Gopal Snacks Limited (GOPAL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Gopal Snacks Limited Q3 FY '26 Earnings Conference Call hosted by Emkay Global Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Nitin Gupta from Emkay Global Financial Services. Thank you, and over to you, sir.

Yes. Thank you. Good afternoon, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Naveen Gupta, Chief Business Officer; and Rigan Raithatha, Chief Financial Officer. I shall now hand over the call to the management for the opening remarks. Over to you, sir.

Thank you, Nitin. Good afternoon. Thank you for joining us for the earnings call. You all got a chance to go through our investor presentation uploaded on the stock exchange. We will share our key operating and financial highlights for the quarter and 9 months ended December 31, 2025. As we reflect on our Q3 FY 2026, it is evident that Gopal Snacks has maintained steady progress, demonstrating strong operational resilience and the ability to scale production despite challenges faced after the fire incident. Our revenue for Q3 FY '26 was at INR 400.8 crores, a 6.7% sequential increase from Q2 FY '26. This growth was driven by strong performance across our core product segments, including the Snack Pellets and Gathiya categories, which grew 20.8% and 10.6% on Q-o-Q, respectively. The growth highlights the continuous strong demand for our products and the operational efficiencies we have achieved. A key focus for us during this quarter was the ramp-up of our Modasa facility. This facility with an added installed capacity of 63,085 metric tonnes is now an integral part of our manufacturing base. it will play a vital role in meeting the growing demand for Gathiya and namkeen products across our target regions. Additionally, we continue to strengthen our supply chain by working with third-party manufacturers, ensuring that we can meet market demand without disruptions. Our efforts to expand our regional footprints have been fruitful with the support of 93 micro distributors under the SSD model. This initiative has deepened our presence in untapped regions contributing to 28.7% Y-o-Y growth in other states. The success of this strategy is a testament of our commitment to building a strong distribution network and improving market accessibility. In terms of marketing, we successfully secured a significant partnership as the official snack partner for the Filmfare Awards 2025. This association has provided us with an exceptional opportunity to enhance our brand visibility and engage with a broader consumer base across key media platform. Additionally, our marketing initiative during the festive season, including the Navratri campaign, further increased our consumer reach and brand recognition. And also, we launched our Gathiya digital and TV ad campaign 3 days back. We continue to make progress in improving our distribution management system, which provides real-time insights to our distributors. This system plays a crucial role in improving inventory management, reducing lead times and enhancing supply chain efficiencies, all of which are key to maintaining our competitive edge. Looking ahead, our focus remains on expanding our production capacity, enhancing our market penetration and investing in strategic growth initiatives. With the continuous operationalization of the Modasa plant along with our investment in technology and infrastructure, we are confident in our ability to sustain growth. As we move into the final quarter of FY '26, Gopal Snacks is well positioned for sustained long-term growth, and we remain committed to creating value. I would now like to invite our Chief Financial Officer, Mr. Rigan Raithatha, to share his perspective on the financial performance during the quarter.

Thank you, Naveen. Good afternoon, everyone. Let me now take you through the key financial highlights for the quarter and 9 months ended 31st December 2025. Starting with the quarterly performance. So during Q3 FY '26, we achieved a revenue from operation of INR 400.8 crores, registering 6.7% sequential growth, supported by improving demand trends, stronger traction in Snack Pellets and Gathiya and continued distribution expansion across newer geographies. Gross profit for the quarter was at INR 110.6 crores translating to gross margin of 27.6% compared to 26.4% in the previous quarter. Operational performance during the period benefited from improving manufacturing stability, supply chain normalization following the commissioning of Modasa facility. With the commencement of commercial production in Modasa namkeen plant, we were able to address key supply challenges that had arisen after the fire incident at Rajkot facility. The consolidation of multiple product categories at a single location is expected to improve order servicing time lines, enhance dealer convenience, which will aid to lowering of our trade discounts and ultimately will benefit the margin. EBITDA for the quarter was at INR 30.4 crores, reflecting an EBITDA margin of 7.6%. Sequential margin expansion was aided by operating leverage and prudent control over discretionary spend. Our profit before tax increased sequentially 41.5% to INR 19 crores, driven by stronger revenue and operational performance. Profit after tax for the quarter stood at INR 15.5 crores, resulting into PAT margin of 3.9% for the quarter. This includes exceptional income of INR 10 lakh coming from the scrap sale arising out of the fire affected facility. Moving to the 9 months performance. For 9 months FY '26, revenue from operations stood at INR 1,098.6 crores, while EBITDA is at INR 69.7 crores, reflecting the margin of 6.3%. Profit before tax before exceptional items stood at INR 37.7 crores, while profit after tax was INR 43.7 crores with a margin of 4%. As we move into the final quarter of FY '26, our priority remains focused on expanding market presence, improving operational efficiency and continue to drive for innovation in our product offerings. With our strengthened manufacturing network, including the newly operational Modasa facility and a disciplined approach to capital allocation, we are well positioned to sustain our growth. We are confident that Gopal Snacks through its strategic initiative backed by strong financial foundation will continue to deliver long-term value for all its stakeholders. Thank you. Over to you, Nitin.

