Ladies and gentlemen, good day and welcome to the AWL Agri Business Limited Q2 FY 2027 earnings conference call. As a reminder, all participant lines will be in 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. Ashutosh Joytiraditya from ICICI Securities. Thank you, and over to you, sir.
Yeah. Thank you, Steve. Hello, and good evening, everyone present on the call. I, on behalf of ICICI Securities, welcome you on AWL Agri Business Limited's Q2 FY 2027 earnings call. I would like to thank the management for giving this opportunity of hosting the call to us. From the management, we have Mr. Shrikant Kanhere, CEO and MD, and Mr. Pankaj Goyal, CFO. I will now hand the call over to the management for any opening remarks. Thank you, and over to you, sir.
Hi. Good evening, everyone, and thank you for joining us for AWL's Q2 FY 2027 earnings conference call. On behalf of AWL, I extend a warm welcome to all of you for our Q2 FY 2027 earnings conference call. Joining me today are members of our leadership team who will also be available to address your questions during the Q&A session following my remarks. We have delivered a strong performance in Q2 FY 2027 with consolidated revenue growing 26% year- on- year to INR 22,202 crores, supported by underlying volume growth of 14%. Importantly, this growth was accompanied by healthy operating profitability, reflecting the strength of our diversified portfolio and continued execution across businesses. Our food and FMCG business remained a key growth driver, delivering 32% revenue growth and crossing INR 2,200 crores in quarterly revenues.
Let me begin with our food and FMCG business, which remains at the center of our long-term growth strategy. Our strategy remains clear to build one of India's largest and most trusted food platforms anchoring daily essentials and center-of-the-plate categories. We see significant opportunities as consumption increasingly shifts towards branded and packaged foods, particularly across staples such as rice, wheat flour, pulses, besan, and sugar. During the quarter, growth remained broad-based across our food portfolio. Our rice and flour businesses maintained double-digit revenue growth. Within rice, our basmati portfolio continued to gain market share, while Kohinoor also delivered double-digit revenue growth. We are particularly encouraged by the performance of Fortune Pulses, which grew over 40% year- on- year with quarterly revenue crossing INR 100 crores. Pulses remain a largely unorganized category with significant headroom for branded penetration.
We are strengthening our regional assortment and expanding distribution, including through quick commerce, to capture this opportunity. Our health and convenience portfolio is also gaining meaningfully with LTM revenues exceeding INR 1,400 crores. We continue to expand our offering across premium health-oriented and convenient food products supported by innovations such as multigrain atta, olive oil, cold-pressed mustard oil, and other differentiated products. The larger opportunity for AWL is to build multiple scalable food categories, leveraging our trusted brands, integrated manufacturing capabilities, and extensive distribution network. Moving to edible oils, the business delivered a 5% volume growth during the quarter. Despite a challenging operating environment, we maintained our market share supported by growth in domestic oils, particularly mustard, groundnut, and cottonseed oil. Our focus remains on protecting our market leadership, strengthening our branded and premium portfolio, and maintaining disciplined execution in a dynamic commodity environment.
Industry essentials delivered another strong quarter with volume growth of 25%, supported by continued momentum in oleochemicals and specialty chemicals. Oleochemicals and specialty chemicals now contributes around 45% of segment revenue, reflecting the increased importance of this business. Our focus is on scaling the value-added specialty chemical portfolio, leveraging our backward integration, manufacturing scale, and access to Wilmar Group's global R&D and formulation capabilities. We see this as an important long-term growth and profitability driver of AWL. Coming to our distribution and channel strategy, our direct retail reach now stands at 9.7 lakh outlets, while our total retail reach remains at around 26 lakh outlet. Our focus is increasingly shifting towards improving throughput, outlet productivity, and distribution efficiencies. Within our retail channel, quick commerce continued to deliver strong growth over 40% year-on-year.
