AWL Agri Business Ltd (AWL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the AWL Agri Business Ltd Q2 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your 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.
Ashutosh Joytiraditya (ICICI Securities): everyone present on the call. I on behalf of ICICI Securities, welcome you on AWL Agri Business Limited's Q2 FY27 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.
Shrikant Kanhere (AWL Agri Business Ltd): Hi. Good evening, everyone, and thank you for joining us for AWL's Q2 FY27 earnings conference call. On behalf of AWL, I extend a warm welcome to all of you for our Q2 FY27 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 FY27 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 anchored in 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 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 offerings 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 lakhs outlet. Our focus is increasingly shifting towards improving throughput, out- outlet profitability, and distribution efficiencies. Within alternate channels, quick commerce continued to deliver strong growth over 40% year on year. We remain focused on improving assortment, visibility, and availability across leading platforms
Shrikant Kanhere (AWL Agri Business Ltd): 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 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 Q2 FY '27, 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 in PAT was primarily attributable to minimum corporate tax computed on revenue of Bangladesh subsidiary under local regulations, which impacted consolidated tax expense during the quarter. For H1 FY '27, 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 2,215 crores with an EBITDA margin of 3.2% in line with our FY '27 guidance range of 3% to 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 '28 onwards. In Edible Oil, EBITDA stood at approx INR 4,100 per MT during the quarter, again in line with our guided range of 4,000 to 4,500 per MT. This reflects the disciplined pricing, effective sourcing and stable operating performance despite volatility in the commodity environment. Industry Essential delivered EBITDA of INR 4,300 per metric ton, well ahead of our guidance range of INR 3,000 to 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% to 4% for FY '27. 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 4,000 to 4,500 per metric ton. For Industry Essential, we expect the increasing contribution of value-added oleochemicals and specialty chemicals to support profitability while continuing to work towards our
Shrikant Kanhere (AWL Agri Business Ltd): 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.
Moderator: 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 touchtone 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 Dheeraj Mistry with Jefferies. Please go ahead.
Dheeraj Mistry (Jefferies): Yeah. Hi, good evening, sir. Sir, my first question is on your cash flow, where we see that there is a 600 crore increase in inventories and because of that our operating cash flow has become negative for this for first half. What is the reason behind that?
Shrikant Kanhere (AWL Agri Business Ltd): See, the inventory increase, of course, is a buildup in 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, the company is actually building little more inventory on sunflower so that we don't 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. So because of that, the inventory buildup actually inventories have gone up by 6,000 crores, not 600 crore. And that is primarily been then funded through working capital lines. So and that's why the the lines which funded this 6,000 crore is more of a funded lines and therefore gone into cash flow presentation into the financing part of it, and therefore the cash flow from the operation is shown as negative, but it's a something which gets corrected in this upcoming quarter which is OND.
Dheeraj Mistry (Jefferies): So on annualized basis, we expect that the inventory level should come down to normalized level?
Shrikant Kanhere (AWL Agri Business Ltd): Yes, yes. Very much.
Dheeraj Mistry (Jefferies): And finance cost increases also because of that?
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