[Operator Instructions] The first question is from the line of Nitin Gupta from Emkay Global Financial Services.

My first question is around like post commissioning of Modasa facility. So I basically wanted to understand like how has been the growth improvement? Like we have seen 3 quarters of decline, and this is the first quarter like we have seen a 2% revenue growth. So how materially a shift is happening now and how management is thinking that the growth can improve on a monthly basis from current levels? That's the first question.

So Nitin bhai, as we had finally declared that from 1st of December, we will start getting our complete range from Modasa facility. So we started getting a complete range from our Modasa facility from 1st of December. Its reflection also came in our December number as well. So now overall supply chain from Gujarat perspective are stable as well a few connecting states like Rajasthan is completely getting catered from Modasa only. And then there are parts of Western Madhya Pradesh and Mumbai and some parts of Western Maharashtra also getting catered from Modasa facility only. So things are stable now. Overall revenue loss owing to the supply chain disruption in Gujarat was to the tune of 8%, 10%. And even in the surrounding states, Rajasthan was impacted the highest. So with the improved supply chain, we are confident that our run rate will certainly improve.

Yes, that's really encouraging. So like we are actually from December, like seeing the growth -- sorry, the supply improvement plus additionally the GST sort of support also from the government in terms of the rate reduction. So qualitatively, would you be able to highlight like how material is the shift in the numbers from November to December. Definitely, December, we will be ramping up. It will not be a true reflection, but some qualitative sense would be really helpful here.

Our December numbers were 7% more than November.

Okay, sir. This is good. And second, with respect to like gross margin expansion of 120 bps to 27.6%. This is more of a sequential Q-o-Q. So could you help us understand the factors which have aided growth -- margin expansion. One point I can take from the commentary is that we have taken back some of the trade promotion. But if you can help us understand this better, that would be very helpful.

Yes, Nitin. So post our supply chain issues since have started getting resolved. So partially from the mid of November, we started lowering our trade discount schemes. And on account of that, the benefit which flowed down in our gross profit was around 1% and also marginally due to the low-margin products or the loss-making products also we are trying to cut out from our product basket. So that is also aiding our gross profit margin. Raw material prices were by and large, stable. So over there, 0.3% benefit is there. And again, post GST regime, we have also reduced the dealer margin, which has also benefited 0.5%.

This is helpful. My last question pertains to like this new other snacking segment, like we have basically split the other segment into 2. So now I can see that other snacking segment is now 4% of revenues. And sort of it is seeing in a way, like this percentage was around 1.7% last year. So like how we are positioned here? We have multiple products, masala noodles, bakery, flour, oil, jaggery. So like is this more of an adjacent business? Or you think that some of the categories can become bigger for us. I have seen like there is an ad wheat flour also we are getting into. So like I just wanted to know your thoughts around like multiple new categories we are trying out in other snacking.

So Nitin bhai, in our multiple commentaries, we have expressed our intent to gradually reduce our dependency on imported oil. So as Rigan bhai stated, we are doing 2 things simultaneously. One is cutting tail of those products or SKUs, which are low in margin contribution as well as revenue and simultaneously adding certain products which have got better margins and which are scalable in nature. So to name a couple of products, we introduced rather 3 products. We introduced somewhere in July popcorn. So popcorn run rate is right now INR 50 lakhs, INR 55 lakhs per month. We added wafer biscuit. So it's a comparatively high-margin product and our run rate is INR 65 lakhs to INR 70 lakhs per month. And we added another bakery product, which is in INR 5 price points, which is Kaju biscuit, So it's a kaju-shaped biscuit. So it has also got good margins and which has started contributing to the tune of INR 35 lakhs, INR 40 lakhs per month. So this is helping us in 2 ways. One is overall product basket, we are trying to reduce contribution of imported oil. And second is we are adding high-margin, high scalability potential product to our product basket.