We remain focused on improving assortment, visibility, and availability across leading platforms, particularly for our packaged food portfolio. Our HoReCa business grew 22% with LTM revenue crossing INR 800 crores, while branded export delivered strong growth of 72% year-on-year. These channels are becoming increasingly important in expanding the reach of our brands and creating additional growth opportunities for our food and FMCG portfolio. Before discussing our financial performance, I would like to briefly reiterate our approach to reporting profitability. We have been disclosing normalized gross profit and EBITDA to better reflect our underlying operating profitability. Under the Indian Accounting Standards, gain or losses on commodity derivatives used to hedge underlying raw material exposures are classified under other income or other expenses, although they form an integral part of our operating profitability. Accordingly, our normalized gross profit and EBITDA are calculated after incorporating these derivative gains and losses.
Coming to our financial performance for quarter two, FY 2027, consolidated revenue grew 26% year-on-year to INR 22,202 crores, supported by underlying volume growth of 14%. Normalized operating EBITDA grew 11% year-on-year to INR 623 crores, reflecting continued profitable growth across our diversified businesses. Profit before tax grew 4% year-on-year to INR 344 crores, while profit after tax stood at INR 239 crores, marginally lower by 2% year-on-year. The marginal decline impact was primarily attributed to minimum corporate tax computed on revenue of Bangladesh subsidiary under local regulations, which impacted consolidated tax expense during the quarter. For H1 FY 2027, consolidated revenue grew 22% to INR 42,250 crores, supported by underlying volume growth of 11%. Normalized operating EBITDA increased 25% to INR 1,378 crores. Profit before tax grew 27% to INR 822 crores, while profit after tax grew 22% to INR 591 crores. Coming to segment-wise profitability.
In food and FMCG, quarterly revenue grew 32% year-on-year to INR 2,216 crores with an EBITDA margin of 3.2%, in line with our FY 2027 guidance range of 3%-4%. As we continue to scale our packaged food portfolio, our focus remains on improving profitability through operating leverage, better product mix, and distribution efficiencies. We expect margin to improve progressively from these levels with an aspiration to move towards high single-digit margin over the medium term beginning FY 2028 onwards. In edible oil, EBITDA stood at approximately INR 4,100 per MT during the quarter, again in line with our guided range of INR 4,000-INR 4,500 per MT. This reflects the disciplined pricing, effective sourcing, and stable operating performance despite volatility in the commodity environment. Industry Essentials delivered EBITDA of INR 4,300 per metric ton, well ahead of our guidance range of INR 3,000-INR 3,500 per MT.
The stronger profitability was supported by an improving product mix, particularly the increasing contribution from oleochemicals and specialty chemicals, which accounted for 45% of the segment revenue. Outlook. Looking ahead, our operating priorities remain broadly unchanged, and we remain confident about AWL's growth trajectory. Our priorities are clear. Accelerate the scale-up of our food and FMCG business, strengthen our leadership in edible oil, expand our value-added oleochemicals and specialty chemicals portfolio, and improve profitability through scale and operating efficiencies. For food and FMCG, we remain focused on sustaining strong revenue growth while maintaining margin within our guided range of 3%-4% for FY 2027. Over the medium term, we expect profitability to improve as our portfolio scales and operating efficiencies strengthen.
In edible oil, we continue to guide on mid-single digit volume growth, gradual uptick in market share, and maintaining EBITDA per ton within our guided range of INR 4,000-INR 4,500 per metric ton. For Industry Essentials, we expect the increasing contribution of value-added oleochemicals and specialty chemicals to support profitability while continuing to work towards our guided operating parameters. Overall, our focus remains on delivering sustainable and profitable growth, with food and FMCG becoming an increasingly important contributor to AWL's scaling and earnings over time. We believe our strong brand, integrated manufacturing platform, and extensive distribution network position us well to capture the growing opportunity in India's packaged food market and create sustainable long-term value. With that, we can now open the floor for questions. Thank you.
Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Dhiraj Mistry with Jefferies. Please go ahead.
Yeah. Hi, good evening, sir. My first question is on your cash flow, where we see that there is a INR 600 crore increase in inventory, and because of that, our operating cash flow has become negative for first half. What is the reason behind that?
