💰 Financial Performance

Revenue Growth by Segment

Consolidated pro-forma revenue grew 8% in Q2 FY26 and 10% in H1 FY26. By segment, Sundrop Brands (58% of business) grew 7% in Q2 and 11% in H1, while Del Monte (42% of business) grew 10% in Q2 FY26. E-commerce revenue surged 41% in Q2 FY26, and B2B revenue grew 23% in the same period.

Geographic Revenue Split

Not disclosed in available documents, though the company mentions a media experiment in a regional market to expand the Sundrop Heart franchise.

Profitability Margins

Gross margins expanded by 250 bps in Q2 FY26 and 190 bps in H1 FY26. This was driven by a relentless focus on material costs and operational efficiencies in manufacturing and supply chain. Reported EBITDA margin improved to 4.0% in Q2 FY26 from 3.1% in Q2 FY25.

EBITDA Margin

Consolidated EBITDA (excluding ESOP and one-time costs) grew 29% in Q2 FY26 and 30% in H1 FY26. The pro-forma EBITDA growth reflects the successful integration of Del Monte and cost-rationalization programs.

Capital Expenditure

Not disclosed in absolute INR Cr for future periods, but the company emphasizes a 'capital efficient approach' to building scale and ensuring efficiency of capital deployed for any new expansion.

Credit Rating & Borrowing

The company maintains a strong balance sheet with NIL borrowings as of September 30, 2025. Operating margins improved to 3.7% in Q1 FY26 from 2.6% in FY25, which is a key credit monitorable.

⚙️ Operational Drivers

Raw Materials

Edible oils (commodity-linked), packaging materials (RM & PM), and food ingredients for spreads and snacks. Material costs accounted for INR 240.1 Cr in Q2 FY26, representing approximately 62.6% of total revenue.

Import Sources

Not specifically disclosed, though the company manages a global affiliation through its perpetually licensed food brands.

Capacity Expansion

Current capacity not disclosed in MT; however, the company is expanding its reach by bringing its 500,000 (5 lakh) outlet coverage onto a tech platform (Bizom), with 23% coverage achieved in Q2 FY26 vs 9% in Q1 FY26.

Raw Material Costs

Material costs were INR 240.1 Cr in Q2 FY26, up 86% on a reported basis due to the DMFPL acquisition. On a pro-forma basis, material costs improved as a ratio of revenue, contributing to a 250 bps gross margin expansion.

Manufacturing Efficiency

Manufacturing and supply chain costs were specifically targeted for improvement through external advisory, resulting in significant operational margin gains.

Logistics & Distribution

Distribution is being modernized via 'Sales Force Automation' through the Bizom platform, covering 113,000 outlets as of Q2 FY26 to track productivity KPIs.

📈 Strategic Growth

Expected Growth Rate

10%

Growth Strategy

Growth will be achieved through a 'scaled food platform' approach following the 100% acquisition of Del Monte Foods Private Limited (DMFPL). Strategies include aggressive investment in e-commerce (+41% growth), expanding the Sundrop Heart and Oats franchises, and leveraging a GST reduction (from 12%/18% to 5%) for 95% of the portfolio to drive volume.

Products & Services

Edible oils (Sundrop Heart), Peanut Butter (Spreads), Oats, Pasta, Olive Oil, Canned Fruits and Vegetables, and ready-to-cook/ready-to-eat snacks.

Brand Portfolio

Sundrop, Del Monte, Crystal.

New Products/Services

New launches in the Del Monte 'layers' and 'timed fruits and vegetable' segments, alongside an expansion into the Sundrop Oats business.

Market Expansion

Focusing on fast-growing channels like Quick Commerce and hybrid e-commerce platforms, which grew 41% YoY. Also expanding regional reach through targeted media experiments.

Market Share & Ranking

The company holds leadership positions in some categories and 'challenger' positions in others, with a total reach of 500,000 retail outlets.

Strategic Alliances

Acquired 100% equity of Del Monte Foods Private Limited (DMFPL) on February 6, 2025, to create a consolidated food platform.

🌍 External Factors

Industry Trends

Consumer megatrends are driving a shift toward branded packaged foods. The industry is seeing a reduction in GST for food items, which Sundrop has passed on to consumers via reduced MRPs to stimulate volume growth.

Competitive Landscape

Facing intense competition in the spreads and dips category from new entrants offering high-protein and chocolate variants.

Competitive Moat

Moat is built on strong brand recall for 'Sundrop' and 'Del Monte' and a massive distribution network of 5 lakh outlets. Sustainability is driven by 'perpetually licensed' brands and a shift toward high-margin food categories like spreads and oats.

Macro Economic Sensitivity

Highly sensitive to edible oil commodity cycles and GST policy changes. The transition of 95% of the business to a 5% GST bracket is a significant tailwind for consumption.

Consumer Behavior

Shift toward e-commerce and quick commerce for food purchases, where the company is investing ahead of the curve with 34% higher advertising spend.

Geopolitical Risks

Not disclosed, though global affiliations for brands like Del Monte imply exposure to international supply chain stability.

⚖️ Regulatory & Governance

Industry Regulations

Compliant with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company recently changed its name from Agro Tech Foods Limited to Sundrop Brands Limited to reflect its focus on its core brand.

Taxation Policy Impact

95% of the group business (excluding edible and olive oils) has seen a GST reduction from 12%/18% down to 5%, which is being used to drive volume growth.

Legal Contingencies

The MDA report mentions legal proceedings but does not disclose specific case values or material pending litigation that would impact financial stability.

⚠️ Risk Analysis

Key Uncertainties

Volatility in raw material costs for edible oils could impact absolute margins. The integration of DMFPL and the associated one-time costs (INR 6.2 Cr for advisory) and ESOP charges (INR 8 Cr) impact short-term reported profitability.

Geographic Concentration Risk

Not disclosed, but the company is moving toward national tech-platform coverage for its 500,000 outlets.

Third Party Dependencies

Dependency on external partners for margin improvement programs in packaging and logistics.

Technology Obsolescence Risk

The company is mitigating tech risks by migrating its entire sales force to the Bizom mobile platform to track productivity KPIs.

Credit & Counterparty Risk

Not disclosed; however, the company maintains a free cash balance of INR 24 Cr and zero debt.