KRBL Ltd (KRBL) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to KRBL Limited 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. Ashish Jain, Chief Financial Officer of KRBL Limited. Thank you, and over to you, sir.
Ashish Jain (KRBL Limited): Thank you, and thank you for joining us. Welcome to the Q2 FY '27 Earnings Conference Call for analysts and investors of KRBL Limited. Today, we have Mr. Anil Kumar Mittal, Chairman and Managing Director; Mr. Anoop Kumar Gupta, Joint Managing Director; Mr. Ayush Gupta, Head of the India Business; and Mr. Akshay Gupta, Head Bulk Exports, as key speakers on the call. To begin the call, Mr. Anil Kumar Mittal will share updates on the business, industry, and our overall strategy. Following that, Mr. Ayush Gupta will provide insights into the performance and outlook of our domestic business. Finally, I will present the financial overview of the company for the second quarter and half year ended September
Ashish Jain (KRBL Limited): 2026. Once the management has concluded their opening remarks, we will open the floor for an interactive question-and-answer session. Please note that some of the statements made during the call may contain forward-looking information, and actual results may differ from these statements. You can refer to KRBL's investor presentation available on the Stock Exchange websites and our company websites. Now, I would like to invite Anil ji to share his views.
Anil Kumar Mittal (KRBL Limited): Good afternoon, everyone. Thank you for joining us for KRBL's Q2 FY 2027 earnings call. I will briefly cover the global and Indian rice outlook, the new basmati crop and paddy prices, the export environment, and the company's performance. Let me begin with global picture, which is broadly unchanged since our last call. As per USDA's October estimate, the world rice production in 2026-27 is expected to fall to about 533 million tonnes from a record of 446 million tonnes last year, with India accounting for most of the decline. Consumption meanwhile is expected to rise to a record of about 539 million tonnes. Global stocks are therefore expected to draw down. India continues to hold close to 40% of world rice trade, and USDA expects Indian exports of about 24 million tonnes in '26-'27, higher than the previous year. For India, USDA now estimates for '26-'27 production at about 147 million metric tonnes against a record of 154 million tonnes last year, reflecting a weaker monsoon. India will remain, alongside China, one of the two largest rice producers in the world, and domestic consumption is expected to rise by about 4 million tonnes. The 2026 monsoon ended about 13% below normal nationally, the weakest since 2015 under a strong El Nino. Last quarter, I flagged the risk this posed to the basmati belt. I am glad to say that risk largely did not materialize. North-West India finished about 6% below normal, irrigation carried the crop through, and trade estimates currently put the year's basmati crop modestly above last year's. The unseasonal rain in part of Punjab in the mid-October wet some harvested paddy in the mandis and flattened, flattened standing crop in places. The damage appears localized, and we'll have a clear picture as arrivals progress. Despite a larger crop, basmati paddy prices have risen sharply. Major varieties are trading at around rupees 4,500 to 5,200 per quintal, well above last year's paddy price. There are three reasons: first, the industry has entered this season with almost no carryover stock; second, the export realizations have stayed high; and third, buyers across the Middle East need to rebuild depleted inventories, and the trade is pricing that demand in. Our procurement approach reflects this. We will not chase the market. We are buying in a staggered manner across the season with a firm focus on quality, low moisture, high recovery paddy, and our inventory position gives us the flexibility to be patient whenever prices run ahead of fundamentals. On exports, between April and August, India shipped about 2.5 million tonnes of basmati against 2.7 million tonne in the same period last year. The entire decline was in the Middle East. Shipments to the rest of the world were unchanged. Realizations were about 21% higher in rupee terms. So, the rupee value of India's basmati export actually rose by around 12%, and in August,
Anil Kumar Mittal (KRBL Limited): millions were back over last year's level. As I said last quarter, this remains a logistics problem and not a demand problem. The situation in the Gulf remains unsettled, transit through the Strait of Hormuz has been intermittent and freight and war risk premiums remain elevated and sensitive to every development. Marine coverage continues to be available priced shipment by shipment and buyers have largely absorbed the higher cost because food security leave them little little alternative. Trade has adapted around the disruptions. Basmati shipment to Jordan largely for onward movement to Iraq are up almost sixfold this year, more than offsetting the fall in direct shipments to Iraq. Iran is the exception. Payment and banking channels have become considerably more difficult since US sanctions were tightened in August, and that market will take longer to normalize. Our view of recovery is unchanged. Inventories in the region are low and when the route becomes dependable, restocking will be significant. But we expect that normalization to be gradual rather than sudden. Now, coming to KRBL's performance, KRBL recorded its highest ever quarterly revenue of Rs. 1,727 crore, up 14% on the same quarter last year, driven by 33% growth in domestic revenue. Export revenue for the first half was Rs. 541 crore, lower by 41%. The decline was almost entirely in bulk export to the Middle East, where three factor weighted on the business. Payment channel in parts of the region became more difficult, movement through the Strait of Hormuz became more restricted, and the weighing risk against reward, we chose to take on fewer opportunities there. We would rather protect the quality to our business than chase volume. At the same time, there are clear signs of strength. In second quarter, export revenue rose 22% over the first quarter to Rs. 297 crore, although it remains 31% below last year. And exports to markets outside the Middle East grew 14% in the first half. These markets are doing well and showing good growth, which reflects the diversification of our export business and the strong recall our brands enjoy. This is encouraging. Looking ahead, we expect exports to recover progressively through the second half, subject to conditions in the Gulf. In Saudi Arabia, our largest export market, demand remains steady and we continue to serve it through the wholesale route. Our priorities are unchanged: disciplined procurement, continued premiumization of the India Gate portfolio, deepening our relationship with large global buyers and prudent capital allocation. I would like to thank our shareholders, customers, partners and employees for their continued trust and support. I will now hand over to Ayush for the domestic business update. Thank you once again.
