Q2 26/27

Oct 16, 2026

Summary

Q2 revenue rose 19% YoY and EBITDA margin improved 98 bps sequentially despite 11% milk procurement inflation. VAP growth, staged price increases and operating leverage support margin progress, while supply and weather risks persist.

Ladies and gentlemen, good day and welcome to the Heritage Foods Q2 and H1 FY27 earnings conference call. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this call is being recorded. I would now like to hand the conference over to Ms. Diya Kaswa. Thank you, and over to you, ma'am. Thank you. Good afternoon, everyone. I am Diya Kaswa, and it is my pleasure to welcome you all on behalf of Heritage Foods Limited. Thank you for joining us today for the second quarter and first half of financial year 27 earnings call. This call is being hosted by Go India Advisors. Please note that today's discussion may include certain forward-looking statements. Therefore, they must be viewed in conjunction with the risks that the company faces. Today on the call, we are joined by Mrs. Brahmani Nara, Executive Director, Dr. M. Sambasiva Rao, Whole Time Director, Mr. Srideep Kesavan, COO, Mr. A. Prabhakara Naidu, CFO, Mr. J. Samba Murthy, COO, Dr. Brij Mohan, CEO, Heritage Nutrivet Limited, and Mr. Umakanta Barik, Company Secretary and Compliance Officer. I now invite Dr. Rao to present the company's business outlook and performance, after which, we will open the floor for Q&A. Over to you, sir. Thank you, Diya. Good morning, everyone. Thank you for joining us today. Before we begin the call, I would like to extend my warmest wishes to all of you and your families on the occasion of the festive season. I hope this special time brings happiness, prosperity, and good health to everyone. Heritage Foods delivered a strong performance in quarter 2 of this financial year, sustaining revenue growth despite an inflationary environment marked by rising milk procurement costs and supply-side constraints. Consolidated revenue grew 19% year-on-year to INR 13,196 million in quarter 2, taking H1 revenue to INR 26,577 million, up 18%. While elevated procurement costs continue to weigh on profitability, EBITDA stood at INR 740 million, with a margin of 5.6%, and profit after tax was INR 309 million. Encouragingly, EBITDA margin improved by 98 basis points sequentially over Q1 of this financial year, reflecting a recovery in operating performance amid sustained cost pressures. Our integrated farm-to-consumer model underpins our ability to ensure reliable milk availability, strengthen farmer relationships, and respond to evolving consumer preferences. During the quarter, we continued to build on this foundation through a stronger procurement network, expansion of our value-added products portfolio, and investments in premium and nutrition-led categories. A strong and resilient procurement network remains fundamental to our business. During Q2, milk procurement volumes increased 7% year-on-year to 17.28 lakh liters per day, while H1 procurement volumes grew 4% to 17.69 lakh liters per day. This growth, despite monsoon-related supply constraints, reflects our sustained efforts to deepen our village-level procurement network and strengthen farmer engagement. At the same time, milk procurement inflation remains elevated across the country. Our average landed milk procurement cost increased 11% year-on-year to INR 47.73 per liter in Q2, driven by sustained demand, limited improvement in milk arrivals, and higher feed and fodder costs. These pressures continue to weigh on near-term profitability across the dairy industry, making procurement efficiency and calibrated pricing critical. On the consumer side, our core milk business continued to demonstrate strength of the Heritage brand and sustain consumer trust. Milk sales volumes increased 2% year-on-year to 12.35 lakh liters per day in Q2, while average selling prices improved 6% to INR 60.34 per liter. For H1, milk sales volume grew at 1% to 11.99 lakh liters per day, while average selling prices increased 5% to INR 59.54 per liter. Our focus remains on balancing volume growth with calibrated pricing while protecting the strength of our consumer franchise. The evolution of our business mix continues to be an important driver of Heritage's growth. Value-added products remain a key growth engine, with revenue excluding ghee and butter increasing 32% year-on-year to INR 4,510 million in Q2 and 36% to INR 10,146 million in H1 of this year. Consequently, VAP contribution increased to 35.4% of revenue in Q2 from 31.3% in the corresponding quarter last year, and to 39.6% in H1 from 33.7% in H1 of last year. Growth was broad-based across categories led by lassi, buttermilk, ice cream, paneer, and curd. Volumes grew 89% in lassi, 56% in buttermilk, 44% in ice cream, 21% in paneer, and 15% in curd during the quarter. We also achieved important scale milestones with daily curd sales crossing 500 tons, quarterly yogurt volumes exceeding 100 tons, and Nourish+ and high-protein paneer accounting for more than 15% of our paneer portfolio. These trends demonstrate the increasing scale of our brands and growing consumer preference for differentiated and nutrition-led products. Including our consumer pack ghee and butter portfolio, the broader value-added portfolio grew 31% year-on-year to INR 5,408 million in Q2 and 35% to INR 11,730 million in H1. Its contribution to revenue increased to 42.5% in Q2 from 37.9% a year ago, and to 45.7% in H1 from 39.3% in H1 of last financial year. The growing contribution of higher value-added products reflects our transition towards a more diversified and premium branded dairy business. We believe this shift will strengthen consumer loyalty, improve product differentiation, and support earnings resilience over time. Alongside portfolio expansion, we continue to invest in innovation. During the quarter, we strengthened our high-protein portfolio with the launch of Nourish+ high-protein curd containing 25 grams of protein and Greek yogurt available in single-serve packs containing 8 grams of protein and mid-size packs containing 40 grams of protein. We also expanded the Alpenvie