Hindustan Foods bucks the trend with record sales while FMCG rivals struggle

In a standout performance for the first half of fiscal year 2025, Hindustan Foods Limited (HFL) has reported its highest-ever consolidated revenue, despite challenging market conditions within the Fast-Moving Consumer Goods (FMCG) sector. The company, a leader in contract manufacturing across diverse FMCG verticals, credits this achievement to strategic expansions and a resilient business model, even as it faces slowing consumer demand.

Revenue Soars Despite Industry Headwinds

For the first half of FY2025, Hindustan Foods Limited reported a 35.4% increase in total income, reaching ₹1,756.9 crore compared to ₹1,297.1 crore in H1FY24. The company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) rose by 38.6%, from ₹106.9 crore to ₹148.2 crore. Profit Before Tax (PBT) also saw a significant 12% rise, landing at ₹68 crore, while the Profit After Tax (PAT) climbed 4.4% to ₹50.2 crore.

This growth comes amidst a slowdown in the FMCG sector, where reduced consumer spending has affected many players. Yet, HFL’s diversified portfolio and focus on high-growth categories have enabled it to thrive. The company’s success across multiple FMCG segments is being cited as a key factor in achieving these record-breaking results.

Ice Cream and Beverage Expansions Drive Growth

Hindustan Foods Limited has undertaken several expansions, including the addition of new customers and the enhancement of production capabilities. In Nashik, HFL has expanded its ice cream manufacturing facility under an anchor-tenant model, attracting additional customers. This investment is expected to boost operations significantly by April 2025, with a total capital expenditure of ₹185 crore. The company is also extending its capacity at an ice cream plant in Lucknow with a ₹20 crore investment and has sanctioned a greenfield plant in North India to cater to another new customer. This third ice cream manufacturing site will require a phased investment of ₹225 crore.

HFL is strengthening its beverage division as well, with an additional ₹15 crore earmarked for capacity expansion at the Mysuru plant. A new acquisition in Orissa for a beverage unit underscores HFL’s commitment to diversifying its product range and regional reach, ensuring further growth momentum in the coming quarters.

Footwear Segment Set to Boost Profitability

As the footwear division continues to grow under the leadership of Carsten Braun, HFL’s efforts to expand its footprint in the sports shoe market are becoming evident. The division has seen rapid growth, with recent investments aimed at establishing HFL as a premier partner for leading global brands. Braun highlighted the demand surge in India’s sports shoe market, driven by a heightened consumer focus on fitness and style, creating substantial opportunities for both established brands and new entrants.

According to Braun, the company has stabilized its factory operations and is delivering in line with customer expectations. He projects a turnaround in profitability over the next few quarters, fueled by increased production efficiency and the expansion of factories in the southern region.

Financial and Operational Efficiency Remain Strong

HFL’s Group CFO, Mayank Samdani, emphasized the company’s strong financial performance, with H1FY25 revenue bolstered by the footwear and OTC wellness businesses, specifically the Baddi factory operations. The company’s cash flow performance has also improved, with net operating cash flow for H1FY25 reaching approximately ₹74 crore compared to ₹24 crore in H1FY24. This improvement is attributed to efficient cash conversion from existing operations, despite increased working capital requirements from new projects.

Looking forward, Samdani expressed optimism about further profitability growth in H2FY25, as the company’s shoe business approaches a positive cash flow position and the new manufacturing units ramp up production.

Hindustan Foods Limited’s Vision for a Scalable Future

Hindustan Foods Limited was founded in 1984 and has since evolved into a diversified manufacturing powerhouse. Acquired by Vanity Case Group in 2013, the company has expanded into multiple FMCG categories, including food and beverages, personal care, footwear, and household products. The recent greenfield and expansion projects align with HFL’s long-term goal to reach a gross block of over ₹1,800 crore by FY2026, reinforcing its position as a major player in India’s contract manufacturing space.

With a clear growth trajectory and strategic focus on high-potential categories, Hindustan Foods Limited remains confident in navigating the challenges within the FMCG sector, maintaining its commitment to long-term scalability and profitability.