Heritage Foods Ltd. reported strong year-on-year revenue growth in the second quarter of FY2027, supported by expanding value-added dairy products, higher sales volumes and continued investment in product innovation. Consolidated revenue increased 19% year-on-year to ₹1,320 crore, while the company’s core dairy business grew nearly 17%.
Despite the revenue growth, profitability remained under pressure compared with the previous year as elevated milk procurement costs continued to challenge the dairy industry. However, sequential improvements in operating performance indicated a recovery from the first quarter, supported by cost management and a stronger product mix.
Profitability Improves Despite Higher Milk Costs
Heritage Foods recorded EBITDA of ₹74 crore in Q2 FY27, representing a 20% increase from the previous quarter. EBITDA margin improved to 5.6%, up from 4.6% in Q1, a recovery of 98 basis points.
On a year-on-year basis, EBITDA declined 4%, while profit after tax (PAT) fell 39%, reflecting continued cost pressures. Average milk procurement prices increased 11% year-on-year to ₹47.73 per litre during the quarter.
The company attributed the challenging milk-cost environment to demand-supply imbalances, low farm productivity, weather disruptions and rising feed and fodder expenses. These factors are affecting dairy farmers’ economics and adding pressure to processors’ margins.
Despite supply constraints, deeper engagement with farmers helped Heritage Foods achieve 7% year-on-year volume growth. The company also reported that calibrated price increases supported revenue growth while maintaining consumer demand across major product categories.
Value-Added Dairy Products Drive Growth
Value-added products emerged as a major growth driver, recording 32% year-on-year growth in Q2 FY27. Several categories delivered substantial volume increases, including curd, paneer, buttermilk, lassi and ice cream.
- Curd: Volume growth of 27%.
- Paneer: Volume growth of 38%.
- Buttermilk: Volume growth of 67%.
- Lassi: Volume growth of 91%.
- Ice cream: Volume growth of 81%.
The company’s ice cream expansion has been supported by a greenfield manufacturing facility commissioned in the previous year. Meanwhile, daily curd sales crossed 500 tonnes, supported by positioning focused on natural goodness, taste and the absence of artificial ingredients.
Including consumer packs of ghee and butter, Heritage Foods’ value-added portfolio grew 31% during the quarter. These products contributed 42.5% of revenue in Q2 FY27, compared with 37.9% in the same quarter last year. For the first half of FY27, the share increased to 45.7%, up from 39.3% a year earlier.
The rising contribution of value-added products is strategically important because it reflects a shift towards a broader portfolio of dairy categories beyond conventional milk.
High-Protein Products Strengthen Innovation Strategy
Heritage Foods is also expanding its Nourish+ High Protein platform to capture consumer interest in protein-rich foods. The platform now contributes more than 15% of the company’s total paneer sales.
During the quarter, the company introduced Nourish+ High Protein Curd, with 25 grams of protein per pack. Its Livo and Greek Yogurt portfolio also crossed 100 tonnes in sales, highlighting continued development in specialised dairy products.
These initiatives reflect the company’s focus on product innovation and differentiated offerings. High-protein paneer, curd and yoghurt provide additional options for consumers seeking convenient ways to incorporate protein into their diets.
Quality Assurance and Operating Efficiency
Heritage Foods is strengthening consumer confidence through its Quality Ka Report Card initiative in Hyderabad. The programme allows consumers to check milk quality information through a QR code printed on each pack, supporting greater transparency around product quality.
The company also reported improvements in employee and operating expenses as a proportion of revenue. Combined with a richer product mix, these efficiencies helped support the sequential improvement in EBITDA margin.
Outlook for the Coming Quarters
As Heritage Foods enters Q3 FY27, its priorities include maintaining revenue growth, expanding value-added categories and improving profitability despite elevated milk procurement costs.
The company’s latest results highlight the importance of farmer engagement, disciplined cost management, brand development and innovation in a challenging dairy market. Continued growth in paneer, curd, buttermilk, lassi, ice cream and high-protein products could further strengthen its business mix.
However, sustained margin recovery will depend partly on milk procurement trends, feed and fodder costs, supply conditions and the company’s ability to maintain consumer demand while managing operating expenses.