ice cream range and introduced organic curd, further strengthening our presence across premium dairy segments. Our objective is to build differentiated products that address emerging consumer needs while leveraging our brands, manufacturing capabilities, and distribution network. These initiatives are helping us expand our presence in premium dairy and nutrition-led categories with attractive long-term growth potential. We continue to strengthen our adjacent growth platforms during the quarter. The newly commissioned ice cream facility provides additional manufacturing capacity for Alpenvie and Get-A-Way, supporting capacity absorption, operating leverage, and future growth. Get-A-Way, in which we now hold 71% stake, delivered robust revenue growth during the quarter with Heritage manufacturing and supplying 3,272 liters of ice cream per day to support its growth, its product availability and expansion. Heritage Novandie Foods, now a wholly-owned subsidiary, continues to strengthen our presence in the yogurt category through the Livo brand and has established itself among the top five brands in India. These investments expand our presence across premium food and nutrition-led categories while complementing our core dairy operations. Beyond our core dairy operations, Heritage Nutrivet continued to deliver strong growth. The wholly-owned subsidiary reported revenue of INR 853 million in quarter two, an increase of 47% YOY, with PBT of INR 37 million. For H1, revenue grew 42% to INR 1,581 million with PBT of INR 56 million. This performance reflects the growing scale of our animal nutrition business and its increasing contribution to our broader portfolio. Our focus remains on translating revenue growth into sustainable profitability through calibrated pricing, tight cost control, continued premiumization, and improved operating leverage. A stronger contribution from higher value products alongside disciplined execution across our operations will be critical to navigating the current cost environment and strengthening margins over time. We also remain committed to responsible and sustainable operations. During the quarter, Heritage Foods Wind Farm, comprising three turbine generators with an aggregate installed capacity of 6.3 megawatts, received the Indian Wind Power Association's Best Performing Wind Farm award for the year 2025/26. This recognition reinforces our continued focus on sustainability alongside business growth. Our long-term direction remains unchanged: to build a larger, more premium, and more resilient branded dairy business. The progress achieved during Q2 and H1 reflects the strength of our consumer franchise and the increasing scale of our value-added and adjacent businesses. While near-term cost pressures persist, we remain focused on disciplined execution, profitable growth, and creating sustainable long-term value for all our stakeholders. On behalf of the entire management team at Heritage Foods, I would like to thank our farmers, employees, distribution partners, customers, consumers, shareholders and all our stakeholders for their continued trust and support. Once again, I wish everyone a very happy and prosperous festive season. With this, I would like to conclude my opening remarks and open the floor for discussion. Thank you. Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Sameer Gupta with IIFL Capital. Please go ahead. Hi, sir. Good morning, and thanks for taking my question. Firstly, on going into the buffalo flush, are we seeing any sign of moderation in milk procurement prices? I understand last year also, the prices had gone up during the flush season, and normally it doesn't happen that for two consecutive years we have persistent inflation, but this is also an El Niño year, plus a broad-based inflation. You mentioned feed and fodder costs are seeing inflation. Any sense on the upcoming slides that you can provide will be helpful. Thank you, Sameer, for the question and you have answered partly. The repetition of the same is not normally seen in terms of production drop or price hikes, et cetera. But this being El Niño impacted year and the situation is repeating like last year, the prices have gone up in quarter 2. The performance of the season is not uniform across the country. If you see the last few months, certain states in northern part of the country have received good rains rather led to even floods of severe nature. Certain states in southern part of India have faced drought and situation is unclear even today. All the governments are announcing that the situation could be difficult in the coming months in terms of drinking water for agriculture, electricity availability, et cetera. Most of the states have announced contingency plans for agriculture to avoid water-intensive crops to semi-dry crops kind of thing. The entire country is preparing for facing El Niño. So we are also preparing in our own areas of operation where our milk sheds are there, encouraging farmers to adopt more and more healthy practices. You can see our feed growth itself has seen 47% year-on-year growth in quarter 2, sale of cattle feed. The performance of the season is yet to be clear. As of now, in certain areas, milk availability has improved. Certain areas may improve after Diwali festival. So it's a mixed kind of situation right now, and it might be stable if the good monsoon states perform well to compensate the drop in the drought-hit states. So it's a kind of close observation we are making and improving our performance. You've seen milk also improved 7% over last year in volume terms at the procurement level. With our field efforts, continued relations with farmers, extending good veterinary care, timely nutrition support, and even tying up with the funds for overcoming their requirements of working capital for the dairy or even to procure more animals from the other states, this should help us to further improve our milk availability for us in our catchment areas. Got it, sir. This is very helpful. Second question is on the value-added dairy portfolio. I understand there are broad-based efforts, but this 32% growth, is there any element