Vadilal Industries FY26: The Summer Play Hits Its Peak

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1. At a Glance

Vadilal Industries served up ₹1,503 Cr in FY26 revenue, a 21.4% jump on FY25’s ₹1,238 Cr. The ice cream maker’s net profit landed at ₹155.1 Cr, marginally up 3.2% — a growth rate that looks pale next to the top-line gallop. Operating margin compressed to 16.6% from 19.3%, suggesting that scaling at pace without price power remains a balancing act.

A 7.57% pledged promoter holding sits in the balance sheet’s blind spot. The company now trades at 26.8x on FY26 earnings, above the peer set’s median of 25.1x. ROCE returned 22.2%, solidly in the “decent” band for a packaged foods business.

The Gandhi family restructuring — three branches settling a decade of disputes via a memorandum of arrangement approved in May 2025 — has let the credit agencies breathe easier: India Ratings upgraded the bank facilities from BBB+ to A- in April 2025. Governance matters, even for ice cream.

2. Introduction

Vadilal began in 1907 as a soda shop. By 1926, founder Vadilal Gandhi’s son was turning a hand-cranked ice cream machine into a retail dream. Today, the company operates twin ice cream plants — Pundhra in Gujarat and Bareilly in UP — plus a processed-foods unit in Valsad. It exports frozen fruits, vegetables, and ready-to-eat meals to 24 countries through subsidiaries in the USA and Australia.

The business splits roughly 80:20, domestic to export. Ice cream drives 90% of consolidated revenue; processed foods pick up the rest. The company owns 70,000 deep freezers across 24 states and 2 UTs, serves 175,000 retailers, and pumps out 2.3 million cones a day from the fastest cone machine in the country — a claim no competitor bothers contesting.

In FY25, the Gandhi family dispute hit a resolution milestone: NCLAT disposed of all litigation in May 2025. The board was reconstituted with independent directors in the majority. The company plans a merger of three family entities into the main company. Himanshu Kanwar, a non-family CEO, took the helm in September 2025. The shift from family management to professional governance marks the company’s turning point on paper.

3. Business Model: WTF Do They Even Do?

Vadilal makes ice cream the way ice cream ought to be made: milk, sugar, and cones. Lots of cones. The cone machine spits 2.3 million daily. The company also handles premium segments — Vadilal Premium, Vadilal Super Cones, branded offerings in every state — and competes against Amul’s sprawl, Kwality Wall’s advertising spend, and Havmor’s regional grip. In a fragmented market, Vadilal owns northern and western India, especially Gujarat, Rajasthan, and UP, which feed 70% of domestic revenue.

Frozen fruits and vegetables — a smaller segment — are exported. The US absorbs 90% of export revenue, commanding higher unit economics than the domestic business. That export margin boost explains why consolidated EBITDA climbs more than standalone figures suggest.

The distribution model is old-school retail partnership: 70 C&F agencies, 1,500 distributors, 175,000 dealers. No direct-to-consumer play. No premiumization narrative that analysts love. The freezer network — 70,000 units — represents sunk capex, switching cost, and deep retail moat. Competitors can’t rent that overnight.

Raw materials (milk, skimmed milk powder, sugar, vegetable oils, dry fruits) made up 47–53% of revenue in FY23–FY25. Milk and SMP prices swing with global dairy. In winter, prices drop and Vadilal stocks up. In summer, those stockpiles become margins — the classic ice cream seasonal play.

4. Financials Overview

Figures are consolidated, in ₹ crore.

Q4 FY26 posted ₹416 Cr revenue and ₹54.9 Cr profit, accounting for ~28% of annual revenue and ~35% of annual profit. The March quarter is always frontloaded with demand — Vadilal’s ice cream business peaks in Q1 (April–June) when temperatures climb.

Operating Metrics: OPM collapsed from 19.3% in FY25 to 16.6% in FY26. The 270 bps swing points to cost inflation outpacing price rises. Power and fuel, employee costs, and other manufacturing expenses all grew in absolute terms while sales margins thinned. Interest expense stood at ₹16.4 Cr, down from ₹13.7 Cr in FY25.

FY26 Q4 Segment (from Quarters sheet): Sales ₹415.8 Cr, Expenses ₹330.8 Cr, Operating Profit ₹85.1 Cr, Net Profit ₹54.9 Cr. The quarter saw OPM of 20.4%, indicating seasonal strength pushed the year-end quarter into healthier margin territory.

5. Valuation Discussion: Fair Value Range (Educational Only)

What follows is a walkthrough of how three valuation methods work, using this company’s numbers as the example — not a target, not a forecast, not advice.

Method 1 (P/E): Annualised EPS ₹215.8 × peer band 20.8x–25.1x produces ₹4,487–₹5,410.

Method 2 (EV/EBITDA): EBITDA ₹249.5 Cr ÷ Enterprise Value ₹4,343 Cr yields an EV/EBITDA of 17.4x. Peer median EV/EBITDA sits at ~17x–18x. At the peer median 17x, the arithmetic outputs ₹4,242 Cr enterprise value, or ~₹5,100 on equity.

Method 3 (Simplified DCF): A business growing revenue at