1. At a Glance – The Milkman With a Calculator
Heritage Foods is that classic South Indian dairy name you’ve seen since childhood—except now it’s juggling ₹3,687 crore market cap, a ₹397 stock price, and a balance sheet that looks fitter than most FMCG peers. Q3 FY26 delivered ₹11,192 mn revenue (+8% YoY) but PAT slipped 20% YoY to ₹346 mn. ROCE sits tall at 25.3%, ROE at 20.2%, debt-to-equity a polite 0.21, and dividend yield a modest 0.63%.
But here’s the drama: sales are steady, volumes are alive, yet profits took a hit. Milk prices? Competitive pressure? Input costs? Welcome to dairy—where margins are thinner than toned curd. And just when margins are under stress, management says: “Let’s spend ₹220 crore on a greenfield ice-cream plant.” Bold or brilliant? Keep reading.
2. Introduction – From Morning Milk to Boardroom Math
Founded in 1992, Heritage Foods has evolved from a regional milk supplier into a multi-division agri-FMCG player—dairy, renewable energy, and animal feed. It processes 2.78 million litres per day, operates 18 plants across 9 states, sells in 19 states, and touches 75% of pincodes it targets.
The promoter lineage is well-known, but this piece is about numbers, not nostalgia. FY25 closed with ₹4,417 crore sales, ₹163 crore PAT, and EPS ₹17.7. Over the last five years, profit compounded at ~26%, while sales grew ~9%—a reminder that operating leverage and product mix matter more than just pushing milk.
Q3 FY26, however, reminded investors that dairy is cyclical. When procurement prices rise faster than consumer prices, margins sulk. The question is simple:
is this a blip, or a structural squeeze?
3. Business Model – WTF Do They Even Do?
Think of Heritage as three cousins at a family wedding:
- Dairy (the responsible elder)
Milk (57% of FY25 revenue), VAPs like curd, paneer, lassi, flavoured milk (32%), fats (8%). This is the cash engine. - Animal Feed (the silent earner)
Via Heritage Nutrivet, cattle feed dominates with 89% of feed revenue. Lower glamour, steady margins. - Renewable Energy (the token green badge)
Not the headline act, but helps with cost optimisation and ESG optics.
Distribution is everywhere—7,400+ distributors, 205,000 retail outlets, 859 parlours, quick commerce apps, and modern trade. If milk had LinkedIn, Heritage would be “well-networked”.
4. Financials Overview – Numbers Don’t Lie, They Just Tease
Q3 FY26 Performance (Consolidated, ₹ mn)
| Metric | Latest Qtr | YoY Qtr | Prev Qtr | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 11,192 | 10,340 | 11,137 | 8.2% | 0.5% |
| EBITDA | 630 | 720 | 770 | -12.5% | -18.2% |
| PAT | 346 | 431 | 510 | -19.6% | -32.2% |
| EPS (₹) | 3.73 | 4.64 | 5.50 | -19.6% | -32.2% |
Annualised EPS (Q3 rule) = Average of Q1, Q2, Q3 EPS × 4 ≈ ₹17–18, broadly aligning with TTM ₹17.71.
Commentary: Revenue held firm, margins didn’t. This quarter smells like higher procurement costs meeting price discipline.
