AWL Agri Business Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Volume growth masked by one-offs: Reported 2% volume growth normalizes to 4% when stripping out last year's government-to-government rice export, while food volume was flattish after the same adjustment.
• Edible oil PBT collapsed 55% on low volumes and higher working-capital finance charges from inventory built for demand that did not arrive; working capital is expected to normalize next quarter.
• Nepal duty-free imports are a structural share threat: Soyabean oil entering via SAFTA at 0% duty undercuts Indian brands by ~INR15 per liter, costing AWL an estimated 2.5–3% market share in its northern stronghold, and management sees no near-term policy fix.
• Food segment stays a top-line story with no near-term profit: H2 food growth should return to mid-teens, but the segment will remain EBITDA-neutral for another couple of years, with meaningful bottom-line contribution not expected before FY28.
• What to watch next quarter: Whether the working-capital unwind actually delivers the promised margin relief, the pace of soya nuggets and wheat flour recovery, and any government movement on the Nepal import channelization request.

The Nepal Import Problem

• Mechanics of the disadvantage: Nepal has no domestic oilseed crop; it imports degummed soyabean oil from Argentina at Haldia port, refines it in Birganj, and re-exports it to India under the SAFTA agreement at 0% duty versus India's 16.5%. The result is a roughly INR15 per liter cost advantage over Indian brands.
• Where it hurts: The impact is concentrated in border states (UP, Bihar, Jharkhand, Bengal) where AWL is the largest player, holding over 50% market share in Bihar, 55–60% in Delhi, and 60% in Haryana/Punjab. Nepal imports come predominantly in pouch form (85–90%), directly competing with AWL's King's and Fortune brands.
• Who is switching: Roadside stalls, hotels, and dhabas have started consuming Nepalese oil, and management estimates AWL's soyabean market share has dropped by almost 2.5–3%.
• Policy outlook is stuck: The trade body has asked the government to impose channelizing agencies for quality and value-addition restrictions, but nothing has moved, and management expects the problem to continue under the current SAFTA framework.

Mallick: "Today, if you -- on cost to cost, it is around INR15 per liter cheaper than Indian brands. So obviously, the roadside stalls, hotels, dhabas, all these people have started consuming Nepalese oil. We are largest shareholders, obviously, we have got a hit and our soyabean market share has dropped by almost 2.5%, 3%."

Edible Oil: Volume, Margin & the Working-Capital Drag

• Volume growth target: Management expects mid-single-digit growth in edible oil going forward, with H2 volume normally higher than H1; low single-digit growth of 5–6% should be achievable because imports are down 3% and the country is not consuming even 1% more.
• H2 value outlook: Value is likely to be flattish given the high base of last year, unless a drastic event occurs such as supply chain disruption or a government duty increase of 10–15%.
• Margin framework intact: The benchmark of INR11,000/tonne gross margin and INR3,500/tonne EBITDA was met this quarter, and management sees no risk in delivering that run rate through H2.
• Working-capital overhang: The 55% drop in edible oil PBT was driven partly by additional interest and finance charges from higher working capital, because planned demand did not materialize. Inventory procured earlier will deliver its benefit next quarter as working capital levels normalize.
• Palm-soya spread: The spread between palm and soya is quite low, which is impacting demand for soya packed oil. Palm prices were higher at the beginning of the year but have now come down to normal levels; soyabean is priced very close to palm.
• Soft oil shift in H2: The oil business in the second half will be driven more by the soft oil category (sunflower, soyabean, cotton seed, rice bran, mustard) as winter sets in and consumption of soft oils rises. Sunflower is a little high now but likely to come down after November following harvest season and new processing in Russia and Ukraine.
• Institutional demand recovery expected: Institutions were not doing well in H1 and got impacted in September after the GST cut announcement as their production stopped to clear old stocks. With GST now at 5% for namkeen, frying, and bakery products, a jump in snack food consumption is expected, and AWL as one of the largest institutional suppliers expects higher consumption in the out-of-home segment.