Ayush Gupta (KRBL Limited): Thank you, and good afternoon, everyone. Our India business delivered its highest-ever quarterly revenue in Q2. Domestic revenue, excluding power, stood at Rs. 1,390 crores, up 33% year-on-year. This took first-half domestic revenue to Rs. 2,612 crores, up 24%. Let me start with what drove the quarter. Domestic branded rice sales grew 23% year-on-year, from Rs. 921 crores to Rs. 1,134 crores. Unbranded rice sales increased from Rs. 53 crores to Rs. 166 crores, owing to a selective additional rice sale of Rs. 102 crores.
Ayush Gupta (KRBL Limited): Within branded rice, consumer pack volume growth accelerated from 7% year-on-year in quarter 1 to 18% in quarter 2. Modern trade and e-commerce together grew consumer pack volumes by 31%. General trade also returned to growth. After a decline of around 5% year-on-year in quarter 1, consumer pack volumes in general trade grew 10% in quarter 2. That recovery accounted for most of the improvement between the first and the second quarters. In branded bulk packs, we had explained on our last call that some traders, trade buyers, had deferred purchases while waiting for prices to settle. Buying picked up in quarter 2, with volumes growing 11% year-on-year. First half volumes were still below last year, but October was another strong month for bulk packs, signaling strong recovery and sustained part to growth. Regional rice also performed well, with quarter 2 volumes growing 42% year-on-year. The H1 growth in regional rice now stands at 32% from last year. Turning to our market position, India Gate continues to lead the packaged basmati category across our key channels. For the 12 months ended September, our volume share was around 36% in general trade, nearly twice that of the next player. In modern trade, our share over the same period was 39.6%, a lead of more than 6 percentage points. In e-commerce, our internal estimates put our September and share at 41.1% compared with approximately 33% for the next player. On pricing, we held prices through quarter 2, as we had indicated on our last call. Domestic rice realizations averaged around ₹80 per kg in both quarter 1 and quarter 2. Compared with quarter 2 last year, realizations were around 12% higher. With the arrival of the new crop, Basmati paddy prices have risen sharply. In late October, millers and exporters reported prices of around 4,500 per quintal for 1509 paddy, and 5,200 for 1121 in key Punjab and Haryana mandis. Both were at least 1,000 per quintal higher than a year earlier. We have taken price increases across our portfolio in quarter 3. From here, we will manage pricing by variant and channel, balancing our objective of gaining market share with the need to protect gross margins. Regional rice prices in the South also matter to that assessment. In parts of Karnataka, weak rainfall and limited water for irrigation reduced paddy sowing. In early October, wholesale Sona Masoori prices were reported at ₹75 to ₹80 per kg, up from around ₹50. In Telangana, retail prices for fine rice rose from ₹70 to ₹80 to ₹82 per kg, while Basmati moved from 113 to 122. For a household comparing the two in that market, the rupee premium for Basmati stayed broadly similar. In our view, firmer prices for regional fine rice provide some support for domestic Basmati pricing. So far, we have seen no noticeable shift from branded Basmati to loose rice. Prices have risen across the category. Some households may choose a more affordable variant or a smaller pack to manage how much they spend on each purchase. We would want to see at least 3 months of purchasing data after the price increase before drawing a conclusion on either behavior. Let me turn to the investments we are making in distribution and in the India Gate brand. India Gate is present in around 3.3 lakh outlets and reaches approximately 1.2 crore urban households. We are working to improve availability in towns where our distribution is still limited. Through our order to cash program, we are also connecting order placement, stock allocation, collections, and claims. For a distributor, the practical benefit should be greater clarity on when an order will be fulfilled and when a claim will be settled. Beyond making India Gate available in more homes, we are also investing in what the brand means to the families who choose it. Consumers know India Gate for the quality of its rice and the confidence that a meal will turn out well. We want that trust to extend to something families care about more deeply, the nourishment of their children. That is the thinking behind Grains of Hope, now in its third year. This year, through the Nutrition Prayer, we took a familiar moment in a child's school day, the morning prayer, and used it to start a conversation about nutrition. The campaign reached more than 75 lakh children.
