Heritage Foods has increased its shareholding in Heritage Novandie Foods Limited (HNFL) to 100%, making the entity a wholly owned subsidiary with effect from October 16, 2026.

The company acquired an additional 5.60% of HNFL's equity share capital, taking its total holding from 94.40% to full ownership. The transaction was completed following the credit of the acquired shares to Heritage Foods' demat account on October 16, 2026.

Acquisition details and timeline

Heritage Foods informed stock exchanges that this move follows earlier intimations dated July 16, 2026, August 29, 2026, and October 10, 2026, regarding the acquisition process. The target company, HNFL, is registered in Hyderabad, Telangana.

What the numbers show

The consolidation of the final 5.60% minority interest eliminates external shareholder claims on HNFL's earnings and assets. By moving from a majority stakeholder to a sole owner, Heritage Foods gains complete control over the subsidiary's strategic direction and financial consolidation without any minority interest deduction in its consolidated statements.

Regulatory compliance

The company submitted the necessary disclosures to both BSE Limited and the National Stock Exchange of India Limited, requesting the record of the completion of the acquisition. The filing was signed by Umakanta Barik, Company Secretary & Compliance Officer.

Heritage Foods reported a consolidated net profit of ₹309 million for the second quarter of FY27, marking a 38.5% decline from ₹510 million in the corresponding period last year. For the first half of FY27, net profit stood at ₹558 million, down 39% YoY from ₹915 million in H1FY26. While the bottom line contracted, the company's topline demonstrated resilience, with H1FY27 revenue from operations rising 18% YoY to ₹26,577 million. This growth in sales did not translate into higher profitability, as margins faced pressure from elevated milk procurement costs.

Financial Performance Overview

The following table details the key financial metrics for Q2FY27 and H1FY27 compared to the same periods in the previous fiscal year:

Segment and Product Performance

The dairy segment remained the primary revenue driver, contributing significantly to the consolidated top line. The Feed segment (Heritage Nutrivet) also showed strong growth, recording revenue of ₹853 million, up 47% YoY. Renewable energy maintained steady contributions.

A key highlight was the robust performance of Value-Added Products (VAP). Excluding ghee and butter, VAP revenue grew 32% YoY to ₹4,510 million, expanding its contribution to 35.4% of total revenue (up from 31.3% in Q2FY26). Including ghee and butter, VAP contribution reached 42.5% of revenue. Growth was broad-based across categories, led by Lassi (+91%), Ice Cream (+81%), Buttermilk (+66%), Paneer (+38%), and Curd (+26%).

Operational Metrics and Cost Pressures

Milk procurement volumes grew 7% YoY in Q2FY27 despite monsoon-related supply constraints. However, average landed milk procurement prices rose 11% YoY to ₹47.73/litre, driven by sustained demand and higher feed costs. Milk sales volumes increased 2.5% YoY, while average realisation improved 6% YoY to ₹60.34/litre, supported by calibrated pricing. The company noted that cow milk accounts for approximately 80% of procurement, with standard cost per litre rising steadily from April to September.

Strategic Initiatives and New Product Launches

The company highlighted several strategic updates aimed at margin expansion and brand strengthening:

• Nourish+ Platform: Launched a high-protein range addressing India's protein gap. The Nourish+ High Protein Paneer contributed over 15% of all paneer sales in Q2FY27.
• Yogurt Portfolio: The yogurt segment crossed 100 tons in volume in Q2FY27, positioning Heritage among the fastest-growing yogurt brands.
• Purity Promise: Introduced a QR-code based 'Quality Report Card' on milk packs, allowing consumers to verify batch reports. This initiative garnered over 2 million organic views on social media and boosted milk revenue growth by 9.4% in the core Telangana market.
• Distribution Network: The company services 10 million consumers daily through 2,05,000 retail outlets, 7,500+ distributors, and 859 heritage parlors.

What the Numbers Show

A divergence between revenue growth and profitability highlights the core challenge for Heritage Foods this quarter. While H1FY27 revenue expanded by 18%, EBITDA declined by 10% to ₹1,358 million. This inverse relationship resulted in a contraction of the H1 EBITDA margin by 160 bps, falling from 6.7% to 5.1%. However, Q2 EBITDA margins recovered 98 bps sequentially from Q1FY27, indicating some stabilization.

The significant drop in net profit, exceeding the decline in EBITDA, suggests that non-operating factors or below-the-line items further impacted the bottom line. Specifically, finance costs doubled YoY to ₹73 million from ₹38 million, and depreciation rose to ₹275 million from ₹201 million, weighing on pre-tax profits. Additionally, other income declined 35% YoY to ₹34 million, further compressing the profit before tax.