See, the inventory increase, of course, is a buildup because of the fact that we had a sluggish September, number one. And number two, also to some extent, the kind of supply chain disruption that we are witnessing in the sunflower particularly. So company is actually building a little more inventory on sunflower so that we do not go out of the market, given the fact that we have a very strong brand as far as sunflower is concerned. So this is one part of it. Because of that, the inventory buildup, actually, inventories have gone up by INR 6,000 crore, not INR 600 crore. And that is primarily been then funded through a working capital line. That is why the lines which funded this INR 6,000 crore is more of a funded lines, and therefore, gone into cash flow presentation into the financing part of it.
Therefore, the cash flow from the operation is shown as negative. But it is something which gets corrected in this upcoming quarter, which is O&D.
On annualized basis, we expect that the inventory level should come down to normalized level.
Yes, very much.
Finance cost increase is also because of that?
Yes, it is because of that, but in our scheme of the thing, most of the finance cost which increased, we recover it in our pricing part. Therefore, in spite of increase in finance cost, you will see that profitability has not been impacted as such.
Got it. Sir, we have seen that last quarter we were at EBITDA margin of almost 2%, and now it has dropped to 1.1% or 1.2%. For the full year basis, what kind of EBITDA we can assume for Edible? I understand that you guide for absolute EBITDA per ton. From the margin perspective, how do you see, and how is the overall pricing to play out during the festival period of time?
See, I will tell you, if you look at a run rate of revenue, we are already at INR 42,000 crore of revenue right now. Okay. If this run rate continues the way it is, I think we should be close to INR 85,000 crore of revenue. With the kind of rate which we are looking at as far as the EBITDA is concerned, we are there with the guidance. I think EBITDA margin right now it is at 2.6%, and maybe full year also we can be close to 3% kind of number we can look at.
This you are talking on overall company level, right?
This I am talking about overall company level because if you ask from me for edible oil, I would speak in per ton basis.
Per ton.
But in food, we don't look at per ton now, we look at only a percentage. But with this, I think we should end the year at close to INR 2,600 crore of EBITDA on INR 85,000 crore will turn out to be close to 3% kind of number.
Got it. Can you throw some light on oleochemical and what kind of Although you have given your guidance in terms of oleochemical. But this kind of profitability and growth rate is sustainable over the medium-term basis?
No, I don't think this 26% kind of growth in oleochemical is sustainable. See, oleochemical has got three parts to it. One is, of course, oleo Sorry, you are asking for oleochemical or industry essential?
Industry essential.
Yeah. Industry essential has got a three segment to it. One is, of course, oleochemical, one is castor, and one is your de-oiled cakes of mustard and soybean. This de-oiled cake of mustard and soya all depends. It is a very dynamic. If you have a parity, normally you do, otherwise you don't do. This time we had some parity and therefore we did this, and therefore this underlying growth of 26%. But we always give a guidance of high single digit or low double digit kind of growth for the industry essential, which we should continue in H2. Therefore, blended growth for the full year should not be kind of 20%. So the 26% is not a sustainable one, it is a one-off in this quarter. Coming quarters, we should be there at 10%, 11% kind of number.
Got it. Lastly, on overall demand and supply perspective, given that we have very bad monsoon during the year, and now that festival season, harvest season is coming and everything, how do you see the commodity price playing out in India? Have you seen any impact in terms of demand, especially in the rural or urban market? Would you like to highlight something on demand also and supply issues perspective also?
Okay, I can give you some sense on how did we fare as well as the rural and urban is concerned when it comes to Q2 and H1 particularly. See, for us, the urban grew better than rural, fact number one. But the difference between both is not that staggering. Rural grew little less than urban for us. So yes, there is some kind of pressure which we saw on the rural, number one. Number two, with this deficit in rainfall of 12%, 13% across overall India, and then couple of territories experiencing deficit more than 30%, 35%, 40% also. With the wheat growing areas of Rajasthan, Haryana, Punjab, where deficit I understand is more than 30%. Therefore, this may have some impact on the kharif harvest and the rabi sowing.
