AWL - AWL AGRI BUSINESS LIMITED Share Price

In the earnings call for Q4 FY26, management provided an encouraging outlook for AWL Agri Business Limited, highlighting significant achievements and anticipations. The company reported a remarkable 14% volume growth, reaching 1.9 million metric tons for the quarter, while achieving its highest-ever quarterly revenue, exceeding INR 21,000 crores, representing an 18% year-on-year growth. Operational EBITDA surged by 40%, with PAT growing over 50% year-on-year.

For the full fiscal year, AWL closed with 6.8 million metric tons in volumes, reflecting a growth of 4%, and a turnover surpassing INR 74,000 crores, up 17% year-on-year. The operational EBITDA for the year stood at INR 2,300 crores, with PAT at INR 1,000 crores. Key performance metrics showed gross profit per ton at INR 11,500 and EBITDA at INR 3,500 for the fiscal year.

Management emphasized several forward-looking points:

1. Market Trends: They noted that the edible oil prices spiked due to geopolitical events, leading prices of sunflower oil settling above $1,400 per ton, and may impact costs in the upcoming quarters.

2. Strategic Priorities: The focus will be on growing market presence in alternative channels, which saw a 43% increase year-on-year, with the HoReCa (Hotels, Restaurants, and Catering) sector growing by 64% year-on-year.

3. New Product Launches: The company launched premium health-focused products under the Fortune brand, including Olive Oil and premium cold-pressed oils, which are expected to cater to growing consumer demand for quality items.

4. Volume Growth Target: For FY27, management expressed ambitions for food volumes to achieve double-digit growth, particularly in categories like wheat flour and rice, reinforcing their strategy to prioritize volume growth over immediate margin expansion.

Overall, management conveyed optimism regarding operational performance and future growth opportunities while navigating potential inflationary pressures and global market fluctuations.

Q&A Highlights from Q4 FY26 Earnings Call of AWL Agri Business Limited

Question from Abneesh Roy:
"Overall holistic level, what is the impact in Q4 of Iran crisis?"

Answer:
In Q4, the impact was somewhat muted, as a significant demand uptick offset price hikes due to stock accumulation. However, we anticipate Q1 will reflect the increased costs from packing materials and chemicals. While demand slowed in April due to inventory usage, we expect a recovery in May and June, leading to a strong Q1.

Question from Abneesh Roy:
"How much price hike have you taken pre-Iran crisis?"

Answer:
Around mid-March, we raised prices by 10% across the edible oil complex, reflecting the surge in crude costs. Packing material impact will only be visible in April where we might adjust prices accordingly, but it comprises only 2-3% of overall costs, resulting in minor margin fluctuations.

Question from Abneesh Roy:
"On alternate channels, what is the profitability versus overall business?"

Answer:
The alternate channel contributes about 15% to edible oil volumes and is expanding at 44%. It's notably more profitable due to fewer intermediaries and rapid inventory turnover compared to general trade. Food products from this channel also exhibit higher margins.

Question from Manoj Menon:
"What's your view on agri inflation in FY '27?"

Answer:
Currently, CPI stands at 3.5%, significantly influenced by the food sector. Assuming stability in edible oil prices, I expect inflation to hover between 3.5% and 3.775%. We focus on essential products, and while discretionary products may suffer, our brands cater to price-sensitive consumers.

Question from Dhiraj Mistry:
"Can we assume food margin improvements will sustain?"

Answer:
While we achieved improved margins due to operational restructuring, our main priority is growing volume. We anticipate food margins to remain steady, focusing on market share growth until FY '27. Our sustainable margin levels will focus on long-term growth over immediate profitability.

Question from Dhiraj Mistry:
"What actions are you taking to drive premiumization in the Food segment?"

Answer:
We're expanding premium products, including recent niche product launches aiming for better margin profiles. This strategy will continue across our flagship brands, enhancing gross margins while leveraging existing strong market positions.

Question from Harsh Shah:
"At what volumes can you maintain margins versus prioritizing volume growth?"

Answer:
In FY '27, we aim for double-digit growth in volumes, particularly in food. While maintaining margins is important, our strategy favors volume expansion. We are targeting at least mid-teens volume growth but will adjust based on market opportunities.

Question from Akshay Krishnan:
"How does pricing gain transition to sustained EBITDA margins in Food?"

Answer:
The transition depends on achieving around 1.5 million tons in food volumes. We closed this year at 1.2 million tons, and with projected growth, we expect to start consolidating margins as we gain market share and pricing power.

Question from Nilesh Doshi:
"Why are we valued lower compared to peers like LT Foods?"

Answer:
AWL Agri Business classifies as a food FMCG company with 70% brand-derived revenue. Valuation is driven by investor perception, but we are confident in demonstrating our growth potential, expecting the market to adjust our valuation accordingly in time.

Question from Kenil Mehta:
"What was the real consumer demand versus stock-up before the price hike?"

Answer:
We typically see primary and secondary demand occur sequentially. Current slumps reflect normal stock adjustments. We do not anticipate a significant drop in demand due to LPG shortages, and we expect consumption to ramp up in the coming months, especially with the wedding season.