Crisil sees steady consumption lifting sector revenue, even as weak broiler prices and margin pressure temper profitability
India’s poultry industry is expected to record a 4–6 per cent rise in revenue this financial year, supported by firm consumption trends driven by stronger rural demand, higher per capita meat intake and a wider shift toward protein-rich foods, Crisil Ratings said.
Despite the top-line uptick, profitability is set to shrink. Operating margins are projected to fall by 80–100 basis points as broiler prices remained weak in the first half of the year. A later rebound in prices and consistently favourable feed costs will soften the blow, but not fully offset it.
Crisil noted that the credit health of poultry companies should hold steady, helped by limited capex plans, controlled borrowings and stable cash flows. The agency’s analysis of 34 rated companies, together generating roughly Rs 10,815 crore in revenue last year.
The poultry market’s value split remains unchanged, with eggs accounting for 55 per cent and broilers making up the remaining 45 per cent. Broiler revenue growth, however, is expected to cool to 1–3 per cent this fiscal because of weak realisations.
“ Wholesale broiler prices fell 20 per cent on-year to Rs 110-115 per kg in the first quarter of this fiscal, as a short summer and an early monsoon led to relatively higher bird weights and, hence, a surplus in supply. Subsequently, with the onset of the festive season, broiler prices have begun to recover. Yet, average broiler prices will be lower by 4-6% on-year in the current fiscal”, said Jayashree Nandakumar, Director, Crisil Ratings.
Eggs Lead Sector Performance
Broiler sales volumes are forecast to rise 6–8 per cent to about 5.86 lakh tonnes. The egg segment is also extending its gains, with volumes climbing 4–6 per cent to nearly 15,750 crore eggs. Prices here continue to rise at a steady 2–4 per cent pace on the back of firm demand.
With India’s per capita annual egg consumption at just 102, which is far below the global average of 218. Crisil expects the egg category to deliver 7–9 per cent revenue growth, outpacing the broader poultry market.
While industry-wide revenue is set to expand 4–6 per cent, profitability remains under strain. A slump in broiler prices during the first half led to inventory losses and a sharp 200 bps hit to margins. The second half should offer some relief as prices recover and feed costs stay supportive.
Feed Costs Provide Cushion
Rishi Hari, Associate Director, Crisil Ratings, said, “Feed prices account for 60-65 per cent of the total material cost, split 1:2 between soy de-oiled cake and maize. This fiscal, soy de-oiled cake prices are expected at Rs 35-37 per kg, a tad lower than last fiscal, because of oversupply. Meanwhile, owing to increased acreage, maize prices are likely to remain stable at Rs 24-25 per kg despite sustained demand from the poultry and ethanol sectors.”
As a result, overall profitability is expected to slip by 80–100 bps for the full year. Softer feed prices will also help companies avoid piling up working capital.
Crisil expects the sector’s credit outlook to stay stable, even with lower margins. Leverage and interest coverage ratios should remain broadly unchanged at 1.3 times and 3.0–3.2 times, respectively. However, factors such as feed price swings, volatility in broiler and egg prices, the risk of bird flu, and any slowdown in consumption remain key watch points.