where weather was more supportive this year in terms of higher temperatures versus last year? Samir, this is Srideep here. Weather helped in Q1, right? And helped in the sense Q1 weather was normal, I would say, compared to, let's say, previous year Q1. Because of which in Q1 we actually had a significant growth in value-added products because of the relatively better weather compared to previous year Q1. But in Q2, I wouldn't say that because the growth that we have seen in value-added products is broad-based. Even though you are seeing certain deficits in rainfall, the deficit in rainfall are restricted to certain districts. Whereas we have seen the rainfalls in metro cities like Hyderabad, Mumbai, Bangalore and all has been actually normal or even above normal. Bangalore has actually received more than normal rainfall. Mumbai has received more than normal rainfall. I don't think there is any rainfall impact. The Q2 value-added product growth is broad-based. If you have seen our investor note, we have very clearly called out that the growth is across paneer and ghee and everything. It's not just any heat-related product category. I hope I have answered your question. Yes. And if you look at the growth in the, let's say, temperature-sensitive products, whether it is buttermilk and ice creams and all of that, it is sustained at the same levels as Q1. So it is more about growing consumer franchise and a steady growth, sustained steady long-term growth rather than any event-led. Got it, Sridhar. This is very helpful. Thanks. I will come back in the queue for any follow-ups. Thank you. The next question comes from the line of Vijay Jangir with Systematix. Please go ahead. Thank you, sir, for the opportunity. My first question is on product price hike. In milk and VAP, how much price hike we have taken in 2Q, and are we planning further price hikes in 3Q and beyond? And second question on milk procurement. Just keeping cattle feed inflation in mind, what trend we see in procurement cost subsequently over the next few months? Yeah, just these two questions. Could you please repeat the second question? If you could be very clear and speak a little bit slowly. Thanks. Yeah. Keeping cattle feed inflation in mind, what trend we see in procurement cost subsequently? Milk procurement cost inflation, that is what I am asking. Yeah. Hello? Yeah, good morning. This is Ramamurthy. First question is on NR increase. See, overall NR increase for milk and value-added products is about 8%. Milk is about 6% and others is about 9%-10%. Overall, it is 8% increase is there. Yeah. Second question. Yeah. You will see that the raw milk prices had increased by about 11% in Q2, against which our net weighted average price increase we have taken is about 8%. I think milk is how much? 5 or 6. 6%, and the value-added products are much higher. This 8% is the weighted average over 3 months of the quarter, July, August, September. The price hikes we have passed on to the consumer in the month of September is much higher than 8%. Price hike is always staggered. The benefit of it will accrue in Q3. In October, we have opened the month with much higher price levels than we had in Q2 as far as the consumer is concerned. Whereas we are also seeing, like you rightly said, because of the feed and fodder price increases, we are also seeing village level, farm level procurement prices also increasing at the edges. But like as asked by Mr. Sameer Gupta in the beginning, and as answered by our Whole Time Director in the beginning, we are expecting the buffalo flush in the rain-fed, sorry, rain-fed regions to improve. We are hoping that post-Diwali, there is a little bit of a cooling effect as far as the procurement situation is concerned. But at this point in time, what we see is slight increase of procurement prices in October compared to September as well. Okay. I mean, just on Q2 basis, milk prices hiked around 2.4% or 2.5%, as per my calculation. So in Q3, we are expecting softer than that. That's what you are saying, sir? No, sir. Q2 price increase year-on-year basis was 11%. Procurement. Procurement prices. Procurement. Procurement prices increased by 11% in Q2. The sales prices net weighted average increased by about 8%. Okay. Yeah. Got it. Yeah. In Q3, at this point in time, I think that 11% kind of thing might continue as we speak. We are hoping, like I mentioned, as answered by our Whole Time Director, sir, that we are hoping that there is a buffalo flush and an improvement because of that. I hope the answer is clear, right? Yeah. Yes, of course. Hello? Yes. I was saying, I hope I have answered your question. Yes, sir. If it is okay, can you move on to the next question, please? Yeah. Can you tell how we fixed the margins in loss-making VAP categories like ghee? I do not think we are able to hear your questions very well. Maybe you can come back in the queue, please. Yes. Sorry to interrupt. Mr. Vijay, I would just request you to please come back in the queue. Our next question comes from the line of Nimma with Unique PMS. Please go ahead. Yes, sir. My question is, we have heard news about Nandini taking a big price hike. How are the cooperatives behaving in October? Because as you mentioned, we were yet to pass on the whole procurement increase completely. How are prices trending now? Yeah. This is Sreedev again. In this quarter, we saw two significant events. One is Aavin increasing milk procurement from up to ₹38 to ₹41 first, and then ₹41 to ₹44. That is about ₹6 per liter kind of increase is unprecedented at the farm level. Slowly following suit, Karnataka government also announced that it is going to increase consumer price by ₹8 per liter, and they will pass on ₹6 out of that to the farmer, very similar to the Tamil Nadu model. This is, as you know, as per Model Code of Conduct for the Election Commission, as in they are going to take effect only from 1st of November. As the investors may know, our procurement footprint in Karnataka is not significant. For us, we have sales side upsize from this move, because we have some sales volume in Bangalore city. It is significant enough for us. We are