The next question is from the line of Resha Mehta from GreenEdge Wealth.

Congratulations on the commercialization of the Modasa facility. So now with this, like the Q-on-Q numbers have been better, like you called out December is higher versus November by 7%. Do we see a similar kind of growth rate, which is also happening as we speak in January because we are almost at the end of January?

Yes, numbers are in line with our December number. Historically, out of last 5 years, Q4 has been lower than Q3 in 4 years. Out of 5 years, 4 years, Q4 has been lower than Q3, but we are confident of reversing this trend this year. January numbers are in line with December number, which historically has not been the case.

Understood. And now like you said, so the supply chain problem gets solved, right? Like we are able to supply a full basket to our distributors and hence, that problem has completely gone away, right, with -- at least 90% solved, right, with the Modasa facility?

We can say as on date, more than 95%. We just did an exercise yesterday. So our fill rates as of now are with stipulated tax is 93%.

Right. And sir, so does that mean that the wafers degrowth, which was happening because it was more like a push product for us, right, and providing it as a part of the overall basket. So that degrowth should kind of start reversing?

Yes, that degrowth will start reversing. There are 2 reasons of degrowth in wafers, Resha ji. One is we took an intentional price hike in wafers. So differential with the market leader versus our pricing to the retailer was to the tune of 20%. So we brought down the difference to the tune of 6%, 7%. So probably, we had not matured in that category to that extent that, that steep hike was not taken generously by the retailer fraternity. And secondly, as a company, what we were doing earlier was we were giving a target of distributor, say, monthly target was INR 50 lakhs. So we were doing a bundle activity with the wafer category to the distributor that he has to sell minimum, say, 7 lakh or 6 lakhs of wafers to get the monthly incentive. But later on, owing to our supply chain issues, we thought of not putting the pressure on distributor fraternity for the push product. Rather, we were giving them a lot of comfort in selling the pull products only. Now since our supply chain issues are resolved, so we will restart that activity. In fact, from 1st February, I'm going to restart that activity.

Okay. And you just called out that we had taken price hikes in wafers. I would imagine, would we have also taken price hikes in other products like Gathiya because I see the value gap is -- there's quite a gap between the volume growth and the value growth even in Gathiyas. So have we taken price hikes there as well, which has also helped in improving gross margins?

I tell you when we compute in a number of packets, so it looks like that we sold lesser number of packets. However, when we convert the volume in metric tonnes, so we have grown by 4%. So typically, what happened after GST, on price point products, we passed on that benefit to the consumer by giving extra grammage. So we did not take any price hike or price drop in price point product. However, in larger packs, we took a price cut. Like on MRP basis, earlier the product getting sold was of 50 MRP. Now we are selling at 47 MRP. 500 grams, we were selling at 89 MRP. Now the MRP is revised to 84. So in absolute terms, we -- more in metric tonnes.

And our trade spend used to be at somewhere around 3.5%. So since we've seen some reduction there, which you've mentioned. So now that number is reduced from 3.5% to what levels now?

In this quarter, we have reduced it by 1.2%.

Okay. Okay. And subsequently, this is expected to -- like in Q4 also, would we see further reduction on the trade spend front?

We will take a reduction on a very gradual pace, Resha ji. In Q4, it will be more or less in line with Q3. However, in Q1, when we reduced it by 0.25% and then we'll try to maintain that for 6 months. So annualized basis next year, we will reduce it by 0.5%.

And so now would you be comfortable in giving some kind of a guidance for the next financial year? I understand that seasonally, Q4 is weak. So what you're giving a sense is that -- but we should still be higher than INR 400 crores or thereabouts in Q4. But in FY '27, considering Modasa plant has been commercialized and our supply chain issues are largely resolved, would you like to give any kind of revenue guidance and therefore, even a margin guidance, assuming raw material prices remain stable.

