was not there, and the other is we are just trying to consolidate the NBR business, which we earlier tried that we will penetrate across India, but then we thought that it is better to go, region by region and then build this, portfolio. That's the only change which we did, in the food business. I think that should continue.
NBR is the private label, right?
NBR is non-basmati rice.
non-basmati rice. Okay.
Yeah, yeah.
Let's say, segment by segment, if we think of wheat, rice, and let's say others, right, soya, sugar, et cetera, where do you see? I mean, you mentioned that a few categories are already growing at 30% in your pre-quarter update. Let's say going into FY 2027, where do you see the largest opportunity, sir, let's say over next one, two years in terms of growth for us?
The largest opportunity, to be very frank with you, sits in rice, wheat flour, besan, and we also have a sugar which is also a volume puller for us. These are the four categories and pulses, of course. These are the four, five categories where we see a huge amount of potential to grow.
Okay. To the earlier comment which you made on wheat, right? That we did not have the opportunity last year, because the prices were quite stable and, you know, local competition also went in. Basically, if the prices firm up, would it also mean that, apart from growth, even the margins of that particular wheat flour business should improve for us this, in FY 2027 versus FY 2026?
No, not necessarily. I think if prices firm up, it will be beneficial to the organized and the big players like us who buy the stock at the time of the harvest because we are delivering a consistent quality to the customer. The local players actually aren't able to compete with organized players like us. It will help us to build volumes. Not necessarily it will have an impact on the profitability. Yes, it will have if the prices go up even beyond the carry cost. That is a complete margin accretion which will happen to us because if prices go up beyond a carry cost which normally you account for, certainly it will add to the margins also.
Oh, okay. Just on a longer term horizon, sustainably, what is the kind of margins do you foresee or envisage in the foods business?
No, in the food business we are actually saying. If you go through our earlier comments, we have always been saying that food will remain EBITDA neutral till FY 2027, and after that we will try and build INR 1,500-INR 2,000 a ton kind of EBITDA in the food from FY 2028. This is what we are working on while we are delivering it today also. That certainly doesn't mean that it is something which is sustainable at least for the year. That's what we are looking. Then from there, that from the journey will start wherein you should ideally get to a margin level where you start benchmarking yourself with your competitor.
Like for us in wheat flour, the competition is with ITC, and in rice we have KRBL and LT Foods. You have to go to that level. We are not there right now because, of course, we are at, still at investment and growth phase.
Got it, sir. Thank you so much.
Thank you. Next question is from the line of Akshay Krishnan from ICICI Securities. Please go ahead.
Oh, hi, sir. Thanks for the opportunity. My question is on at what point in time does the business shift from the reinvesting gross margin gains to the delivering sustained EBITDA expansion, and what are the key triggers for this transition, sir?
Your question is specifically for the food?
For the food, exactly.
Can you repeat the question again?
What I'm trying to say is, at what point of the business does the shift happens in reinvesting the gross margin gains to delivering sustained EBITDA margins, and what are the key triggers for this?
I think key triggers remains, I mean, a good market share, which you have, and only then you have a pricing power to charge prices. Until that, at that time, you are just playing aggressively on pricing and growing. I think food anywhere closer to or anywhere more than 1.5 million tons of volumes, I think we should be able to start consolidating the margins. This year we closed at 1.2 million. I am hopeful that next year we will go beyond 1.5 million, 1.6 million as far as the food is concerned. From there, I think the consolidation will start on gross margin as well as the EBITDA margin.
Okay, but technically you also gained market share in this quarter. Is it that you are focusing more on market share gains at the cost of the margins then?
Yeah, at least for FY 2027 for sure, and maybe some part of FY 2028 also. We will certainly give priority to the top line rather than margins.
Okay. My second is on the volatility in the oil that's been going on in the recent trends. Have you done any sensitivity analysis on every INR 5 or INR 10 drop or increase in the cost of oil? What is the impact on the margins, and how do you protect and this price through the pricing measures?
Can you just repeat your question? What I'll suggest that Saumin to come in and answer.
Yeah.
Just repeat the question for sake of clarity.
Basically the recent volatility in edible oil, I just wanted to understand the sensitivity analysis. For every INR 5 or it's a $5 or $10, decline or an increase in the edible oil or crude oil prices, what is How are you managing the inventory, and how are the margins being protected through pricing in this?
