GOPAL - Gopal Snacks Limited Share Price

During the earnings call held on August 7, 2025, management provided a cautious yet optimistic outlook for Gopal Snacks Limited. The key points from their forward-looking statements are as follows:

1. Revenue Guidance: Management reiterated its commitment to achieving an annualized revenue of approximately Rs. 1,800 crores, aiming for Rs. 800 crores in H1 FY26 and the remaining Rs. 1,000 crores in H2 FY26. They expressed confidence in achieving a 20% growth on an annualized basis.

2. Production Capacities: The Modasa plant is expected to begin trial production by mid-September 2025, which will significantly enhance their ability to meet market demand without supply chain interruptions. The management anticipates that the combined capacity from Modasa and the supplementary Rajkot facility will restore their operational capacity lost due to recent disruptions.

3. Operational Improvements: The current quarter (Q1 FY26) saw revenue from operations at Rs. 322.2 crores, reflecting a sequential growth of 1.7% despite a year-over-year decline of 9% primarily due to supply chain constraints. The strategic realignment of facilities and enhanced operational efficiencies were noted as key to stabilizing performance.

4. Marketing and Brand Initiatives: The company is investing in marketing efforts, including revamped packaging and enhanced visibility to bolster brand recognition. These initiatives are seen as crucial for driving future sales, especially during the festive season.

5. Gross Margin Projection: Management expects gross margins to remain around 26% in the near term, with improvements anticipated as commodity prices stabilize. They also highlighted that EBITDA margins are likely to increase in upcoming quarters, especially once full operations resume at the Modasa facility.

6. Focus on Product Diversification: The launch of new non-palm oil-based products"”such as popcorn and wafer biscuits"”reflects the company's strategy to diversify its product portfolio and reduce dependency on palm oil products.

Overall, the management expressed a firm belief in their strategy to overcome current challenges while setting the stage for future growth through operational improvements and strategic product developments.

Q&A Section Extract from Earnings Transcript

1. Question: "Could you help us guide on Modasa plant commissioning date? And do you see any headwinds further for the commissioning or sort of a delay from September?"

Answer: I confirmed with our operations and project team, and we anticipate starting trial production by mid-September. As of now, there are no visible headwinds that could cause delays.

2. Question: "Do you see any demand impact during the festive season because of the delayed commissioning?"

Answer: We do not foresee challenges in demand. We have sufficient production capacity, despite the current supply chain disruptions. Our performance has been improving monthly, so we are confident we can meet market needs.

3. Question: "What are the factors that have helped improve gross margins sequentially, despite the Y-o-Y decline?"

Answer: Our sequential gross margin increased by 6% due to reduced prices of palm oil, packaging materials, and channa. The Y-o-Y decline of 3% is primarily because of the custom duty implemented by the government which remains a cost factor.

4. Question: "Is the 26% gross margin sustainable moving forward, and when can we expect to return to historical margin levels?"

Answer: We expect the gross margin to remain stable (+/- 1%) for the upcoming quarter. To return to historical levels, we will gradually improve our product mix and implement profitability enhancement plans, aiming for significant strides by Q4.

5. Question: "Is the Modasa plant expected to completely replace the lost capacity of the Rajkot plant?"

Answer: The Rajkot facility's output will be split; 60% will be addressed at Modasa, while 40% will be restated at Rajkot. Thus, we will effectively restore capacity but not all will come from a single location.

6. Question: "What will the depreciation run rate look like once the Modasa and Rajkot plants are operational?"

Answer: Once these plants are operational, we expect the depreciation cost to increase by about Rs. 1 crore per quarter, reaching approximately Rs. 9 crores - Rs. 10 crores per quarter.

7. Question: "How are you addressing supply chain issues currently affecting distributor orders?"

Answer: We can replenish distributors within 24-48 hours, but current supply constraints mean orders are split between facilities, complicating logistics. Once both Modasa and Rajkot facilities are operational, issues should be mitigated significantly.

8. Question: "Do you foresee any margin disadvantages while operating from the Gondal unit as a temporary measure?"

Answer: There won't be significant margin impacts from Gondal. We anticipate minimal costs associated, likely around 0.2% - 0.3% from operating there temporarily.

9. Question: "Our guidance was for Rs. 1,800 crores in revenue. Given the delay in commissioning the Modasa plant, can you confirm if this remains achievable?"

Answer: We maintain our guidance of Rs. 1,750 crores for this financial year, compensating for the Rs. 50 crores through alternative opportunities like joint ventures. We remain confident in achieving this target despite disruptions.

10. Question: "What is your plan for international expansion versus domestic focus?"

Answer: Given current circumstances, we're prioritizing the domestic market while exploring potential international opportunities through partnerships with established third parties. This strategy allows us to leverage existing international experience without overextending our resources.