I will keep my fingers crossed at this point of time because India somehow has become, I would not say very well, but reasonably good irrigated country as compared to the last 15, 20 years, and therefore, many a times we have seen that shortfall in rainfall is covered by the irrigation. So areas of Rajasthan, Haryana, Punjab, they are quite very well irrigated areas. I hope they will recover any rainfall shortage. But having said that, any impact of this coming on kharif crop and rabi sowing may have impact on the demand for sure. Rural, as I said to you, rural, we have already seen less than urban for us. If this happens, then we may see some sluggishness in the rural demand.
The inflation is again, another spoiler factor, which is going on right now, which is sitting at a very high, with headline CPI touching close to 6% as we speak today. And within that CPI, 6% food inflation is already at 7.5% kind of level. If such kind of all these things, parameters continue the way, we may see some bit of sluggishness in demand. But fortunately, India is getting into this festive season. So the festivities will also spike in some demand and which may negate these kind of pressures. So we are hoping that we should continue to get that volume growth of mid-single digit or a high single digit for overall scheme of the things for AWL in H2.
Got it. Thank you very much. I will fall back in with you.
Thank you. The next question comes from the line of [Yatin Mohane] with ICICI Securities. Please go ahead.
Hi, can you hear me?
Yeah.
Hello? Yeah.
Yeah, yeah. You can go ahead.
Just a couple of questions. Firstly, congratulations on good results. Could you give us some color on the export business? I think branded exports have grown at 72%, so what markets are driving these exports, and how big is this opportunity?
See, export is growing quite fast for us. We actually have started concentrating more on the branded export in last couple of years. Our target markets basically are the markets where you have a concentration of Indian diaspora, which is U.S., U.K., Europe, Australia, and to some extent, the Indian subcontinent also. We are getting quite good response from there because Fortune remains a well-known brand in India, and therefore, all people who have moved out of India and there, they are quite familiar with Fortune and are giving good demand to our products. Right now it has a very low base. We are doing a close to INR 800 crore kind of number in the branded exports. This is soon, in next couple of years, going to be quite significant for us, not only on the top line but also on the bottom line.
Because it is a very margin accretive business, given the fact that you get quite a good premium out of export business.
Okay. Got it. Thank you. Just one more question. I think the Government of India is implementing standardized pack sizes from September. Do you see any impact on the industry, and is it like a favorable thing for a company like us?
Yeah, the standardized pack is always favorable for branded companies like us, because then you have a level playing field across. Standardized pack will also, to some extent, increase the volumes for us. Because last full year, we had seen that lot of different size of pack size were going, and grammage war was first time seen in the edible oil industry, which was never seen earlier. With standardized packs coming in, I think it will boost volume growth, number one, and also it is good for companies like us because now nobody can play around with the grammage and sell the product at a lower price on the face of it. Yeah.
All right. Thank you.
Thank you. Participants who wish to ask a question may press star and one. The next question comes from the line of Nilesh Doshi with Prospero Tree AMC. Please go ahead.
Thanks for the opportunity. Sir, just you have mentioned that in the second half, the company may witness the higher single-digit volume growth. In response to the answer was that shortfall of rain. Are you sure that in spite of the lower rural demand, we can report the higher single-digit volume growth in the second half?
See, if you look at H1, we delivered 11% volume growth, okay?
Now, H2, as I said earlier also, H2 is generally a festive season, okay, in India, and therefore, usually there is a pent-up demand, at least for the food products. I am not talking of the FMCG products, which are kind of discretionary FMCG products. So there is a differentiation between FMCG, which is a discretionary and there is a FMCG, food FMCG, which is a daily essential products. Going on that, I feel while we have delivered H1 11%, I think full year we should be there at 8%, 9% kind of number.