expecting once the KMF takes up the prices of Nandini milk, we will also be able to pass on much better to the consumer in Bangalore city. Apart from Bangalore city, in all other places, on a staggered basis, as and when we had opportunities, we have passed on. Not on the same day, but on a staggered basis throughout Q2, we have been continuously passing on consumer price hikes across products, across regions. Okay. We will continue that Q3 also, right? The milk procurement prices should not increase by that much. Yes. That is what we are hoping. Yeah. Thanks. Sir, one more question. When the cycle finally turns, in which segments and how much benefit will you have to pass on to the consumers once the milk prices start trending down? No, we will not have to. Because usually the consumer prices, once it goes up, at least we have not seen it coming down. If the milk prices trend downwards, let us say we were doing an arithmetic earlier. The good news is we are now cycling all these high levels at a much higher milk procurement volume level as well as much higher consumer franchise level, which means every rupee will have a much bigger impact than we had previously. So a half rupee reduction in milk procurement prices will improve our bottom line by 0.7%. So we will not have to increase consumer prices further. That said, what we should realize is that the net revenue reported by the company is a weighted average of the products that we sell and the regions where we sell in. As we see more and more value-added product contribution, even without increasing consumer prices, our weighted average net revenue goes up. Within the value-added products, one significant phenomenon we are seeing is that the percentage of our premium portfolio contribution is going up. For example, within paneer, Nourish+ paneer, which is our premium high-protein variant, is now already contributing 16% or 17% of the volume, which is actually pulling up our consumer revenue. Our yogurt contribution share is going up. Ice cream share is going up. Ice creams have got more than ₹200 per liter of revenue. So all of these value-added products, ghee, as we have seen close to about 20% revenue increase in ghee. So ghee going up, all these things will pull up our net revenue per liter realization. Got it, sir. And sir, one last question. Last flush season, we saw that milk availability itself was a challenge. So do we expect something of that kind this year given the drought conditions and the poor monsoon? This is Brahmani here. As mentioned, I think we are on a wait-and-watch mode. However, I think I would like to point out the fact that milk procurement volumes for the company, despite the tough situation that we are seeing outside, has increased by 7% in terms of volume. That is because of the continuous efforts of how closely we work with the farmer. We work very closely in terms of improving their animal productivities. We organized a lot of third-party lending to meet with their working capital needs as well as to help them purchase more animals. Very closely, we are looking at metrics and our basic fundamental metrics in terms of procurement are looking very encouraging and very positive, such as the number of farmers that we are adding, the number of farmers we are activating. The volume per farmer has seen a very positive trend this year, and the productivity or the capacity utilization per milk collection center have all been very positive. I think the basic fundamentals are looking good for us, and we continue to work in that direction of closely working with the farmer and looking at our numbers. Yeah, sure. Got it. Thank you, and all the best. Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer questions from all participants, please limit your questions to two per participant. The next question comes from the line of Yash with Orega Capital Advisors. Please go ahead. Hi. Thank you for this. Sir, would the understanding be right that the worst is not behind us in terms of the procurement cycle, and it will only be normalizing post a good monsoon? Okay, this is Srideep here. I think that is a very speculative question. If you want a speculative answer, I can give. What we should understand is that we are in a very strong position because we have been able to take up consumer prices and sustain volumes. If you see the presentation, our revenue growth in core dairy, which is about 17%, 39% has come through price increases, 51% has come through volume increase. So we are able to sustain volume growth despite price increases. We will continue to do this. So if procurement prices go up, we will again take consumer prices. We do not have an option, right? At the same time, our value-added products contribution has increased by 4.1%. In Q3 also, we are already 15 days into the quarter. We are seeing the same trend continuing, so our value-added products will continue to further expand in Q3. This is a continuing job for us. One more thing which you should know is that in the beginning of the year, we had capitalized some large projects, and those depreciation is also impacting the P&L. You must have seen that the EBITDA improvement sequential is far better than PBT or PAT. The reason is depreciation is much higher, and that is another thing that we should see playing out in the subsequent quarters because operating leverage is increasing, right? With higher volumes, higher throughput, operating leverage is kicking in, so operating leverage in Q2 is better than Q1, and the operating leverage in Q3 will be better than Q2. So it is an ongoing journey. Raw milk prices is speculative. I do not wish to make any comment. Okay. Sir, thank you for this. Sir, can you comment on how the cooperative actions have been? Because we are reading in the news that Aavin, they are not being able to meet the demand. So if you can comment on the cooperatives in the southern region, Aavin, Vijaya, and Nandini. I think it is very unfair to ask us a question on cooperatives because we do not know the inner workings of cooperatives, and in most cases, there are multiple stakeholders there. One is a society farmer, the other