I think if prices goes up, our experience says that at every INR 10 we see demand slowing down by 1%, and vice versa. As prices comes up, the demand increases. Based on the international price analysis, we also revise our inventory and supply chain, and also depending upon the seasons and the customers. Depending upon the prices and the trend, we revise and we manage our inventory supply chain.
Okay. Okay, perfect, sir. My next is on the alternate channel. You've been scaling up rapidly, and I just wanted you to just help me in understanding and pick your brains on how can you quantify the margin difference versus general trade, and how this evolves with scale?
No, I think this alternate channel certainly is more profitable than general trade because there are less number of intermediaries involved, because you are then dealing directly with the e-com and alternate channel operator. Also the stocks are moving very fast. You certainly have a better margin profile as far as general trade are concerned. Again, on the alternate channel also you have other costs which you have to incur because alternate channel is all about ensuring the visibility of your product on the platform, plus you will have to also spend some amount of time, some money on ensuring that the fill rate doesn't go down, and therefore you have to keep supplying to them through your logistical capabilities.
All these costs are there, but in spite of taking all this, it's better off in terms of margins as compared to general trade and therefore we are saying we are quite optimistic about this channel growing. It's a channel of the future and the way it is growing at a 40%, although the base is low, that's why the 40, 50% looks very good number. As the base increases, this growth rate will certainly come down. I'm sure in the years to come, we will have close to 30%, 35% of our volumes coming in from the alternate channel, which is today at 15%.
What would be the margin difference versus general trades in this?
The margin difference is like our. It's not more than. It's very minuscule margin difference but maybe if in general trade we are making x percentage. I think the general trade versus this is hardly a 50-60 basis points lower than higher than the general trade. Because in our overall scheme of the things, the margin itself is 1.5%-2% at the end of the day. Any change in 25-30 basis points is quite a significant for us.
Okay. One final last question. The pertinent EBITDA has improved YOY, but it's been volatile on a QOQ or on a sequential basis. Now what is the steady state range that we should be building in across these cycles from this?
Steady state range you can build is around INR 3,600 a ton or INR 3,500 for a safer side. If you take it, I think we should be able to deliver within that range.
Okay. Even given the volatility that's been going on.
Yeah, yeah.
with the raw material and what.
Yes. Yes. Yes.
Okay. Thank you and good day, sir. Happy. Thank you.
Thank you. Before we take the next question, a reminder to all the participants, anyone who wishes to ask a question, please press star and one. The next question is from the line of Nilesh Doshi from Prospero Tree. Please go ahead.
Thanks for the opportunity, sir. Congratulations for the strong volume and revenue growth in the quarter four. Sir, my question is related to whether the Wilmar define itself as a branded product company or a simple commodity company. Because we are valued far below the other peer group company like LT Foods, which has a brand of Daawat, KRBL brand, India Gate, Patanjali. We are trading more than 1x the revenue, and we are far below because our market cap is around INR 26,000 crore and revenue is INR 74,000 crore. Can you explain the reason for such a anomaly, sir?
First of all, AWL Agri Business is a food FMCG that we classify ourselves because 70% of our revenue comes from the brands. I think this is what we've been saying, and this is how our numbers sell. Now, as far as the valuation is concerned, I will not be able to comment too much on it because it's ultimately a market-driven price discovery. We can only say that the kind of potential that AWL Agri Business has got, the investor is taking their own time to understand that potential, and we are quite hopeful and very positive that sooner or later investor will understand that potential and will give a valuation that we deserve.
Thank you. Next question. Why the management is constantly guiding the margin per ton? Because we are selling the products as a brand and under the small packaging. When we are selling as a brand and under the small packaging, the margin much more higher than the per ton basis. What is the logic to guide the margin per ton rather than in a percentage term of the each segment?
The reason for giving guidance in margin per ton is very simple because the product levels at which we operate gets impacted due to the price movement in the commodities, whether it is edible oil, whether it is a wheat, whether it's a rice. Therefore, what happens is that since we operate a very significantly strong brand, most of the time we are able to pass on the price increase or a commodity price increase to the consumer. Therefore, when you pass on the commodity price rise to the consumer, your margin percentage actually goes down, but you normally able to maintain per kg or per ton of margin.
That is the reason why we say we are not a pure play, a discretionary FMCG product where you try and maintain margin as a percentage of a revenue. Our revenue gets impacted because of the inflationary pressures, and therefore, we say it is better for us, better for investing community to track our margins on a per ton basis.
