Hatsun Agro Product Limited
Q1 FY26
Call date · August 21, 2025
1 · Management Commentary
Key Positives
- Proposed GST reduction from 12% to 5% on dairy products expected to significantly boost demand.
- Lower GST will improve farmer payments, stimulate production, and enhance export competitiveness.
- Company already exporting ice cream to eight countries, with momentum building.
- Management expects to achieve 15% growth for the half year, surpassing earlier 9% growth.
Key Negatives
- Q1 revenue growth was 9%, below the guided 15%.
- Margins came in at 13.9%, lower than the expected 14–15%.
- Debt position as of FY25 is higher than management guidance.
- Cash flow concerns remain, especially after accounting for dividend payouts.
Forward Guidance
- Capex in FY25 exceeded guidance; no new capex numbers disclosed for FY26.
- Expects export opportunities to accelerate in the second half of FY26.
- Anticipates better performance in the next half and a "glorious" next year if GST reforms are implemented.
- No specific new products or segments announced.
- Management expects improved capacity utilization and operating leverage if demand rises.
2 · Q&A Highlights
Q 1 (Composite): How will the proposed GST reduction impact the dairy industry and Hatsun Agro specifically?
A (Management):
- GST reduction will meaningfully boost demand, improve farmer payments, and enhance export competitiveness.
- Lower taxation will bridge the urban-rural gap and stimulate broader economic activity.
Q 2 (Composite): Will the GST cut lead to immediate export opportunities for Hatsun Agro?
A (Management):
- Exports will start increasing in the second half itself; company already exporting ice cream to eight countries and expects to reach 15% growth for the half year.
Q 3 (Composite): Is the GST reduction linked to India’s trade negotiations with the US, and what is the risk from US dairy imports?
A (Management):
- GST cut is positive for local production and exports.
- US dairy imports are not seen as a major threat due to different consumer preferences; New Zealand poses a bigger import risk.
Q 4 (Composite): Will the GST cut offset any negative impact if India opens its dairy sector to US imports?
A (Management):
- Doubtful about significant US entry; GST cut will help protect local farmers and maintain competitiveness.
Q 5 (Composite): What is the outlook for the next half and the coming year?
A (Management):
- Next half will be better; expects a "glorious" next year if GST reforms are implemented.
3 · Other Key Numbers
- Q1 revenue growth: 9%
- Guided revenue growth: 15%
- Q1 margins: 13.9%
- Guided margins: 14–15%
- Export volume: Ice cream exported to eight countries
- Farmer payment example: For ice cream, if 100 rupees is paid, 73 rupees goes as GST (as per management)
- India’s dairy production: 240 million tons
- India’s dairy exports: 1 million tons
- World dairy trade: 60 million tons
- New Zealand’s share of world dairy trade: 35%
- Capex in FY25: Not disclosed (stated as "more than guided")
- Debt position as of FY25: Not disclosed (stated as "more than guided")
- Cash flow position (excluding dividend): Not disclosed