is the government as a stakeholder, then there is voting population. So I do not know. Okay. Thank you for this. Thank you. The next question comes from the line of Ishani with NV Alpha. Please go ahead. Hi. I would like to just ask a clarifying question. When you state in your presentation that cow milk accounts for 80% of procurement, do you mean price or volume? Volume. Volume. They are- Okay. Thank you. Volume dependent. Yeah. Yeah. Yes, ma'am. Does that answer your question? That does. Thank you. Yeah. Thank you. The next question comes from the line of Siddharth Shen with YES Securities. Please go ahead. Yeah. Hi, good morning. One of the slides in your presentation had shown different value-added products, their pricing, and their volume. Is that true that the growth that is coming in lassi and buttermilk, it is coming at near zero price increases? See, these are all weighted averages. The general idea there is that I do not think that we should dig too much into each at a product level. These are weighted averages. Let's say the realization in Hyderabad city is far higher than, let's say, rural Andhra, for example. I am just making it up. If growth in rural markets are higher, then it will swing in a little different way as far as the net revenue realization is concerned. Net realization. Second is in terms of pack realization. Even though our home packs are very highly profitable, in fact, home packs are very profitable, but the net realization in a home pack is lower than, let's say, a single-serve pack at INR 10 on a per liter basis. The mix changing more towards home penetration, which is also profitable and long-term sustainable growth, will also impact all of these things. I think the idea is and also there is also timing issue, right, in terms of timing on when we might have taken up the prices. The main point to note is that because raw milk prices were going up, we took significant price increases in ghee and paneer and curd. Between ghee, paneer, and curd is about 90% of everything we sell or 95%. 90%-plus of everything we sell. We took significant price increases in ghee, paneer, and curd, and except in the case of ghee, we were able to sustain the volume growth in all other both curd and paneer. As far as ghee is concerned, you will see that the volume growth has been flat. But what you should also note is that ghee is also a lot festive dependent. The timing of Dussehra, Diwali also matters. You will see that ghee volumes will have a bumper growth coming into Q3, and we are already seeing that in the first 15 days of this quarter. My suggestion is that, please don't use that graph to calibrate and calculate to that granularity. The general idea is that everything is growing. Understood. Just like you mentioned, ghee. So out of the total ghee sales, what would be the percentage of consumer packs versus bulk? 100%. 100% would be consumer packs? Yeah. They are not selling Okay. One more question on how do you see this new competition from a large conglomerate entering the dairy space product by product, like first ice cream and now the drinkable space. They have generally a tradition of going at extremely low prices. How do you see that impacting our industry and our company in particular? See, the dairy industry is. Actually, there is no very good estimate, but I think my estimate is about 13 to 14 lakh crore. Out of which only 4.5 lakh crore or at best maybe this year it could have expanded a little 5.5 lakh crore is organized industry. Out of which, the largest dairy player that we know, Amul, is about 75,000 to 80,000 crores. Can you imagine how small all organized players, like Heritage Foods, is around 5,000 crores. All of us have a big job to do, which is to convert from the whole unorganized trade to organized. More than area, frankly, actually, it helps accelerate the category growth, it helps drive market penetration. Even if I take a very simple example of retail penetration. While, let us say, biscuits, you might find Parle-G biscuits in some 10 million stores across India. Recently, I was reading that Amul has about a million stores penetration. You just imagine the kind of gap that we have as far as this category is concerned. There is humongous headroom for everyone to grow. The third aspect that you need to look at is that our growth strategy is very highly differentiated. Yeah. This is something that continuing shareholders already know. We are sharply focused on significant leadership position in curd, a significant leadership position in fresh categories, which is buttermilk. The size of fresh category is humongous. There is no second word to it. If I put in terms of packaged dairy, long shelf life and all of that, it is just a minute fraction of the fresh dairy category. We see tremendous potential in fresh category dairy value-added products, whether it is curd, buttermilk, paneer, which are all highly profitable businesses for us. And ghee. Ghee also, if you look at ghee as a category in India, is worth INR 10,000 crore or something. But it is only some 18%-20% is organized. So the opportunity size is INR 50,000 crore. We all have a lot of job to do. And the INR 15 lakh crore dairy industry itself is growing at 4%-5%, which means that every single year, the dairy industry is adding one Amul size to the industry size. One Amul is getting added. Right. INR 75,000 crore-INR 80,000 crore. That's the opportunity size we are talking about. Fourth point I will also speak about is that, see, in the last several years, we have continued to grow at a CAGR of 14% or 15%. We have achieved this CAGR without expanding geographic footprint, which means actually we are going deeper rather than going wider, unlike many of our competitors. This actually has significance, because all the growth that we are getting is because of higher consumer love or bigger consumer love and better consumer traction. Our existing consumers are buying more and more of our products. Our household penetration is improving in the markets where we are operating. This also helps us significantly improve our overall brand portfolio. Thank you, sir. The next question comes