Okay. Sir, at the consol level, for this quarter, quarter two, the revenue growth is around 26%, volume growth is 14%, but our PBT growth is only 6%. I am also aware that you are suggesting the margin per ton, but the PBT growth is not matching even the volume growth. Why, sir?
See, in our scheme of the things, I will tell you, there are a lot of things which keep moving from one quarter to another quarter, because there is something called mark-to-market gain, which is there. Since you have to declare the result by taking cutoff for a particular quarter or a half, you declare the number and therefore lot many times the mark-to-market gains or losses either moves between one quarter to another quarter and therefore you will see the H1 number is quite better than the Q2. When you look at a longer period of two quarters, three quarters, four quarters, everything gets normalized.
Okay. Sir, Government of India has reduced the import duty on the edible oil in the last week of the September, and since we are maintaining the higher inventory, will it impact our profitability in the coming quarter?
It will not impact the profitability as such because of the fact that we have a brand in front of us. It impacts to usually the players who do not have a brand equity in the market and therefore you can sustain the prices at which you have maybe bought the inventory. Yes, there might be some impact, but I think we should be able to recover everything from our pricing and that is what we are saying that our H2 should be similar to what which we have delivered in H1.
Okay. If you permit me, which product with the Madhur we are selling other than the sugar?
Madhur right now we are selling only sugar. We have not expanded it to any other product. Right now it is only for the sugar which we are selling.
Okay, sir. Thank you. All the best, sir. Happy Diwali in advance.
Thank you.
Thank you. The next question comes from the line of Binay Shukla with PhillipCapital India. Please go ahead.
Hi, sir. Just quickly on palm oil prices. Sir, given the El Niño is quite intense in Indonesia, just wanted to know, do you see any kind of threat on production side in coming quarters? Also on the wheat prices, what will be the expected inflation in wheat prices in 3Q and 4Q?
Sorry, your first question was on El Niño in Indonesia and impact on the palm oil prices, right?
Yes, sir.
Second was on the wheat prices.
Correct, sir.
See, El Niño in Indonesia is, of course, it is quietly talked about subject nowadays and whatever we have heard from experts commenting on this, I think, the palm outlook may be bullish, but not that bullish and therefore you may have some impact of production because of this El Niño. Given that, yes, in near term you may see some bullishness in palm oil, but not the very high bullishness which is what generally the commentary is going on around the commodity world as we speak today. We are prepared for that given the fact that we have quite a strong risk management structure. So we read the market carefully and accordingly take our calls.
Number two, on wheat, yes, currently the prices are going up for the wheat and in fact it is good for us given the fact that we carry good amount of inventory to ensure that our products delivered is of the same quality across the year, and we are able to recover the carry. So, it is a different fact that Government of India today is holding sizably good amount of wheat stocks and they have all the levers available with them to check the going up wheat prices. As I said to answer earlier question also, if you have a brand equity in place, normally any bullishness in the price going up or going down on a bearish market don't impact too much on our scheme of the things.
Understood, sir. Just follow- up on the wheat prices, sir. Given there is expectation of a weaker rabi season, can we expect maybe not immediately, but maybe after couple of quarters we could expect sizeable inflation in wheat prices also?
See, right now it is very difficult for anyone to predict on this because rabi sowing, I think is yet to happen actually. Rabi sowing will happen in next couple of days, so nobody knows what is going to actually the moisture levels of the soil while it is all very low, which has been reported. Unless you have these basic numbers in hand, I don't think we can predict any outlook on prices or outlook on production, anything else. Okay.
Last, just quickly on the FMCG and food business. Can you be able to share the near-term strategy or gameplay to offset the rural slowdown impact on other business? Already you have mentioned high single digit type of growth, but is it a blended high single digit growth, or will it be more of [crosstalk]
Carry on. Sorry.
Food will continue to grow at double digit. This quarter, we delivered 28% of growth. I think food, we don't see any issue that we will continue on. If you look at H1 also, the growth of volume growth is 24%, revenue growth is 27%. Food business, our growth of 25% + of revenue should continue either way. The strategy is very simple because packed food is very prevalent on the modern trade and the alternate channels, including e-com and quick commerce. We are investing quite heavily on these channels. We are also investing on urban towns where these products are being bought more. We will go with that strategy, and the strategy is working also for us, and we hope that it will continue to work for us.
