Heritage Foods Limited announced its Q3FY26 financial results for the quarter ended December 31, 2025, presenting a mixed performance with revenue growth accompanied by declining profitability. The dairy and food products company reported results that reflect both operational expansion and margin pressures during the quarter.

Financial Performance Overview

The company's standalone financial results showed contrasting trends in revenue and profitability metrics. While the top line demonstrated healthy growth, bottom line performance faced headwinds during the quarter.

Nine-Month Performance Analysis

The nine-month period ended December 31, 2025, reflected similar patterns with revenue growth but reduced profitability compared to the corresponding period in the previous year.

Management Insights from Earnings Call

During the earnings conference call held on January 29, 2026, management provided detailed insights into the challenging operating environment. Dr. M. Sambasiva Rao, Whole-Time Director, highlighted that the quarter was marked by an unusually tight industry supply environment, even during what is typically a seasonally strong flush quarter.

Milk Procurement Challenges

The company faced significant milk procurement challenges during the quarter. Management reported that milk procurement volumes declined for the first time in several years, with Q3 procurement averaging 16.73 lakh liters per day, down 9% year-on-year. This marked a departure from three consecutive years of 9% to 10% year-on-year growth in procurement volumes.

Pricing and Cost Pressures

Management disclosed that milk procurement prices increased by 9% year-on-year, with the weighted average procurement price reaching ₹45.57 for the quarter and ₹46.01 in December. The company managed to pass on approximately 4.9% price increase to consumers in milk products, while value-added products saw price increases of 6.6%.

Segment-wise Business Performance

Heritage Foods operates primarily through two business segments, with dairy forming the core revenue driver and renewable energy providing additional income streams.

Dairy Segment Results

The dairy segment generated revenue of ₹10,912.84 million in Q3FY26 compared to ₹10,195.46 million in Q3FY25. Segment profit before finance costs and tax stood at ₹396.14 million versus ₹547.41 million in the previous year quarter.

Renewable Energy Operations

The renewable energy segment contributed ₹17.11 million in revenue during Q3FY26, up from ₹12.94 million in Q3FY25. The segment reported profit of ₹18.75 million compared to a loss of ₹2.56 million in the corresponding quarter last year.

Value-Added Products Performance

Value-added products remained central to the company's growth strategy during the quarter. Value-added product volumes grew 6.8% year-on-year with strength visible across curd, paneer, drinkables, ghee and ice cream categories. Including ghee and butter consumer packs, value-added product revenues grew 22.6% year-on-year, contributing 38% of total revenue compared to 33.8% in the corresponding period last year.

Consolidated Financial Results

On a consolidated basis, Heritage Foods reported net profit of ₹345.98 million for Q3FY26 against ₹430.54 million in Q3FY25, representing a decline of 19.6%. Consolidated revenue from operations increased to ₹11,191.58 million from ₹10,339.35 million, showing growth of 8.2%.

Capacity Expansion and Strategic Initiatives

Management confirmed that capacity additions remain firmly on track. The Hyderabad ice cream plant is progressing as planned with trial production underway and commercial commissioning expected in the current quarter. The flavored milk plant is also expected to be commissioned in the current quarter. The ice cream plant has potential to deliver ₹500-600 crores of revenue over 6-7 years, while the flavored milk facility targets ₹120 crores revenue potential.

Key Financial Highlights

The company's financial structure remained stable with paid-up equity share capital of ₹463.98 million. Total comprehensive income for Q3FY26 stood at ₹306.14 million on standalone basis and ₹347.21 million on consolidated basis. During the quarter, the company recognized a onetime increase in provision for defined benefit obligations of ₹27.42 million on standalone basis following notification of new labor codes.

Heritage Foods Limited has announced receipt of a GST refund order worth ₹77.95 lakhs from tax authorities in Chennai, marking a positive development in a long-standing tax classification dispute. The company disclosed this information to stock exchanges on January 21, 2026, under regulatory compliance requirements.

GST Refund Details

The refund order was issued by the Assistant Commissioner, CGST, Poonamallee Division, Chennai, Tamil Nadu, on January 20, 2026. The order pertains to GST amounts paid under protest by the company on flavoured milk classification issues.

Timeline and Background

The refund covers a significant period spanning from July 1, 2017 to October 31, 2021. The resolution process involved multiple stages of appeals and applications:

• November 25, 2025: Additional Commissioner, Appeals, Central Tax passed favorable orders
• November 27, 2025: Heritage Foods filed GST refund application
• January 20, 2026: Assistant Commissioner issued refund sanction order through form RFD-06

Regulatory Compliance

The company made this disclosure under Regulation 30(13) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which mandates disclosure of communications from regulatory authorities. Company Secretary and Compliance Officer Umakanta Barik confirmed that no penalties, restrictions, or sanctions were imposed, and no aberrations or non-compliances were identified by the authorities.

Financial Impact

The ₹77.95 lakh refund represents recovery of GST amounts previously paid under protest during the classification dispute period. The company stated it will receive the full refund amount pursuant to the sanction and release orders issued by the tax authorities. This development resolves the flavoured milk classification matter that had been under dispute for several years.

The disclosure indicates a clean resolution with no additional compliance issues or financial obligations arising from the tax authority communication.