Apex Frozen Foods: Navigating Tariffs with Strategic Diversification

Apex Frozen Foods Ltd., a prominent player in India's seafood export industry, recently unveiled its financial results for the second quarter and first half of fiscal year 2026. The company demonstrated a resilient performance, marked by significant growth in revenue and profitability, even as it navigated a complex global trade landscape characterized by U.S. tariffs and supply chain dynamics. The management's strategic focus on diversification and value-added products appears to be yielding positive outcomes, positioning Apex for sustained growth.

For Q2 FY26, Apex Frozen Foods reported a net revenue of INR 238.3 crore, marking a 19% year-on-year increase. This growth was primarily attributed to higher average realizations for its shrimp products. The first half of FY26 saw even more robust performance, with net revenue climbing 29% year-on-year to INR 496.5 crore. Profitability metrics also showed substantial improvement. The gross profit for Q2 FY26 surged by 76% year-on-year to INR 95.8 crore, with the gross margin expanding significantly to 39.2% from 27.2% in Q2 FY25. Similarly, EBITDA for the quarter grew by an impressive 284% year-on-year to INR 17.7 crore, pushing the EBITDA margin to 7.2% from 2.3% in the prior year. The profit after tax (PAT) for Q2 FY26 stood at INR 11.9 crore, a remarkable turnaround from a loss of INR 1.7 crore in Q2 FY25. For H1 FY26, PAT reached INR 21.0 crore, an 877% increase from INR 2.1 crore in H1 FY25.

Strategic Pillars and Operational Excellence

The company's strong financial performance is underpinned by several strategic initiatives. A key focus has been on geographical diversification to mitigate the risk of over-reliance on any single market. The non-U.S. export business, which accounted for approximately 24% in FY22, has now expanded to nearly 50% in H1 FY26, with the non-U.S. business share increasing to 56% in Q2 FY26. While sales to the U.S. declined in Q2 FY26 due to tariff-linked trade uncertainties, the European Union market demonstrated robust growth, with an 18% year-on-year increase in Q2 FY26.

Apex Frozen Foods has also made significant strides in its product mix, with an increased emphasis on value-added products, particularly Ready-to-Eat (RTE) shrimp. The share of RTE products in total shrimp sales reached 14% in H1 FY26. The company has commissioned an additional 5,000 MT RTE line and has received EU approval for its second facility, enabling it to take on more RTE orders for the European market. Management expects RTE volumes to reach 2,000 to 2,500 metric tonnes in the next fiscal year, contributing to higher margins.

Financial Prudence and Future Outlook

Apex Frozen Foods has maintained a strong balance sheet through consistent debt reduction. Total borrowings have been significantly reduced from INR 167 crore in March 2022 to INR 41 crore by September 2025. This prudent financial management has led to a substantial improvement in the net debt-to-equity ratio, which strengthened from 0.34x in March 2022 to a healthy 0.05x in September 2025. Cash flow from operations also saw a remarkable increase to INR 46.4 crore in H1 FY26, compared to INR 7.3 crore in H1 FY25, providing ample liquidity for future growth and debt servicing.

Looking ahead, the company aims to further enhance its capacity utilization, targeting a minimum of 50% over the next year and potentially 70% in the coming years, which would translate to approximately 20,000 metric tonnes of volume. Management is optimistic about the ongoing trade deal negotiations between India and the U.S., as well as India and the EU, anticipating favorable outcomes that could further boost export trade. The company also expects to maintain a stable EBITDA margin of 10% to 12% in the future, driven by its focus on value-added products and stable realizations.

Navigating Challenges with Resilience

Despite the positive performance, the company acknowledges challenges such as sales volume decline due to U.S. tariffs, susceptibility to disease outbreaks in shrimp farming, and volatile global pricing. However, Apex's proactive diversification strategy, focus on high-margin products, and disciplined financial management demonstrate its resilience. The company's ability to adapt to market realities, as evidenced by its operational consolidation during Q2 to optimize costs, reflects a robust management approach. Apex Frozen Foods is strategically positioned to capitalize on improving market conditions and its expanded capabilities, reinforcing investor confidence in its long-term growth trajectory.