Sundrop Brands Limited delivered accelerated top-line growth in the first quarter of fiscal year 2027 (Q1FY27), with consolidated revenue rising 15% year-on-year. The company sustained its EBITDA margin at a healthy 7%, demonstrating resilience against significant commodity and packaging inflation through operational efficiencies and strategic pricing. This performance underscores the effectiveness of its capital-efficient growth strategy following the integration of the Del Monte Foods business in February 2025.

The earnings conference call, held on August 7, 2026, and hosted by Anand Rathi Shares and Stock Brokers Limited, provided detailed insights into segmental performance and strategic initiatives. Key executives, including Group Managing Director Nitish Bajaj, CEO Asheesh Kumar Sharma, and CFO KPN Srinivas, outlined how the company is leveraging scale benefits and optimizing its portfolio to drive profitable growth. The transcript of the call was subsequently disclosed to the Bombay Stock Exchange (BSE) and National Stock Exchange of India Limited (NSE) on August 10, 2026, in compliance with Regulation 30 of the SEBI Listing Regulations.

Segmental Performance and Growth Drivers

The company’s core portfolio, which now constitutes approximately 60% of total business, showed robust acceleration. The Sundrop business, contributing 56% of revenue, grew by 16% year-on-year, while the Del Monte business, accounting for 44-45% of revenue, accelerated to 14% growth from 9% in the previous quarter.

Popcorn remains a key growth driver, with overall category growth close to 18%, backed by 12% volume expansion. The Ready-to-Eat (RTE) format is particularly strong, growing at 39% year-on-year, driven by distribution penetration in general trade and premiumization in e-commerce. Conversely, the peanut butter segment continues to face headwinds, recording a 3% decline in value, though management notes signs of recovery due to new value-added product launches.

Margin Resilience and Cost Management

Despite an inflationary environment affecting commodities and packaging materials, Sundrop Brands improved its gross margins by 110 basis points compared to the previous year. This improvement was achieved through a 40-basis point gain in material efficiency and a 70-basis point reduction in other expenses. The company successfully passed on price increases in staple categories like edible oil, where value growth reached 16% against 7% volume growth, indicating effective price realization.

Advertising and promotion (A&P) spends were optimized, with real-term spending down approximately 5% year-on-year after adjusting for reclassification of trade spends. This shift towards ROI-centric marketing has allowed the company to maintain investment levels in core categories while improving overall profitability. The EBITDA margin of 7% is normalized net of Employee Stock Option Plan (ESOP) costs, which remain front-loaded for the next 18-21 months.

Strategic Initiatives and Future Outlook

Management emphasized a shift towards capital efficiency, leveraging third-party manufacturing platforms where appropriate to enhance asset utilization. The integration of Sundrop and Del Monte operations is ongoing, with e-commerce already consolidated under a single team. Further synergies are expected from the consolidation of Cash & Carry Fulfillment Centers (CFAs), with eight consolidations planned by year-end, potentially yielding 200 basis points in margin improvement over the next 18 months.

Innovation continues to be a central pillar, with nearly 100 new products launched in the last 24 months, contributing 6% of sales in Q1FY27. The company aims to fund 40% of its mid-teens growth ambition through such innovations. Looking ahead, Sundrop Brands targets reaching a 12% EBITDA margin within three years, driven by scale benefits, premiumization, and operational synergies.

What the Numbers Show

The divergence between revenue growth (15%) and the stability of EBITDA margins (7%) highlights the company’s successful navigation of input cost inflation. While many FMCG peers faced margin compression, Sundrop’s ability to improve gross margins by 110 basis points suggests strong pricing power and operational discipline. However, the continued decline in the peanut butter segment indicates that not all categories are benefiting equally from the current strategy, requiring focused intervention to arrest share loss in value-added variants.

Sundrop Brands delivered a robust financial performance in the first quarter of FY27, with consolidated net profit surging 97% year-on-year to ₹12.13 crore. Revenue from operations grew by 15% to ₹428.08 crore, reflecting strong demand across its food products segment. This significant profit expansion, outpacing revenue growth, signals improved operational leverage and better margin retention, key indicators of enhanced business efficiency. The company’s normalized EBITDA margin expanded to 7.0%, driven by cost optimization initiatives and favorable mix shifts in high-margin categories.

The Board of Directors approved the unaudited standalone and consolidated financial results for the quarter ended June 30, 2026, on August 6, 2026. The results were subject to a limited review by statutory auditors B S R & Co. In addition to financial approvals, the Nomination and Remuneration Committee (NRC) granted 29,500 employee stock options (ESOPs) under the Agro Tech Foods Limited Employees Stock Option Plan, 2024. This includes 24,000 options for eligible employees of material subsidiary Del Monte Foods Private Limited and 5,500 options for an eligible employee of the parent company.

Financial Highlights

The quarter witnessed a sharp expansion in margins, with EBITDA more than doubling year-on-year. The following table summarises the key performance indicators:

Revenue from operations comprised ₹427.22 crore from the sale of products and ₹0.86 crore from other operating income. Total expenses stood at ₹374.17 crore, including ₹271.95 crore for cost of materials consumed and ₹44.51 crore for employee benefits. Advertising and sales promotion expenses were recorded at ₹20.20 crore.

Segmental Performance

Growth was broad-based across core categories. Popcorn business grew 18% in value, driven by strong performance in both Ready to Cook (RTC) and Ready to Eat (RTE) formats. Culinary category grew 15% in value, supported by high double-digit growth in B2B segments including Foodservice and Exports. Premium Staples, led by edible oils, registered 16% value growth. Conversely, the Spreads category saw a decline of 3% in value, though the rate of decline moderated sequentially from -10% in Q4FY26. E-commerce sales surged 32% year-on-year, with Quick Commerce delivering 35% growth.

What the Numbers Show

The disproportionate rise in net profit compared to revenue growth indicates significant operational leverage. While revenue grew by 15%, net profit nearly doubled, and normalized EBITDA margin expanded to 7.0% from 4.3% in the year-ago period. This suggests that operating costs did not increase proportionally with revenue. Gross margin expanded by 110 basis points due to improvements in material costs (40bps) and other expenses (70bps). Share-based payment expense under employee benefits was ₹4.74 crore for the quarter, consistent with the previous quarter's ₹4.88 crore, indicating stable compensation costs despite new ESOP grants.

Operational Updates

Sundrop Brands expanded its outlet coverage to 387,000 outlets in Q1FY27 from 376,000 in Q4FY26, aided by Sales Force Automation (SFA) implementation which achieved 100% direct coverage enrollment by Q4FY26. The company launched 100 new products across Act II, Sundrop, and Del Monte portfolios in the last 24 months, contributing approximately ₹60 crore to sales. The Board also amended the Code of Conduct to regulate insider trading, aligning with SEBI's Prohibition of Insider Trading Regulations, 2015.