Hyderabad: Heritage Foods reported a sharp decline in profitability during the fourth quarter of FY26 as elevated milk procurement costs and supply-side pressures weighed heavily on margins, despite steady revenue growth and strong traction in value-added dairy categories.
The company’s Board of Directors approved the audited standalone and consolidated financial results for the quarter and year ended March 31, 2026, and recommended a final dividend of ₹2.50 per equity share (50% on face value of ₹5) for FY26, subject to shareholder approval at the upcoming Annual General Meeting.
Q4 EBITDA Falls 35% Year-on-Year
On a consolidated basis, EBITDA for Q4 FY26 fell 35% year-on-year to ₹523 million compared to ₹799 million in the corresponding quarter last year.
EBITDA margin also declined sharply to 4.52% from 7.62% in Q4 FY25, reflecting severe cost pressure arising from higher milk procurement prices and weak milk availability.
Net profit for the quarter dropped 37% year-on-year to ₹241 million from ₹382 million.
However, revenue continued to grow steadily:
- Q4 FY26 consolidated revenue: ₹11.6 billion
- Q4 FY25 consolidated revenue: ₹10.5 billion
- Revenue growth: 10% YoY
Milk Procurement Costs Hit Record Levels
The company described FY26 as one of the toughest operating periods for the dairy industry in recent years.
Average landed milk procurement cost rose to ₹46.7 per litre during Q4 FY26, an increase of 8% year-on-year, driven by:
- Weak flush season
- Lower milk availability
- Industry-wide supply tightness
Milk procurement volumes declined 7% year-on-year to 16.38 LLPD during the quarter.
Despite procurement challenges, milk sales volumes still grew modestly:
- Q4 milk sales volume growth: 1% YoY
- FY26 milk sales volume growth: 2% YoY
Average milk selling prices improved by 4% year-on-year to ₹57.80 per litre during Q4 FY26.
Value-Added Products Continue Driving Growth
Value-Added Products (VAP) emerged as the company’s biggest growth engine during FY26.
VAP revenue grew:
- 18% YoY in Q4 FY26 to ₹3,957 million
- 13% YoY in FY26 to ₹14,678 million
The contribution of VAP to total revenue increased to:
- 35.5% in Q4 FY26
- 35.3% in full-year FY26
Including consumer-pack fats such as ghee and butter, the broader premium product portfolio contributed nearly 42% of Q4 revenue.
Strong category-level growth included:
- Paneer volumes: +32% YoY in Q4
- Ice cream volumes: +26% YoY in Q4
- Curd volumes: +11% YoY in Q4
Quick Commerce and E-Commerce Expand Rapidly
The company also witnessed rapid growth in emerging distribution channels:
- E-commerce and quick commerce revenues grew 56% YoY
- Fresh distribution and emerging channels grew 49% YoY
Heritage Foods currently serves around 10 million consumers daily through:
- 7,500+ distributors
- 2,25,000+ retail outlets
- 859 Heritage Parlors
- 423 Happiness Points
Strategic Expansion Continues
The company continued investing in capacity expansion and premiumisation initiatives during FY26.
An upcoming ice cream manufacturing plant at Hyderabad’s Shamirpet region is expected to support rising demand in the fast-growing ice cream segment.
The company also launched Organic Cow Milk in Bengaluru as part of its premium dairy strategy.
Operationally, the company now has:
- Chilling capacity: 2.6 MLPD
- Processing capacity: 2.95 MLPD
- 18 processing plants nationwide
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Subsidiary Businesses Also Perform Strongly
Heritage Nutrivet Limited, the company’s wholly owned feed subsidiary, reported:
- 33% YoY revenue growth
- 40% growth in feed volumes
- Significant rise in profitability during FY26
The company also consolidated:
- Heritage Novandie Foods Limited
- Peanut Butter and Jelly Limited
during the fiscal year.
Management Outlook
Brahmani Nara said the company remained resilient despite severe milk shortages, procurement inflation, and operational challenges across the dairy industry.
She highlighted strong momentum in:
- Premium dairy categories
- Value-added products
- Quick commerce
- Consumer engagement channels
The company plans to continue focusing on:
- Procurement infrastructure
- Distribution expansion
- Premiumisation
- High-growth dairy categories
as industry conditions gradually stabilise.
Dividend and AGM Calendar
The Board has proposed a final dividend of 50%, rewarding investors who hold the stock as of the mid-July cutoff.
| Event | Date |
| Record Date | Wednesday, July 15, 2026 |
| 34th AGM (Virtual) | Thursday, July 23, 2026, at 10:00 AM |
| Book Closure Period | July 16, 2026 – July 23, 2026 |
| Dividend Payment Date | Thursday, July 30, 2026 |
Strategic Corporate Moves
- Consolidation of HNFL: Heritage has moved to take greater control of its joint venture, Heritage Novandie Foods Limited (HNFL). By acquiring 71 lakh shares for ₹85 million, the company is signaling its intent to dominate the premium yogurt and specialized dairy space.
- Leadership Continuity: The re-appointment of Mr. M P Vijay Kumar as an Independent Director for a second 5-year term ensures stability in the board’s oversight during this volatile period for the dairy industry.
- Labour Code Compliance: In a proactive accounting move, the company recognized a one-time expense of ₹48.07 million for employee benefits. This follows the new Government of India Labour Codes notified in late 2025, ensuring the company is legally and ethically “future-proofed.”
Stock Performance Analysis
The historical returns reflect a classic “long-term winner, short-term struggle” scenario.
- Long-Term (5 Years): The stock has been a multi-bagger, delivering +108.12%. This showcases the strength of the Heritage brand over a 5-year horizon.
- Medium-Term (6 Months to 1 Year): The stock is down roughly 7% to 21%. This aligns with the broader industry trend of “margin squeeze” caused by high milk procurement costs and heatwave-related supply shocks.
- Recent Momentum: There is a sharp recovery in the last month (+11.92%), likely driven by the dividend announcement and the robust growth in Value-Added Products (VAP).
Summary for Investors
Heritage Foods is currently a story of resilience. While extreme heat and high milk prices have hurt short-term profits (as seen in the 35% EBITDA drop), the company is using its cash reserves to pay dividends and buy out partners. For the long-term investor, the 5-year return profile remains strong, and the shift toward Q-Commerce and Premium VAP (Paneer, Ice Cream, Organic Milk) appears to be the primary engine for the next leg of growth.
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I do my best to share reliable and well-researched insights but occasional errors or omissions may slip through. Please view all content as informational.
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