Rising Feed Costs Drag Indian Poultry Industry Profitability: Crisil

(MENAFN- KNN India) New Delhi, Feb 21 (KNN) The Indian poultry industry is projected to experience a 50 basis point decline in operating profitability during the upcoming fiscal year, according to a report released Thursday by Crisil Ratings.

This downturn comes despite anticipated revenue growth of 8-10 per cent, primarily driven by robust demand in the sector.

The analysis, which examined 30 poultry companies with combined revenues of approximately Rs 10,000 crore in the previous fiscal year, indicates that recent profitability gains achieved through lower feed costs will diminish as prices for key ingredients surge.

Crisil Ratings Director Jayashree Nandakumar notes that soya, comprising 30 per cent of total feed expenses, is expected to become more expensive due to reduced cultivation area.

Similarly, maize, which accounts for 60 per cent of feed costs, faces price pressures from increasing ethanol production demand.

The impact of these cost pressures is evident in the steady rise of maize procurement prices in India, which have increased from Rs 1,962 per quintal in fiscal year 2023 to Rs 2,225 in fiscal year 2025, according to data from market research platform Statista.

In response to these challenges, poultry companies are expected to increase their feed inventory during harvest seasons, potentially extending gross current assets to 60-65 days.

Despite these headwinds, the industry's credit outlook remains stable. Post-pandemic capacity expansions have created adequate operational buffers, reducing the necessity for major debt-funded investments.

Financial metrics are expected to remain healthy, with interest coverage ratios maintaining a comfortable range of 3.1-3.5 times and stable gearing ratios around one time.

Ricky Thaper, Joint Secretary, Poultry Federation of India, emphasises that the sector's future growth depends on several critical factors, including demand patterns, technological advancement, government policies, and feed availability.

He particularly stresses the importance of investing in cold chain infrastructure and establishing processing facilities that meet international standards.

The industry faces additional challenges regarding maize supply allocation between poultry and biofuel sectors.

Thaper suggests that India should consider allowing genetically modified maize imports and enhance domestic production to address the growing demand from various industries, including poultry, starch, and biofuel sectors.

While the overall outlook remains stable, industry stakeholders must continue monitoring feed costs, poultry price fluctuations, and potential bird flu outbreaks as key risk factors.

(KNN Bureau)

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