Mumbai, Nov 11 The poultry sector in India is projected to see revenue increase by 4-6 per cent during the current financial year, driven by increasing rural demand, higher per capita consumption of meat and growing preference for a protein-rich diet, according to a Crisil report released on Tuesday.
Operating margin, however, will slip 0.8 to 1 per cent because of lower broiler prices in the first half of the financial year, which will be partly mitigated by a subsequent recovery in broiler prices and favourable feed costs throughout the year, the report states.
However, despite the lower profitability, credit profiles of poultry companies are seen stable, backed by modest capital expenditure, limited debt addition and steady accrual.
The report is based on an analysis of 34 companies with a cumulative revenue of Rs 10,815 crore during the last financial year.
The layer/egg segment accounts for 55 per cent of the poultry industry by value and the broiler segment for the remaining 45 per cent. In the broiler segment, revenue growth is likely to slow to 1-3 per cent during the current financial year due to lower realisations.
Crisil Ratings director Jayashree Nandakumar said that “Wholesale broiler prices fell 20 per cent year-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 per cent in the current fiscal.”
Sales volume in the broiler segment is expected to grow 6-8 per cent to around 5.86 lakh tonne during the current financial year.
In the layer/egg segment, the sales volume is seen up 4-6 per cent to around 15,750 crore eggs even as prices are seen rising a steady 2-4 per cent amid stable demand. India's per capita consumption of eggs, at 102 per annum, is significantly below the global average of 218, indicating substantial growth potential. Hence, the egg segment’s revenue is poised to grow 7-9 per cent during the current financial year, the report further stated.
The blended revenue growth of the poultry industry is expected at 4-6 per cent in the current fiscal. Profitability, however, is seen under pressure. The first half of this fiscal saw broiler prices crash, leading to substantial inventory losses for industry players and, thereby, around 2 per cent decline in the operating margin.
In the second half, however, players will be able to minimise losses on account of subsequent recovery in broiler prices and favourable feed costs, the report added.
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