Resha ji, we, on a YTD basis, we have touched INR 1,100 crores, right? And our Q3 numbers are visible. We are stating that Q4 numbers, we are reversing the trend. So I mean, we'll be somewhere INR 1,500 crores kind of number we will be closing this year. So next year, we have made a rough sketch of our annual operating plan. So we have taken a delta of INR 300 crores to INR 350 crores for next financial year in our plan.

INR 1,800 crores to INR 1,850 crores. And on the margins, EBITDA margins, assuming raw material prices are stable?

Yes. So on the top line front, it would be in the range of INR 1,800 crores to INR 1,900 crores. That is what we are anticipating. And in terms of EBITDA margins, so like in the current quarter, our EBITDA margins are close to 7.6%. So as we would be exiting on the similar rate. So next year, we are targeting on an annualized basis, EBITDA margin between 8% to 9% within next year exit rate close to double digit.

Wouldn't you say that 8% to 9% annualized margin for next year is very conservative, assuming raw material prices are stable? Or are we -- despite Modasa plant being operational for 2 months, we've not seen those distributors who we lost, they're not coming back or maybe we are not seeing market share gains again. So that's why we would want to guide for lower margins? Or is there some other reason?

So there are a couple of other things. One thing, so post Modasa commissioning, so that we are quite confident. So over there, there is nothing of an issue. As in our opening commentary, we said we are now aggressively moving into the market in terms of spending more on the advertising, sales promotion schemes. So that is one of the things. So sequentially, probably we would be improving on that trajectory. So probably in, let's say, in first or second quarter, improvement might be a little bit less. But next -- going forward, it should be on a very fast trajectory. So that's the reason we are likely to maintain between this range. And that's the reason we are also seeing that our exit rate would be much higher than the average rate.

Understood. And on the other products, right, I think even the previous participant called that out, while I appreciate that we want to reduce our dependency on palm oil, but I think we're also selling beauty soaps and washing bars and ghee, I mean, and jaggery, right? So wouldn't you say that these are completely unrelated products? What would be our right to win and very fringe, what are your thoughts here? Why are we getting into these products?

These are our byproducts only, Resha ji. When we process our products through oil, so a lot of oil gets generated as a byproduct. So this oil, soap -- and this is by product.

The next question is from the line of Azharuddin Jariwala from Sameeksha Capital.

[indiscernible].

Azharuddin, your line is not clear.

Am I audible now?

Yes, you're audible now. Can you please repeat?

My question is on the side of the geographical volumes, which we are seeing quite muted growth in the core market of the company. So I just want to know about how are we taking the measures to stabilize and revive the volume in the core market.

Sorry, I couldn't get anything.

Sir, there's some static on your end.

Am I audible?

Your voice is not clear. However, what I could understand that you are asking that what is our strategy to grow in core market, right? So there are 2 things which we have already started in Gujarat, which is our core market. One is frequency. So we have initiated to increase our number of salesmen and that is completely facilitated by automation. Number two is when we have started our marketing endeavor like TV campaign, digital and print, et cetera, so that is going to aid growth to our core market faster than noncore markets. So if I summarize, one is improving on distribution efficiency and another is it has to be backed by marketing endeavor.

The line for the participant has dropped. We will move with the next question from Shreya Chatterjee from Angel Capital.

I wanted to understand a bit more that the quarter-over-quarter growth in the focus markets is a bit slower than the core markets. So what are like our strategies on the focus market, what would be the future growth rate in the focus markets. And what about adding distributors in both the core and focus markets, if you could give a bit more color to that.

Yes. So Shreya, so one thing is in core markets, we will not add to number of distributors. We have got footprint in 99% of Gujarat at -- levels. So we will not add to number of distributors in our core markets. Now coming to focus and other markets, we have taken an ambitious aim of adding one net new distributor every working day starting from 1st of January till 31st December. So right now, we have 881 distributors on our SAP. And we have taken an ambitious aim that we will add somewhere between 250 to 300 distributors within this calendar year. So coming to how will we perform in focus markets. So there was a reason that why in focus markets, our growth rates were not -- these were subpar. One was Rajasthan, West Maharashtra and West Madhya Pradesh was disturbed in terms of supply chain. However, these are streamlined now. Within focus markets and other states, the growth will come from 2 factors. We have aimed just 15% growth from our existing distribution network and roughly INR 75 crores of delta will come from addition of new distributors. So there will be a complete ladder, which will get built the way we did in 2024 as well from April 1. Yes, please?

