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Credit rating agency ICRA expects the revenue growth for its sample set of domestic poultry companies to improve mildly to about 5-6 per cent in FY2025 after an estimated modest Year-on-Year (YoY) growth of about 3-4 per cent in FY2024.

According to ICRA, the growth will be driven by demand improvement, increasing share of organised players and growing preference for value-added products.

“While broiler meat realisations continued to be strong till 7M FY2024 (YoY growth of about 2 per cent), they started tapering thereafter due to high placement and excess supply in key markets,” ICRA said in its recent report.

Subsequently, Q3 FY2024 witnessed a about 10% Quarter-on- Quarter (QoQ) drop in average realisations, resulting in overall flat average numbers in 9M FY2024 on a YoY basis. The same could revive gradually, as the oversupply scenario corrects over the next few months, ICRA said.

While realisations improved in 7M FY2024 following controlled supply and healthy demand, poultry companies’ earnings were further supported by softened feed costs, ICRA said.

Average maize prices during April-November 2023 decreased by about 9 per cent vis-à-vis FY2023. Likewise, soybean prices softened in the current fiscal and average prices in 9M FY2024 declined by about 14 per cent vis-à-vis FY2023. However, the realisations started tapering from November 2023 onwards and the grain prices, particularly maize, also started rallying since then, ICRA said.

Further, significant contraction in soybean harvest during the kharif season and delayed sowing of maize may result in a potential spike in feed costs and is likely to exert pressure on the margins of poultry companies over the next few quarters, ICRA said.