Foods & Inns Limited, a leading food processing company, has reported a robust 25.7% year-on-year volume growth in the second quarter of fiscal year 2026. However, the company faced a 2.1% decline in EBITDA, primarily due to forex losses and increased operational expenses.

Key Highlights

• Volume growth: 25.7% year-on-year in Q2 FY26
• EBITDA: 2.1% decline
• Forex losses: INR 5.00 crore
• Significant tomato paste orders secured: INR 75.00-90.00 crores

Financial Performance

Despite the strong volume growth, Foods & Inns experienced a slight setback in its EBITDA performance. The company attributed this decline to two main factors:

1. Forex losses amounting to INR 5.00 crore
2. Higher operational expenses resulting from increased in-house production capacity

Operational Developments

Tomato Paste Orders

Foods & Inns has secured significant tomato paste orders worth INR 75.00-90.00 crores. These orders are expected to be dispatched by June 2026, indicating a strong pipeline for the coming quarters.

Export Outlook

The company is optimistic about its export prospects, particularly in the mango pulp segment. Indian mango pulp has become price competitive against Mexican products, potentially opening up new market opportunities.

Growth Target

Foods & Inns has set a target of 20% annual volume growth, reflecting confidence in its market position and operational capabilities.

Segment Performance

Frozen Foods

The frozen foods category has shown promising growth, with Q2 FY26 volumes up by approximately 39% year-on-year.

Kusum Spices

While the Kusum Spices segment has maintained stable performance, the company plans to implement new digital marketing strategies to drive growth in this category.

Tetra Recart

The company is seeing slow but steady progress in its Tetra Recart segment, with new orders coming from various countries, particularly Russia. Foods & Inns is also expanding its presence in the Canadian and North American markets for this product line.

Future Outlook

Foods & Inns remains optimistic about its growth prospects, citing several factors:

1. Strong export demand, especially for mango pulp
2. Expansion into new geographical markets
3. Increasing demand in the frozen food category
4. Potential growth in the Tetra Recart segment

The company is also exploring options for capacity expansion, including the addition of a mid-sized spray drying plant with low capital expenditure.

As Foods & Inns continues to navigate challenges such as forex fluctuations and increased operational costs, its focus on volume growth and market expansion may position it well for future success in the competitive food processing industry.

Key Highlights

• Total income increased by 14% year-on-year to Rs 195.00 crore
• Sales tonnage grew by 26% to 20,737 MT
• Export volumes surged by 39%
• Profit after tax declined by 94% to Rs 1.00 crore due to forex losses
• EBITDA margin compressed to 10.4% from 15.2% in the previous year

Strong Volume Growth

Foods & Inns demonstrated impressive volume growth in Q2 FY26, with total sales tonnage increasing by 26% to 20,737 MT compared to 16,494 MT in the same quarter last year. This growth was primarily driven by a substantial 39% surge in export volumes, which reached 8,551 MT. The domestic market also showed healthy expansion, with sales volumes growing by 17% to 12,186 MT.

Financial Performance

The company's total income for the quarter rose by 14% year-on-year to Rs 195.00 crore, reflecting the strong volume growth. However, profitability was significantly impacted by foreign exchange fluctuations. Foods & Inns reported a profit after tax of Rs 1.00 crore, a 94% decline from the previous year, primarily due to an Rs 85.46 crore mark-to-market forex loss arising from currency fluctuations.

The EBITDA margin also faced pressure, compressing to 10.4% from 15.2% in Q2 FY25. This margin contraction can be attributed to the forex losses and potentially higher input costs, although detailed cost breakdowns were not provided in the available data.

Forex Impact

The company's financial results were significantly affected by foreign exchange fluctuations. Foods & Inns reported an unrealized mark-to-market loss of Rs 4.67 crore on its forward contracts for the quarter ended September 30, 2025. This loss is part of the larger Rs 85.46 crore forex loss mentioned in the results.

It's important to note that these are unrealized losses, reflecting the accounting impact of currency movements on outstanding exposures rather than actual cash losses. However, they have had a material impact on the reported profitability for the quarter.

Half-Year Performance

For the first half of FY26, Foods & Inns reported a 16% increase in sales tonnage to 50,775 MT, compared to 43,647 MT in H1 FY25. Export volumes for the half-year grew by 24% to 12,968 MT, while domestic volumes increased by 14% to 37,807 MT.

Outlook

Despite the profitability challenges in Q2 FY26, Foods & Inns' strong volume growth provides a positive indicator for future performance. The company's ability to significantly increase its export volumes may position it well to benefit from growing international demand for its products.

However, the impact of forex fluctuations on the company's financials highlights the need for effective currency risk management strategies. As Foods & Inns continues to expand its sales volumes, particularly in the export market, managing costs and improving operational efficiency will be crucial to translating this growth into improved profitability. The company's performance in the coming quarters will be closely watched to see if it can maintain its strong volume growth while addressing the challenges that impacted its bottom line in Q2 FY26.