HMA Agro inventory build drives Rs 69.02 crore operating cash outflow

HMA Agro Industries Limited reported consolidated net profit of Rs 155.081 crore for the half year ended September 30, 2026, but used Rs 69.02 crore in operating activities as inventories rose by Rs 347.925 crore. The inventory movement was larger than the Rs 193.857 crore of operating cash flow before working-capital changes.

Why did HMA Agro report negative operating cash flow?

HMA Agro reported negative operating cash flow because its Rs 347.925 crore inventory increase outweighed cash generated before working-capital changes. Under the indirect cash-flow method, profit before tax of Rs 194.991 crore was adjusted for non-cash and finance-related items, resulting in Rs 193.857 crore of operating cash flow before working-capital movements for the period ended September 30, 2026.

The inventory increase was the largest working-capital cash use, compared with a Rs 6.294 crore increase in trade receivables and a Rs 1.703 crore increase in other financial assets. Inflows included a Rs 31.99 crore decrease in other assets, a Rs 74.388 crore increase in other current liabilities and a Rs 10.78 crore increase in trade payables. Those movements did not offset the inventory outlay: cash used in operations was Rs 42.289 crore and net taxes paid increased the operating cash outflow to Rs 69.02 crore.

How did HMA Agro’s working-capital balance sheet change?

HMA Agro’s inventory balance increased to Rs 1,678.528 crore at September 30, 2026 from Rs 1,330.603 crore at March 31, 2026, an increase of Rs 347.925 crore. This balance-sheet movement matches the inventory adjustment in the cash-flow statement, linking the operating cash use to stocks held at the reporting date.

Current borrowings increased by Rs 236.356 crore to Rs 1,083.116 crore over the six-month period, while cash and cash equivalents increased by Rs 167.645 crore to Rs 303.438 crore. Other liabilities rose by Rs 74.386 crore to Rs 490.029 crore, while trade receivables increased by Rs 6.294 crore to Rs 30.026 crore. Inventory was therefore the largest disclosed current-asset movement alongside higher short-term borrowings and other liabilities.

Did HMA Agro’s profit rise despite the cash outflow?

HMA Agro’s consolidated net profit rose to Rs 155.081 crore in the half year ended September 30, 2026 from Rs 90.386 crore in the corresponding half year ended September 30, 2025. Revenue from operations increased to Rs 4,889.799 crore from Rs 3,277.949 crore, while profit before tax rose to Rs 194.991 crore from Rs 118.439 crore. The group therefore reported higher earnings while operating cash flow was negative.

The difference reflects the working-capital movements included after profit before tax in the cash-flow statement. HMA Agro started with Rs 194.991 crore of profit before tax, adjusted for Rs 25.454 crore of interest expense, Rs 13.789 crore of depreciation on property, plant and equipment, and a Rs 31.169 crore unrealised fair-value gain on forward contracts. The subsequent Rs 347.925 crore inventory increase moved the pre-working-capital cash generation into an operating cash outflow.

HMA Agro operates in one reportable segment: manufacturing and exporting buffalo frozen meat and meat products. The filing states that manufacturing operations are in India and products are sold across geographical markets worldwide, but it provides no separate product or geographical cash-flow figures. The accounts identify inventory as the cash-use mechanism but do not state the operational reason for the higher stock balance.

How did HMA Agro finance the inventory-related cash requirement?

HMA Agro recorded net cash inflow of Rs 207.606 crore from financing activities in the period ended September 30, 2026. The largest disclosed financing source was Rs 170.689 crore of net borrowings drawn under a working-capital demand facility, followed by Rs 66.173 crore of proceeds from unsecured borrowings from a related party. These inflows were partly offset by Rs 25.484 crore of interest paid and Rs 3.772 crore of term-loan repayment.

Investing activities provided a further Rs 33.677 crore of net cash during the period. HMA Agro received Rs 46.477 crore from the net movement in bank deposits with maturity exceeding three months and Rs 8.431 crore of interest on fixed deposits, while spending Rs 26.239 crore on property, plant, equipment and capital work in progress. The group also received Rs 5.008 crore from selling its entire equity interest in FNS Agro Foods Limited.

The reported cash and cash-equivalent balance of Rs 303.438 crore at September 30, 2026 comprised Rs 250.004 crore in current accounts, Rs 52.76 crore in fixed deposits with original maturity of three months or less, and Rs 67.4 lakh in cash on hand. The cash-flow statement also records Rs 4.618 crore of cash and cash equivalents attributable to the disposed subsidiary. Financing and investing inflows allowed the reported cash balance to rise despite the Rs 69.02 crore operating outflow.

Conclusion

HMA Agro’s first-half results show a difference between reported profit and operating cash generation. Consolidated net profit increased by Rs 64.695 crore year on year to Rs 155.081 crore, while revenue rose by Rs 1,611.85 crore. However, the Rs 347.925 crore inventory increase led to operating cash outflow of Rs 69.02 crore, with Rs 170.689 crore of net working-capital demand-facility drawings recorded in financing cash flow.

The key unresolved issue is why inventory increased to Rs 1,678.528 crore, as the filing gives no inventory reduction target or working-capital plan. Subsequent comparisons will also reflect the changed group structure because HMA Agro disposed of its entire interest in FNS Agro Foods Limited during the period, and it ceased to be a subsidiary from the disposal date.