Thank you. The next question is from the line of Kenil Mehta from Boring AMC. Please go ahead.
Sir, I would like to know what portion of your 10%-15% growth in volumes in edible oil was real consumer demand versus distributor stock-up and consumer stock-up before the price hike. Are you seeing slowdown in volumes in April due to commercial LPG issue across the restaurant and retail?
No, see, in our scheme of the things, the primary and secondary keeps happening hand in hand. You have a primary in one month and, say, followed by the secondary in another month. What we are saying is that between one month and two months, there are certain pipeline corrections between the trade which keeps happening, and therefore, you might see some slump in one month, which is getting replenished in the next month. It's only a stock gap which happens between one month and another month. I think for us, whatever we are able to sell, I think it's reflective of the secondary itself.
On your second question, does this slowness in the demand in month of April is suggestive the fact that there is a shortage of LPG? I don't think that is there now on the street. We don't see any shortage of LPG across the country. Coming months, we have quite a few marriage season coming up, and therefore, we are hopeful that demand will pick up from here.
Understood. Also, sir, is it as the palm oil price reduces, is it our margin remains stable or we have to pass on the low prices to the consumers also?
No, we-
After price rise.
No. For us, whether price goes up or price goes down, since we operate in a brand, we don't change the prices quickly. If in the case, whenever the prices goes up, we have that ability of passing on the price to the consumer quickly because of the brand. But when the prices goes down, we try and time it such that we are able to get as far as margins before passing it out to the customer. That happens both the way.
Understood. Sir, are you also planning to enter into palm oil plantation business like your peers, like Patanjali Foods and Godrej Agrovet, worldwide due to government push to?
No, as we speak today, we don't have any plan because our promoter, Wilmar itself, they are into a big, plantation, in palm in Indonesia and Malaysia. As far as AWL is concerned, as we speak today, we don't have any plans to get into this.
As an industry, what do you think the Indonesian government is increasing palm oil usage in diesel instead of importing it?
We'll see some sort of a price hike and lower production exports to other countries.
Yeah, I'll request Saumin to answer this question.
Yeah, hi. As you mentioned, Indonesian government has planned to increase the biodiesel consumption to be 50, that is happening across the world, that all the producing countries are increasing their biodiesel blending into the diesel. The main reason is today the biodiesel is cheaper than the fossil diesel because of the war situation. Indonesia is on the you know, right path to announce and eventually consume more palm into biodiesel. That may not start from tomorrow, but, yes, the plan is from the second half of the year.
That may impact the price structure, which may help palm prices to go up and the other competing oil to remain at a reasonable price spread, which is probably good for AWL because we are mainly soft oil consumer pack very strong soft oil consumer pack company. I think eventually it will help us.
Thank you. The next question is from the line of Devesh Advani from IndusInd General Insurance. Please go ahead.
Yeah. Congratulations on good set of numbers. Actually, what I wanted to ask is: how have been the traction in edible oil and foods in the month of April, and how do you see it panning out in the month of May and June going forward?
You are talking from the consumption point of view?
Yeah, from the consumption point of view.
See, normally, April, first half of April is always slow because the new year or the wedding season starts from fifteenth of April. The first half we always see a little slow, and then the demand picks up. This year, the overall summer has set in quite strong and we have seen very high temperatures, which has cut into the consumption overall. Small disruptions in the out-of-home consumption has been seen. Hotel workers or other workers going away for either the election or for the wheat harvest season has also disrupted the entire labor force in many of the places. This type of disruption we have seen. Again, after 15th April onwards, the season picks up and this will continue till June.
This year the wedding season is good, so the consumption normally will be good one. Harvest has been good, so we expect the rural to do well because wheat, mustard and chana has been good harvest. We only now have to see how the monsoon sets in. Overall, consumption-wise, I think Q1 should be good. April is low, but May and June will pick up.
Okay. Overall a growth of double digits in terms of edible oil and foods. Edible oil?
Not possibly double digit, but surely a single digit growth.
Okay. All right. Thank you so much.
Thanks.
Thank you. That was the last question for today. I now hand the conference over to the management for closing comments.
Yeah, thank you very much for attending this call and keep tracking us. In case of any further queries you can write down to our IR team and we will certainly respond. Thanks again.
Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you all for joining us today and you may now disconnect your lines.