Orkla India’s revenue rises 19.4% in Q2, but volume growth remains subdued
Fast-moving consumer goods company Orkla India reported a 19.4% year-on-year increase in revenue from operations in the September quarter, driven by strong growth in its spices business and pricing actions, even as volume growth remained subdued amid elevated input costs.
Revenue from operations rose to ₹776 crore in the second quarter of FY27, from ₹650 crore a year earlier. Revenue from sale of products grew 18.4%, while volume growth, measured by tonnage, stood at 2.9%, compared with 7.7% in the year-ago quarter. Net profit increased 19.2% to ₹91 crore from ₹77 crore.
“We are not fully thrilled about the volume growth number. Our organizational focus is squarely on volume growth,” Sanjay Sharma, managing director and chief executive officer of Orkla India, said in an interview with Mint.
The company’s spices business, which includes brands such as MTR and Eastern, reported revenue of ₹498 crore, up 25.1% from ₹398 crore a year earlier. Convenience foods revenue rose 7.7% to ₹271 crore from ₹252 crore.
The slower growth in convenience foods portfolio was partly due to a shift in the festive calendar. Diwali and Dussehra fell in the September quarter last year, while the festivals have moved into the December quarter this year, Sharma said, adding that the company expects the category to see stronger demand in the third quarter.
The spices business recorded growth across geographies, with Kerala, which had been under pressure for several quarters, beginning to turn around. The state is now growing faster than the company average, Sharma said.
The company continues to face elevated input costs, particularly in spices. Its consumption cost index for spices stood at 1.30 in the September quarter, compared with 0.88 in the year-ago period, reflecting an increase of 48.2%. The index is based on Orkla’s own average consumption costs.
Sharma said the high year-on-year increase partly reflects the base effect of a period of sharp price deflation, when spice prices had fallen by around 30%. Prices are now normalizing towards earlier levels, making the year-on-year increase appear steeper. He expects input-cost trends to become steadier going forward.
The company tracks crop development, sowing trends and cold-storage stocks to assess commodity availability and price movements ahead of the harvest season, Sharma said. It also uses data and artificial intelligence-based models to improve its price forecasts.
Earnings before interest, tax, depreciation and amortization (Ebitda) rose 12.6% to ₹124 crore in the September quarter from ₹110 crore a year earlier. However, Ebitda margin narrowed to 15.9% from 16.9%, as higher input costs and investments in the company’s Project Bolt transformation programme weighed on profitability.
Sharma said the company expects some of the margin pressure to ease as price increases taken after the latest round of industry-wide cost inflation begin to flow through. Expenses linked to Project Bolt are also expected to end by November-December 2026. He said the company remains confident about its margin trajectory.
For the first half of FY27, revenue from operations rose 15.1% to ₹1,435 crore from ₹1,247 crore in the year-ago period. Volume growth stood at 2.3%, compared with 8% in the first half of FY26.
Ebitda grew 7.8% to ₹239 crore in the first half, while the margin declined to 16.6% from 17.8%. Profit after tax before exceptional items, net of tax, rose 14.4% to ₹178 crore from ₹156 crore.
Luring customers
Orkla is also investing in digital commerce and new product development to widen its consumer base. Digital commerce grew 23% year-on-year in the September quarter and contributed 10% of domestic revenue, up from 8.9% in the June quarter. Outside South India, the channel grew 33.6%, Sharma said.
The company launched 15 new products in the September quarter, taking the total number of innovations introduced in the first half to 38. The launches are aimed at addressing evolving consumer preferences, including demand from younger consumers and those in urban markets.
“We are actively looking at acquisitions in the spices and convenience foods categories. We are looking at brands that are No. 1 or No. 2 in their respective markets and have the potential to scale the business,” Sharma said.