from the line of Thitru Manchaudi with Bullhead Investments. Please go ahead. Yeah, hi. Hi, sir. Thank you for the opportunity. First, to one of the participants, you spoke that even in Q3, there could be 11% YOY increase in milk procurement price, which would actually mean, compared to Q2 of FY 2027, it would mean another INR 3 increase in milk procurement price. Is that what we are looking at? Because that's quite a big jump. See, YOY is one way to look at it. I encourage you to please look at the results from a sequential QoQ basis also. See, in an inflationary situation, it is very important for investors to look at sequential basis as well. Sequentially, the company has expanded EBITDA by almost one percentage point, 98 basis points or something. Right. This is despite raw milk prices going up. For example, in Q1, raw milk prices were up about 7.5% or something. In Q2, raw milk prices were up 11%. Despite that, EBITDA expanded by one percentage point or 98 basis points. So which means actually we are exiting Q2 in a much stronger position. Whatever is with that now is not going to come down because the consumer prices have been increased, right? The only thing we are not willing to speculate is if the raw milk prices will come down in the flush as it usually does. If it comes down, well and good. Actually, it is going to be tremendous. If it does not come down, it will just come anyways as per Q2, right? Yeah. I just. Like in Q2, our milk procurement price was INR 47.7 as per the QoQ. Could this go to something like INR 50 plus in Q3, or that is way too high? Is what I was trying to understand. That is number one. Second, standing today, what do you see as the biggest reason for milk price increases? Is it general delay in milk arrivals, or is this mainly to do more with the feed cost increase that we are seeing? Because see, it has been around eight quarters of milk pricing fees. So by now, ideally, milk arrivals should be much better. Sir, I think in a way you are answering the questions yourself. Yeah, we are also thinking similar way, as in how long will it keep going up. Will it go to INR 100 per liter one day? I do not know. So we also expect that, with such high prices, the farmers should produce more milk and the prices should come down. But that said, we do not think it will go from INR 47 to INR 50 in a quarter and all of that. If I could speak about last quarter, Q3 of last year, the average milk procurement prices was about 45.55. So it is possible that we might see continued inflation in terms of what we have seen in Q2. But at this point in time, our consumer prices are at a much higher level than it was earlier. That is all I can say. And like you said, maybe the prices will come down because of higher production. Thank you, sir. Ladies and gentlemen, you are requested to limit your questions to one per participant, and if you have more questions, please come back in the queue for further questions. The next question comes from the line of Rajat with ITOT PMS. Please go ahead. Hi. Thanks for the opportunity. One clarification. You mentioned the INR 0.5 reduction in procurement price can increase the bottom line by 0.7%. Are you referring to the absolute number? Like if we are doing INR 100 crores, it will increase us 17- Yeah. Right. It's a very high-level calculation. I was saying, see, we are procuring about 1.8 million liters per day. A fixed price day roughly translates to almost INR 3 crore improvement in bottom line per month. Right? That's INR 400 to INR 450 crores of revenue. That's how we did the arithmetic. But life is little more complex than that. But that is the simplistic way of calculating, right? Got it. I just wanted to make sure you are talking about absolute number or the margin percentage. Understood. Sir, do you plan to take any price hikes in Q3 or you will take a call later on? Yeah. Glad to just watch actually the market, how it behaves, and also how we have discussed about procurement prices. Based on that, we will take a call. Okay. Sir, one small thing. Other thing was that, the realizations hike that we took in the last quarter, in which months did we take them and by how much percentage? Okay. I am sorry to interrupt, Mr. Rajat. I would request you to please come back in the queue for further questions. So yeah. See, we have taken up the prices in the month of July, August, and September also. Like that, earlier our CEO mentioned that some prices hike also there, took it up in the month of September, generally, which will also come in the month of Q3 also. That is why we have taken all the months. July in certain pockets of the market, August also, September also. I think I answered your question. Thank you, sir. The next question comes from the line of Resha Mehta with GreenEdge Wealth. Please go ahead. Yeah. Thank you, and congrats for a good volume growth. I have just one question. So there is an interesting slide in the presentation which talks about the inflation in cow milk versus buffalo milk since April. If I look at that slide, the cow milk has been more inflationary versus the buffalo milk. If you could just share your thoughts on this and how do you see this trending going ahead? Also, the slide only gives the trend from April onwards, but also, if you could go back, let us say 18 months and talk about the trend of cow milk inflation versus buffalo milk inflation and how do you all kind of think about it? Resha, this is Srideep here. I will just give a quick situation analysis of what is happening. See, number one, there is a widening supply-demand gap. Demand is growing strong. Unfortunately, for the last 18 months, we are suffering from one reason or the other. Earlier, it was some climate issue, then there was some other issue. Something or the other is happening, and the supply is not really growing. In the supply, actually, what is really affected is the buffalo milk supply. So technically speaking, ideally, the buffalo milk prices should go up because buffalo milk supply is what is constrained, and cow milk supply is reasonably growing. But we are also seeing a phenomenon of both farmers and producers