Yes. So the guidance of INR 1,800 crores to INR 1,900 crores, which you just gave now for FY '27, is it factoring into this 250 to 300 distributors, that ambitious guidance, like even -- or are you taking into consideration like even if like 80% to 90% of it is achieved, you will be able to take INR 1,800 crores to INR 1,900 crores?

Yes, we have taken a range of INR 150 crores goes to INR 160 crores delta coming from our Gujarat business. From non-Gujarat business, we have taken an aim of -- delta of INR 130 crores to INR 150 crores. So out of this INR 140 crores, INR 70 crores will come from existing set of distributors and INR 70 crores, INR 75 crores from new set of distributors. Besides this, there are alternate trade scanners. So alternate -- by alternate trade channels, I mean that we have got business of railway, modern trade, quick commerce and exports. Unfortunately, in the entire year, YTD, we have just done INR 80 lakhs of export this year, whereas previously, we had done INR 8 crores of export this year. So delta coming from these alternate trade channels will be INR 25 crores. So that will translate into the overall delta of INR 350 crores.

So is it then fair to assume that we can see a growth rate of 15% plus in the focus market once everything stabilizes. And also, what is your CapEx plan going ahead given that now you are increasing the grammage in your packet. So what would be the CapEx plan going ahead?

Answering your first question, Shreya, in the core state, there will be 2 reasons for us to grow. One is our stabilized supply chain, which will be backed by automation and distribution plus our marketing endeavors. Coming to CapEx part, I'll let Mr. Rigan answer this question.

So as far as CapEx since we have enough capacities available currently. So we don't require to build any additional capacity to incur additional sales or to improve the grammage.

Got it, sir. And sir, about the namkeen category, do we see the growth coming back once the -- like full -- once we get a full quarter of operation in Modasa facility? Or is there a degrowth of some sort in the namkeen category? Because there has been a slight degrowth in the namkeen quarter-over-quarter?

Yes. So let me deep dive into the numbers, Shreya ji. Typically, when we start our operations in Modasa, so our first priority was to manufacture the single-line product items. So all the Gathiyas are single-line product items, whereas when we sell namkeens, so namkeens have got 5 items, which have got mixture. So manufacturing mixture is a comparatively complex thing because then you have to do a mixture of several things. So now since entire production and supply chains are stabilized, so namkeens will also come into growth trajectory.

The next question is from the line of Azharuddin Jariwala from Sameeksha Capital.

Am I audible?

Yes, Mr. Jariwala, you are audible now.

Okay. So my question is on the side of the geographical volume as we are seeing quite muted growth in our core market. So how are we taking any measures to revive the volume in core market?

Yes, Mr. Jariwala, I already stated that if you consider Gujarat as our core market, so strategy is very clear that, one, since our supply chain has stabilized, so distributor will start getting full -- have already started getting full range from one place only. So that helps in faster rotation of his business. Second, we have already started automation of our distribution ecosystem and that we are complementing through adding more number of salesmen to cater majority of outlets twice in a week instead of once in a week. And third factor will be marketing endeavor. We started our TV campaign as well as digital campaign as well as print campaign 3 days back. So that is going to help largely into core markets itself, which is Gujarat.

Okay. And for the next year, as you are assuming the delta of INR 300 crores to INR 350 crores income incrementally. So how are you looking at the category-wise like the Gathiya and namkeen or any -- which are the higher-margin products which you are focusing currently. So how are you looking at the category-wise revenue?

See, at company level, if we are aiming to have a growth of 20% plus, so that will come from the respective categories only. So in our FRAMs category, this was first quarter after so many quarters that we are able to bounce back. So FRAM, we will continue to grow by 20%. We are doing certain innovations and renovations in our FRAMs category. In Gathiya category, it will be aided through TV ad and marketing campaigns. So Gathiya, we will certainly grow by 20%. And in wafer category, since our base have depleted, so we will like to come back to our original run rate. So the overall growth run rate growth, we are aspiring 20% plus. So it will get reflected in across categories.

The next question is from the line of Amit Agicha from HG Hawa.

Sir, what was the marketing spend in Q3 9M FY '26 in crores and in percentage of revenue?

So in Q3, in terms of percentage of revenue, it was close to 2%.