New Delhi, Feb 23: The Indian poultry industry's operating profitability is expected to decline in the 2025-26 financial year, primarily due to a rise in feed costs, although strong demand will drive revenue growth of 8-10%, according to a report by Crisil Ratings.
The rating agency projects a 50 basis point drop in operating profitability, although it notes that poultry companies' credit profiles are likely to remain stable. This is due to modest capital expenditure (capex), no significant debt increase, and healthy accruals.
Crisil’s estimates are based on an analysis of 30 poultry companies, which generated around Rs 10,000 crore in revenue during the 2023-24 fiscal year.
"The industry's margins improved last fiscal and this fiscal due to favorable input costs and higher realizations, particularly from softening feed prices," the report said. However, profitability is expected to narrow in 2025-26 due to anticipated increases in the prices of maize and soya-based feeds.
Jayashree Nandakumar, Director at Crisil Ratings, explained that soya prices, which account for 30% of feed costs, had fallen in the past two years due to a bumper crop. However, with a reduction in soya acreage, prices are expected to rise next fiscal year. Similarly, maize, which makes up 60% of feed costs, is expected to become more expensive due to increased demand for ethanol production.
Despite the projected decline in profitability, poultry companies' revenues are still expected to grow by 8-10% in 2025-26, reflecting a similar growth rate for this fiscal year. This growth will be driven by both healthy volumes and solid realizations.
Strong domestic demand for broiler chicken and eggs is expected to support volume growth. India’s per capita consumption of eggs and poultry meat is still much lower than the global average, indicating significant potential for growth. Factors such as changing dietary preferences, rising disposable income, and increasing urbanization are expected to drive 4-6% volume growth in the medium term, the report added.
