Zappfresh's H1 FY26: A Strong Debut Post-Listing with Triple-Digit Profit Growth

DSM Fresh Foods Limited, operating under the popular brand Zappfresh, has made a remarkable entry into the public market with a robust performance in the first half of fiscal year 2026 (H1 FY26). The company reported a significant 43% year-on-year (YoY) revenue growth, reaching INR 95.85 crore. Even more impressively, Zappfresh nearly tripled its EBITDA and Profit After Tax (PAT), both soaring by 188% YoY. EBITDA stood at INR 14.92 crore, while PAT reached INR 7.03 crore, showcasing the company's strong scalability and disciplined execution in the fresh food supply chain.

This stellar performance, as highlighted by Deepanshu Manchanda, Founder & CEO, reinforces the market's confidence in Zappfresh's profitable, digitally native, and high-frequency food business model. The company's integrated supply chain and loyal customer base are proving to be key drivers of this success, positioning Zappfresh as a leading player in India's rapidly formalizing fresh protein and ready-to-cook market.

Driving Growth: Product Mix and Operational Excellence

Zappfresh's revenue split for H1 FY26 reveals a balanced yet focused approach. Chicken remains the largest contributor at 56% of total revenue, followed by Mutton at 23%, and Fish & Seafood at 21%. A significant factor in the improved profitability has been the strategic optimization of the product mix and enhanced procurement and logistics. Gross margins expanded to 34% from 29% in H1 FY25, while EBITDA margins surged to 16% from 8%, and PAT margins improved to 7% from 4% in the same period.

Management specifically noted substantial margin improvements in the fish and mutton categories. Fish margins increased from 16-17% to 23%, and mutton margins jumped from 10% to almost 15%. This was achieved by going deeper into sourcing and leveraging volume scale, demonstrating effective category management and operational efficiency. The company's ability to turn around previously acquired loss-making entities like Dr. Meat and Bonsaro, bringing them to profitability within a year, further underscores its operational prowess and integration capabilities.

Financial Summary Table (Amounts in INR Crores)

Strategic Initiatives and Future Outlook

Zappfresh is not resting on its laurels and has outlined clear strategic initiatives for future growth. The company is actively pursuing inorganic growth, with two acquisitions in the pipeline. These acquisitions are primarily in the non-meat category, focusing on export-oriented snacking and dry ready-to-cook products, particularly in the North region. These ventures are expected to be larger than previous acquisitions and are crucial for achieving the company's long-term vision of becoming an INR 1,000 crore company and a 'proficorn' – a profitable unicorn.

Another key strategy is the offline retail transformation. Zappfresh is tapping into the traditionally unorganized meat market by partnering with local meat shops to rebrand them as 'Zappfresh stores'. This low-capital intensive model provides technology, standardized products, trained staff, and better hygiene, aiming to create a deeper impact in the SME meat ecosystem. The pilot stage for this initiative has been successful, and the company plans to scale it up gradually.

Zappfresh also emphasizes enhancing profitability through automation, process integration, and higher in-house processing. This focus on operational efficiency, coupled with an expanding omnichannel presence across B2C, B2B, and modern trade, is designed to deepen its leadership in fresh and packaged meat across existing and new cities.

Management's Vision and Investor Confidence

Management's commentary reflects a confident yet cautious approach. They anticipate a stronger H2 FY26 due to minimal seasonal impacts and are on track to meet their IPO guidance. The company maintains a conservative leverage position and a strong cash balance, ensuring sufficient liquidity for future growth. Deepanshu Manchanda expressed commitment to building a multi-million-dollar business by rolling out diverse initiatives and categories.

While the company faces challenges like an increased working capital cycle due to extended B2B client credit and a pending Angel Tax demand, management has transparently addressed these. The overall tone is balanced, highlighting achievements while acknowledging areas requiring attention. Zappfresh's proactive approach to market trends, technological shifts, and regulatory changes, coupled with its robust performance, instills confidence in its ability to deliver long-term value to shareholders.

Zappfresh's H1 FY26 performance is a testament to its strategic clarity and disciplined execution. The company is poised for sustained growth, driven by an expanding product portfolio, innovative market penetration strategies, and a strong focus on profitability, making it a compelling story in the Indian food sector.