Okay. Is it possible to get some channel mix for food and FMCG business? This is our last question from my side.
The food and FMCG business, you can have the 75% is coming from a general trade and 25% from the alternate channel. But the growing channel is alternate channel rather than a general trade. General trade is also growing, but alternate channel is growing far more than that.
Understood. Very helpful. Thank you so much.
Thank you. The next question comes from the line of Madhur Rathi with Counter Cyclical Investments. Please go ahead.
Sir, thank you for the opportunity. Sir, I wanted to understand regarding our net debt and this INR 8,500 crores of trade receivables. How should we include this in net debt calculation, if you can help me understand.
Sorry, come again.
Sir, I wanted to understand what is our current net debt, and this INR 8,500 crores of trade credit, how should we consider this number when calculating net debt going forward?
See this INR 8,500 crore trade credit is nothing but a suppliers credit which we obtain for our imports. Okay. It's not basically a fund-based line which we have used from the market. I think for calculating net debt, this INR 8,500 should not be considered.
Got it. So this is not a working capital line. Is that a fair understanding?
No, these are working capital lines, but actually these are non-funded working capital lines. In a sense, the funds doesn't get committed on the day one. The funds get committed only on the day when you pay actually. So it's only a letter of credits which have been issued and therefore a trade credit. Therefore it's not a funded line, that's what I'm saying.
Got it. And sir, is there any plan to demerge our industry essentials or the oleochemical business?
No, I don't think there is any plan. It's a very significant part of our business. Even the fact that it's a forward integration for us of a palm refining, and it's an integral part of entire value chain of the business which we capture for the palm particularly.
Got it. Sir, just one final suggestion would be if the management can consider a share buyback as our share is available at a very favorable valuation. That is it from my end. Thank you so much, and all the best.
Thank you.
Thank you. The next question comes from the line of Aniket Kamble with ICICI Securities. Please go ahead.
Yeah. Hi, sir. Congrats on a very good set of numbers. Also congrats on good numbers in Tops. My question was on Tops regarding what would be the geographical breakup, because during acquisition, I remember it was mostly North India and Central India product. How is the distribution expansion happening and what is the progress on it?
No, see right now, it is almost more than a year since we acquired GD Foods, which has got a brand called Tops. At the time of acquisition also, we had said that this company right now predominantly is into basically North India. Given the fact that AWL itself is very strong in North, we want to first leverage our distribution itself to make this company more stronger in North itself, before we try out any other markets. Having said that, we have been able to leverage AWL's distribution, and of course, the growth is significantly good there. We have been growing at plus of 25% in GD Foods. We have been able to maintain the margins also, which were there. Having said that, yes, now the geographies needs to be expanded.
Now we have started working particularly on the east part of India and the central part of India. These are the two territories that we would be targeting in next maybe one and a half years. Continue to put our trust on the North itself, because North, still not yet fully completed. There is still huge amount of scope which is still left in North itself for the company. Plus these two markets, East and Central, will come. Once these are stabilized, maybe we will think of West and going to the South.
Okay, sir. Thank you. Just one more question on food and FMCG. You mentioned about the channel mix. What would be the profitability? If you can just rank the channels according to profit.
Channels are more or less similar. Whether it is a GT or any alternate channel, the profitability right now more or less remains same. While alternate channel is more profitable, but since we are investing in these channels on various promotions, schemes, searches, fill rate, there are a lot of things which we have to spend amongst, and therefore the profitability is more or less similar to what we see in general trade as well as alternate channel.
Okay, sir. Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments.
Okay, thanks everyone for joining the call and taking this opportunity to ask questions to us. If at all you still have any questions left, do write to our investor relation team and they will certainly respond to your questions in more detail. Thank you very much, and have a good night.
Thank you, sir. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.