Sundrop Brands Limited , a leading player in the Indian packaged food industry, has reported an 8% year-on-year revenue growth for the second quarter of fiscal year 2026, despite facing temporary challenges due to GST transition. The company's performance was driven by strong growth in its core categories and e-commerce channel.

Key Highlights

• Revenue grew by 8% year-on-year in Q2 FY26 and 10% in H1 FY26
• EBITDA increased by 29%, driven by a 250 basis points improvement in gross margin
• Core category salience expanded to 64% of total revenue
• E-commerce channel grew by 41% year-on-year
• B2B business, led by Del Monte, grew by 23%

Performance Across Categories

Sundrop Brands' performance varied across its different product categories:

The company's core categories, which now contribute 64% of total revenue, showed strong growth. The popcorn business, including both ready-to-cook and ready-to-eat formats, grew by 12% in value terms. The culinary segment, comprising ketchups and mayonnaise under the Del Monte brand, saw a 15% growth.

Notably, while the Italian category experienced a 3% decline in value, it achieved a 13% volume growth.

Channel Performance

Sundrop Brands witnessed significant growth in its e-commerce and B2B channels:

• E-commerce: 41% year-on-year growth
• B2B business (led by Del Monte): 23% growth

The company has been investing aggressively in these channels, particularly in e-commerce marketing, to drive growth.

Margin Improvement and Cost Efficiency

Sundrop Brands reported a 250 basis points improvement in gross margin, attributed to cost efficiency measures in material sourcing, manufacturing, and supply chain. The company engaged external advisors to optimize costs in these areas, resulting in an EBITDA growth of 29% (excluding one-time costs and ESOP expenses).

GST Impact

The company faced temporary challenges due to GST transition in September, which affected trade destocking. However, 95% of Sundrop Brands' business now falls under the 5% GST slab, which may drive consumption growth in the coming quarters.

Management Commentary

Nitish Bajaj, Group Managing Director of Sundrop Brands, commented on the results, saying, "We continue our growth journey in an equally strong way. Our relentless focus on expanding business in core categories is yielding very strong results, with our business saliency from core categories now at 64%."

Innovation and New Product Launches

To address competition and recover market share, particularly in the spreads category, Sundrop Brands has launched several new products:

• High-protein peanut butter variants in dark chocolate and honey flavors
• Jaggery and chocolate peanut butter formats for the mass segment
• New flavors in the ready-to-cook popcorn segment

Future Strategy

The company aims to:

1. Continue investing in core categories for growth
2. Expand e-commerce and B2B channels
3. Improve margins through cost efficiencies and synergies between Sundrop and Del Monte businesses
4. Focus on innovation to address market challenges and consumer preferences

With a strong balance sheet, zero debt, and a focus on capital efficiency, Sundrop Brands is well-positioned to pursue both organic growth and potential inorganic opportunities in the food sector.

As the company navigates through temporary challenges and invests in growth drivers, investors will be keenly watching its ability to maintain momentum in core categories and improve profitability in the coming quarters.

Sundrop Brands Limited, formerly known as Agro Tech Foods Limited, has reported robust financial performance for the second quarter of fiscal year 2026, demonstrating significant growth across key metrics.

Revenue Growth and Margin Expansion

The company achieved consolidated revenue growth of 8% for Q2 FY26 and 10% for H1 FY26. This growth was accompanied by substantial margin improvements, with gross margin expanding by 250 basis points in Q2 and 190 basis points in H1.

EBITDA Performance

Sundrop Brands' EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) showed impressive growth on a proforma basis:

• Q2 FY26: 29% growth
• H1 FY26: 30% growth

Key Performance Highlights

The company's core categories now contribute 64% of the business, up from 47% in FY23, indicating a strategic shift towards higher-value segments.

Product Performance

The popcorn category demonstrated strong growth, with a 16% increase in H1 FY26. Both ready-to-cook and ready-to-eat formats performed well in this segment.

Innovation and Expansion

Sundrop Brands has been actively expanding its product portfolio, launching multiple new products across its range. The company has also implemented sales force automation, now covering 113,000 outlets, which is expected to enhance distribution efficiency.

Financial Position

As of September 30, 2025, Sundrop Brands maintains a strong financial position:

• Net worth: INR 1,449.00 crore
• Borrowings: Nil

This debt-free status provides the company with financial flexibility for future growth initiatives.

Marketing Investments

The company has significantly increased its marketing investments:

• Q2 FY26: 34% increase
• H1 FY26: 44% increase

These investments are primarily focused on core categories and e-commerce growth, aligning with the company's strategy to strengthen its market position in high-growth segments.

Outlook

While the company has reported strong growth, it's important to note that these results are for a specific period and may not necessarily indicate future performance. Investors and stakeholders should consider broader market conditions and potential risks when evaluating the company's prospects.

Sundrop Brands' focus on core categories, e-commerce, and B2B segments, coupled with increased marketing investments, suggests a strategic approach to capitalizing on evolving consumer trends and market opportunities. The company's strong financial position provides a solid foundation for potential future growth initiatives.