Kanhere: "The future guidance, I think, remains same. I think the run rate at which we are today running, which is close to INR11,000 a tonne of gross margins and INR3,500 tonne of EBITDA per tonne, we should continue to deliver that. I don't see any risk as such in delivering that in H2."

Food & FMCG: Growth Without Profit

• Volume normalization: Reported 10% food volume degrowth becomes flattish when normalizing for last year's one-time government-to-government rice export business. Branded packed food growth in Q2 came mainly from basmati rice, sugar, and wheat flour.
• Wheat flour competition: Flattish food growth was partly due to increased competition from small regional players in wheat flour; management views this as a short-term, one-quarter phenomenon and expects the food basket to recover and deliver better growth going forward.
• Soya nuggets GST disruption: Soya nuggets declined marginally because GST was reduced from 18% to 5%; offtake slowed as trade waited for the new rate to come into effect, with the impact concentrated in September. Full recovery is expected next quarter.
• GD Foods integration: Acquired in April 2025, GD Foods saw all its products move from 18% to 5% under GST 2.0, impacting the quarter. Combo offers with Atta for Tops products (sauces and jams) in August and September received good response, and H2 should see strong demand with double-digit volume and revenue growth.
• H2 growth target: Food growth should return to the long-term guidance of mid-teens in H2, with the second half expected to be as good as or even better than last year's H2.
• Profitability remains distant: The food and FMCG segment will remain EBITDA-neutral for some time, with aggression to grow the top line continuing for the next couple of years. Oil has to deliver better than INR3,500 EBITDA per tonne because food is not at that level, and that is how the blended INR3,500 guidance works.
• Meaningful contribution not before FY28: Management does not expect the food segment to contribute meaningfully to the bottom line before FY28, which is practically three years from now (currently in FY26, then FY27, then FY28). When it does, it is expected to be better than oil.
• INR10,000 crore food revenue target: AWL is working toward this target and expects to be very close to it, with another 18 months to reach it by FY27. The plan banks on the Gohana plant getting streamlined (500 tonnes paddy processing daily), the flour mill (550 tonnes/day ready by end of November), and new Atta plants coming up in Odisha and Bihar.

Kanhere: "And therefore, our sense is that not before FY '28, we should start contributing really meaningful to the bottom line because by only by that time, FY '28 means what I'm saying is practically 3 years from now because right now, we are into FY '26, then you have a '27 and then '28. That's where it will start contributing meaningfully to the bottom line, and I think better than oil rather, I would say."

Distribution & Channel Dynamics

• Rural expansion continues: Rural towns reached increased from 3,000+ in March 2020 to close to 58,000 in September 2025, up 8,000 from March 2025. The stated aim is to reach 0.1 crore outlets directly.
• Quick commerce dominance: Quick commerce is growing 80–85%, and AWL commands over 50% market share in soya oil and over 40% in mustard oil on these platforms. Management expects India will do more purchasing on alternate channels and is investing to sustain that growth.
• E-commerce margin compression: Earlier, e-commerce margins were much higher than general trade; now, with pressure to promote and keep the brand top-of-mind, and competition between FMCG products on e-commerce platforms, e-commerce margins are now at par with or only slightly above general trade.
• Industry sluggishness: The edible oil industry is sluggish due to a grammage play (pouches packed with 720–750 grams versus the standard 910 grams) and an overall contraction in FMCG non-durables.

Industry Essentials & Other Segments

• Industry Essentials margin: The segment delivered one of its best margins, driven by the Oleo business with a positive commodity cycle for glycerine and soap noodles. Normalized profits are expected to continue next quarter.
• Bangladesh turnaround: The business environment improved after two bad years. Volumes declined because the company now commits only to branded volumes rather than loose, but profitability turned positive.
• Oleochemicals disclosure gap: When asked for the share of oleochemicals in Industry Essentials and margin comparisons between oleo, castor, and de-oiled cakes, management gave a qualitative description but did not provide specific share or margin breakdowns.

Guidance & Commitments

Key Metrics