as well as companies, brands switching more and more towards cow milk because cow milk on a solids basis is cheaper than buffalo milk. Protein is also lower, but the solids basis also is slightly cheaper, so people are switching to the cheaper cow milk alternatives, both production side as well as buying side. Because of which, even though production volumes of cow milk is going up, cow milk is becoming dearer. Now, cow milk, actually the total solids level price is almost getting closer to buffalo milk. That is the kind of phenomenon we are seeing. This is one at a very macro level. Secondly, just earlier I addressed that Aavin, for example, took up prices from INR 38 to INR 41 to INR 43, INR 44 or something. Some INR 6 price increase. Aavin in all Tamil Nadu, Southern Andhra, Nandini, these are all cow milk belts actually. This is not the buffalo milk belt because buffalo milk is usually coastal Andhra or Telangana and all of that. So the significant inflationary trend we have seen also is in the hardcore cow milk. So it is a combination of these two factors that has actually driven both availability of cow milk also upwards but prices also upwards. Thank you, sir. The next question comes from the line of Madhur Rathi with Countercyclical Investments. Please go ahead. Sir, thank you for the opportunity. Sir, I just wanted to understand how the pricing pass-through happens for the feed segment, considering that this is an El Niño year and the raw material prices are very high. Are we able to pass it on or we will expect to take the hit during this year as seen in H1 margins? Yeah. You will refer to Mr. Brij. Thank you, Ramadevi. This is Dr. Brij Mohan from Heritage Nutrivet, and taking this question. We have a strong quarter 2. Of course, we had a difficult quarter 1 due to the very, very high cost of the ingredients. But especially during the month of August and September, we had taken a very good price hike in all the verticals, including our integration as well as outside general trade market. We have seen that in our PBT as well as in EBITDA, we have grown significantly during quarter 2. Similar thought process is there that this will be passed on to the customers, the farmers, when we are seeing the inflation in the ingredients during the quarter 3 and of course, in quarter 4 as well. We are looking towards that to strengthen our PBT during rest of the year in H2. We will be on top of the growth what we have taken in PBT during the months of August and September. Hope it answers your question. Thank you, sir. The next question comes from the line of Roshan Koraiya with Chris PMS. Please go ahead. Hi, sir. Am I audible? Hello? Yes, sir, you are audible. Sir, if you could provide me the contribution of curd, paneer, and ice cream for the value-added products. Sir, I wanted to know the contribution for your value-added products in the Hello? Hello? Yes, sir, you are audible. Yeah. Hello? Yes. Hello? Yes, sir. Please proceed. Yeah. Yeah. See, at a very high level, I can say, this is at a very high level, right? Curd is roughly around INR 320 crores kind of revenue. This is you can say an annualized about 1,200 kind of thing. Paneer on an annualized basis will be about INR 200 crores plus, INR 200, INR 230 crores. It is growing on a quarterly basis. It gives you a kind of sense. Ghee, I think we are currently trending at around INR 350 crores annualized basis. Thank you, sir. Our next question comes from the line of Sunil Desai with Turtle Capital. Please proceed. Hi, good morning, everyone. My question, sir, is that you indicated that the full impact of price hike will continue to play out in Q3 and onwards. We are already at 5.6% margin. If the price of milk remains stable, which we are expecting in the same range, do we expect margin improvement and even with the higher milk prices, can we go to 7% odd over, let's say, next two, three, four quarters? Yeah. See, our effort is actually since we have moved from 4.6% to 5.6%, our effort is to keep on growing, right? Our ability to absorb the costs are better. You must have seen in the P&L statement that cost heads as a percentage of revenue has come down whether it is employee expenses as a percentage of revenue has come down by about 1%. Operating expenses has come down by about 0.6%. These are all aspects, and freight also has come down by about 0.1%. The only expense which is going up is raw material as a percentage of revenue. We are able to offset a lot of this raw material cost increase to better realizations from our product portfolio and this journey is continuing. As volumes continue to grow, then our operating leverage continues to grow as well, right? That's what we are hoping. We are hoping that even if, let's say, raw milk inflation continues at the current trend also, we will be relatively better off in terms of EBITDA because of the price increases we have taken. If raw material comes down, then we will widen and the margins will go back to our steady state levels. Thank you, sir. Our next question comes from the line of Siddharth Gandhi with CWC. Please proceed. Hi. Thanks for the opportunity. Two questions. One, on a long-term basis, you have shown a 6% CAGR on milk procurement. Considering that is the bottleneck to sales volume growth, do you believe that that is adequate for you to maintain a mid-teens revenue value growth? That is question number one. Question number two is, on that slide 9 which shows the price and volume change. If one were to instead of crossing it at -10, cross it at 11 which is where the milk price inflation was, then most of the large categories which is milk, curd, buttermilk would fall to the left which would be lower than the procurement price increase. I understand that is a function of a staggering between the increase in procurement cost versus the increase in consumer price. Do you believe that next quarter most of it should be to the right if one had to draw that up and consequently, accordingly should milk prices remain at the same level as Q2 sequentially? Is there enough confidence to see improved margins in Q3? The next question was on ice creams. If we look at