Ayush Gupta (KRBL Limited): For us, the longer-term purpose is to build an association between India Gate, the care that goes into feeding a family, and our responsibility as a food company to help address child hunger. That is an association we intend to earn through sustained work over time. In our newer categories, we are building on both that trust and our existing retail relationships. On our last call, I spoke about the launch of India Gate Lite & Fluffy Poha. By mid September, Poha had reached approximately 44% of our existing rice outlet base in the launch towns. Of the retailers who had stocked it, around 30% had already placed a repeat order. That is an encouraging early sign. Our focus now is to reach more outlets in those towns and track how consistently retailers reorder. In masalas, first half sales increased to approximately 4.5 crores from 3.5 3.1 crores a year earlier. Rice brings India Gate into the households, and masalas give families more occasions to cook with us. Building on our Biryani Masala, we are developing ready-to-cook blends for regional dishes where consumers want authentic flavor and a simpler way to prepare the recipes at home. Our ambition remains to exit financial year '27 at an annualized masala revenue run rate of approximately 25 crores. To get there, our priorities in the second half are to make our biryani masalas available in more outlets and build repeat purchases across the ready-to-cook range. In edible oils, our Applite Heart Heart Balance pack addresses another everyday need by giving consumers greater control over how much oil they pour. Looking ahead, we continue to see approximately 10% growth in overall domestic rice volumes as achievable for financial year '27. Consumer pack growth has accelerated, bulk pack buying has remained strong in October, and regional rice continues to grow. Our focus in the second half is to sustain that volume growth and gain market share while protecting gross margins as higher paddy costs work their way through the business. Thank you. I'll now hand it over to Ashish.
Ashish Jain (KRBL Limited): Thank you, Ayush. I will now take you through the performance for the quarter ended September 30th, 2026. All figures mentioned by me would refer to the consolidated financials of KRBL Limited. In terms of the quarter, total income for the quarter stood at 1,768 crores, higher by 15% over the corresponding quarter last year. Domestic revenue grew by 33% driven by strong volume and realization growth in the branded business and a selective bulk rice sale of 102 crores. Export sales were lower owing to lower bulk rice exports to the Middle East. Branded exports continued to be stable. Gross margin for the quarter stood at 34.5% compared to 29.2% in Q2 FY26, increased due to higher realization, better product mix, and higher other income. EBITDA margin for the quarter was at 21.1% versus 16.6% in the same period last year due to higher gross margin, partially impacted by higher proportionate freight and advertisement costs. PAT for the quarter was at 159 crores or 14.6% in margin terms as against 122 crores or 11.2% in the corresponding quarter. Let me now share a comparative analysis of Q2 versus Q1 of this year. Revenue from operations for Q2 FY27 is at 1,727 crores, higher by 15% quarter-on-quarter driven by 22% higher export revenue and 14% higher domestic revenue. Other income is lower mainly due to lower gain on sale or revaluation on treasury investments and lower forex gain. Gross profit is lower due to lower other income. EBITDA followed the trend in gross profit, partially impacted by higher proportionate other expenses. Coming to the first half of this year, total income for the period stood at 3,329 crores, higher by 6% as against H1 FY26. Domestic revenue grew by 24% while export revenue declined by 41% due to lower bulk exports to the Middle East. Branded exports in the same period grew by 18%. Other income is higher due to higher yield on treasury investments and higher forex gain. Gross profit of the company stood at 35.3% while EBITDA and PAT stood at 22.4 and 15.6%. Margin improved mainly due to better realization, better product mix, and higher other income.
Ashish Jain (KRBL Limited): This includes 146 crores in paddy inventory as against 123 crores at the same point last year, and 1,900 crores in rice inventory as against 1,995 crores in September '25. On a volume basis, as of September 30th, 2026, paddy and rice inventory stood at 31,000 tons and 278,000 tons respectively, compared to 33,000 tons of paddy and 304,000 tons of rice as on September 30th, '25. Slightly lower inventory is due to lower inventory quantity. Cash and bank balance including treasury investments was at 2,895 crores as of as of September 30th, '26, higher from 2,157 crores at the same point last year. With that, I come to an end of my prepared remarks. I would now like to hand over to the moderator for opening the Q&A session. I would just like to mention that as the ED matter is sub judice, we will not be able to respond to queries on this matter. So over to the moderator now.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. You're requested to kindly restrict the number of questions to maximum of two questions at a time. In case if you have any further questions, please rejoin the queue again. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Yash Dantewadia from Dante Equity. Please go ahead.
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