Heritage Foods Navigates Monsoon Challenges, Churns Out Resilient Q2 FY26 Performance

Heritage Foods Limited, a prominent player in India's dairy sector, has demonstrated remarkable resilience in its Q2 FY26 performance, navigating through an extended monsoon season and elevated procurement costs. The company reported a consolidated revenue of INR 1,112.5 crore, marking a 9% year-on-year growth, and achieved its second consecutive quarter above the INR 1,100 crore revenue mark. Despite these operational headwinds, Heritage Foods delivered a Profit After Tax (PAT) of INR 51 crore, a 5% increase year-on-year, showcasing its strategic agility and robust business model.

The Value-Added Products (VAP) segment emerged as a significant growth driver, with revenues soaring to INR 341.7 crore, an impressive 18% increase year-on-year. This segment now contributes nearly 38% to the company's total sales, highlighting a successful strategic shift towards higher-value offerings. Categories such as curd, paneer, drinkables, and ice cream all registered double-digit growth, supported by enhanced distribution and new product launches. While milk revenue grew by 5.6% to INR 632.1 crore, and fat products saw a 5.2% increase to INR 75.1 crore, the VAP segment's strong performance underscores the company's ability to diversify and capture premium market opportunities.

Financial Snapshot: Q2 FY26 Performance

Strategic Initiatives and Operational Excellence

Heritage Foods has been proactive in its strategic initiatives, focusing on both market expansion and operational efficiencies. The company's greenfield ice cream facility is on track for commissioning by the end of the current financial year, a move expected to significantly enhance manufacturing efficiency and reduce logistics costs, positioning Heritage for growth in the high-margin frozen desserts market. Furthermore, increasing its stake in Heritage Novandie Foods Limited (HNFL) to 94.4% reinforces its commitment to the fast-growing fermented dairy segment, with yogurt now achieving a national footprint.

Marketing efforts have also been intensified, with the launch of the 'Pure Doodh ki Shakti' milk campaign and 'Purity ka Report Card Activation,' which garnered significant consumer traction and boosted brand health. The successful launch of Sampurna cow milk in core markets like Hyderabad and Bengaluru further expands its product portfolio and aims to drive milk volumes. The company has also strategically transferred cost benefits from recent GST cuts on various dairy products to consumers, reinforcing its commitment to affordability and enhancing competitiveness against the unorganized sector.

Navigating Headwinds and Future Outlook

Despite the robust performance, the company faced challenges from elevated milk procurement costs, which increased by 6.3% year-on-year, while realizations grew by 4.5%. This mismatch temporarily impacted EBITDA margins, which declined by 122 basis points year-on-year. However, management noted a sequential improvement in margins and expressed confidence in normalization as milk costs ease and supply stabilizes in the second half of FY26. The company's focus on operational agility, prudent cost management, and digital tracking programs, including chilling infrastructure upgrades, is helping contain logistics and handling costs.

Looking ahead, Heritage Foods anticipates a strong H2, driven by improving milk availability, festive and seasonal demand, and the tailwinds from GST rationalization. The company's continued emphasis on innovation, digital engagement, and strengthening farmer partnerships is expected to drive sustainable, long-term growth. Management remains focused on balanced margin management through calibrated pricing, mix optimization, and tight cost discipline, aiming to sustain its growth momentum and enhance shareholder value.