your total value growth would be roughly about 30 odd percent. Considering that comes off a low base, what is the longer-term CAGR and what is your assessment of your share in ice creams? My last question is considering your endeavor to be a national brand, could you give us some understanding of salience in terms of South, West, and other regions? Those would be- This is Srideep here. There were four questions actually you asked. I will answer question 2, 3, and 4, and our Executive Director will answer the long-term vision of the company and how we are building it. I will start with the last question. You see, when we commissioned the ice cream factory, we said our vision is in the next six or seven years we want to get to INR 500 crores of revenue. Last year we had clocked about INR 110 crores. This year our own ice creams is getting close to what? INR 200 crores or so INR 170, INR 180 crores. So the traction will continue. You can do the math that in five, six years to get to INR 500 crores what kind of- And this is excluding Get-A-Way because that is a subsidiary company. I remember the second question. The third question was- Because you asked so many questions. Sorry. Maybe- Sure. The last question actually was more on your regional salience. Right. Okay. If you could give me an understanding of how is your endeavor on- I answered that question. We are not expanding geographically as we speak. We are going deeper is our strategy. That said, our brands are now spreading globally. We have entered 12 countries, mainly in Middle East and West Asia, as well as Southeast Asia and Far East Asia. And we are doing reasonably well. Even though the revenue is just 0.5% of our overall revenue, it is not a very big one. But I see that growing over a period of time. But otherwise, we are actually going deeper, right? Your question on putting a line at 11% and looking at which products on the left side, which products on the right side. If milk procurement prices go up by 11%, you can't take up all products by 11% click and drag. That doesn't work, because I can't increase consumer milk prices by 11%, right? Milk, you can imagine, cannot go up by 11%. That is the reason why we call the rest of the category value added, because of the value added and the branding and all of that, we will have a better ability to take up prices in the remaining category. Curd, for example, we have taken much higher price increases than milk, for example. I am just giving an example. Even though the number here you are seeing is close to about 10% in curd, but actually in the premium versions of curd, whether it is Sampurna A2 Curd or all those variants, whether it is the top curd, which is the one kg, which is actually our fastest growing segment of curd, there we have taken prices of course, of 15% also. So eventually our overall weighted average, like we mentioned earlier, has gone up by about 8%. Naturally, when you look at it, that is the reason why you will see that milk, we will not be able to pass on as much price inflation as we will be able to do in value added products, which is why our bottom line is suffering whenever there is a raw milk price increase. The more and more value added product contribution goes up, the better will be our ability to pass on to our consumers as much as raw milk inflation happens. I will pass on to ED. Thanks. I think when it comes to procurement, we are at a good state to secure our procurement volumes. We have been in the past, and we are confident we will be in the future. We are extremely focused on empowering the farmer, and a huge part of that is to double their incomes every few years. So it is not just the transactional benefit that we offer to them of paying them accurately, paying them in time, and always picking up the milk that they are supplying to us. But there is a lot more that we do. For instance, we supply subsidized cattle feed very conveniently to them, so that the health of their animals improves, the productivity of their animals improves. I think the good part is that we have seen a significant increase in higher protein sort of concentrated feed, and the outcome of which we are seeing in terms of the volumes that we procure from individual farmers. We also facilitate a lot of third-party lending, like I said earlier, to meet with their working capital requirements and also for them to increase their herd sizes, which is coming in very handy to these farmers. It is all digitally managed, so it is a very efficient process by which we do it. We actually focus on a lot of artificial insemination programs and awareness programs. We have a huge team of about 400 procurement and veterinary personnel at the field level who work alongside with the farmers to focus on the animal health. In fact, I am happy to say that our artificial insemination program is more successful than an average program. We focus, encourage farmers to go with chromosome sex-sorted semen to be able to guarantee female calves. We also do a lot of Social Security programs with the farmers for themselves and for the animals as well. There is a lot of benefit that we offer to the farmer in the direction of doubling their income, which is also leading to Heritage as a company securing our volumes with the farmer. We also are very digitally integrated, very transparent, so all payments happen online at the farmer level. We also have an integrated app called the Heritage VET+ app, through which all transactions, real-time basis, are recorded with the farmer, and they can also avail some of the services that I had mentioned through the app. It is a very tight ecosystem, through which we are able to deepen our relationship with farmers across the country. Thank you, ma'am. Ladies and gentlemen, due to time constraint, that was the last question for today. I now hand the conference over to Dr. Rao for closing comments. Thank you very much for your active participation and feedback. Looking forward to catching up in the next quarter. Thank you all. Wish you a happy festival season. Thank you, sir. On behalf of Heritage Foods Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.