Key Points
Poultry revenues expected to grow 8-10% despite margin pressure
Maize and soya feed costs projected to increase
Domestic chicken and egg consumption driving industry growth
Per capita consumption remains below global average
The operating profitability is expected to slip 50 basis points, the rating agency said in a note this week.
With modest capital expenditure (capex), no significant debt addition and healthy accrual, the credit profiles of poultry companies are expected to remain stable, Crisil Ratings said.
The rating agency has come up with these estimates after analysing 30 poultry poultry companies it rates. Those 30 companies had generated revenue of about Rs 10,000 crore last fiscal - 2023-24.
"The industry's margin improved last fiscal and this fiscal due to favourable input costs and higher realisation, particularly from softening feed prices," said the rating agency.
In 2025-26, profitability is, however, expected to narrow next fiscal owing to an anticipated increase in prices of maize and soya-made feeds.
Jayashree Nandakumar, Director, Crisil Ratings said the price of soya, which accounts for 30 per cent of the total feed cost, declined last fiscal and this fiscal owing to a bumper crop.
"However, with the soya acreage expected to reduce, the price is likely to increase next fiscal," Jayashree Nandakumar said in the note.
The price of maize, which constitutes 60 per cent of the overall feed cost, is also expected to increase due to rising demand for ethanol production, she added.
Despite a decline in profitability, revenues of poultry companies are likely to increase 8-10 per cent next fiscal, following a similar growth rate this fiscal, driven by both healthy volume and solid realisation.
Strong growth in domestic consumption of broiler chicken and eggs is expected to drive volume growth.
India's per capita consumption of eggs and poultry meat is much lower than the global average, indicating significant potential for growth.
"Changing dietary preferences, rising disposable income and increasing urbanisation are some of the factors that would support volume growth of 4-6 per cent over the medium term," said the rating agency.
Rishi Hari, Associate Director, Crisil Ratings said, given the strong demand and higher feed cost, they expect overall realisation for the industry to grow 4-5 per cent next fiscal.
"The average price per kg of broiler chicken would increase 3-5 per cent and the average price per dozen eggs by 2-4 per cent on-year," Rishi Hari said.
