This article first appeared on GuruFocus .
Release Date: November 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Sundrop Brands Ltd ( BOM:500215 ) reported an 8% growth in Q2 and a 10% growth in H1, despite GST transition challenges.
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The B2B segment, particularly led by Del Monte, showed strong performance with a 23% growth in Q2.
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E-commerce channels experienced robust growth, with a 31% increase in Q2 and 42% in H1, supported by aggressive marketing investments.
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The company achieved a 250 basis points improvement in gross margins, driven by cost efficiencies in manufacturing and supply chain.
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Sundrop Brands Ltd ( BOM:500215 ) remains a zero-borrowing company with a strong balance sheet, holding a free cash balance of 24 crore.
Negative Points
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The GST transition led to a 2-3% impact on business growth, affecting the overall performance in September.
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The peanut butter segment is under pressure, experiencing an 11% decline due to strong competition and market challenges.
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Sunflower oil volumes have been affected by high commodity prices, leading to a shift by bulk pack users to cheaper alternatives.
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The Italian business segment saw a 3% decline in value terms due to price reductions in olive oil, despite strong volume growth.
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The company incurred one-time costs related to external advisory fees for improving margins, impacting short-term financials.
Q & A Highlights
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Q: What is the expected volume growth for Sundrop Brands, considering the GST impact? A: The volume growth for the company is estimated to be around 4-5% after accounting for a 2-3% GST impact. The company is focusing on category-specific investments to drive both value and volume growth, particularly in categories like ready-to-eat popcorn. The management is committed to protecting volumes in the edible oil segment while focusing on value growth in other categories like olive oils and ketchups. (Respondent: Unidentified_3)
Q: How has the GST rate change affected Sundrop Brands' portfolio, and how has the company passed on the increase to consumers? A: Approximately 95% of Sundrop Brands' business has moved to a 5% GST rate, with 70-75% of the business benefiting from the reduction. The company has passed on the benefits to consumers through a combination of price reductions and gramage increases, depending on the product and price point. (Respondent: Unidentified_3)
Q: Can you provide guidance on the ESOP costs for FY26, FY27, and FY28? A: The ESOP costs are non-cash expenses linked to long-term performance parameters. Approximately 30% of the grant is linked to tenure, while 70% is performance-based. The costs will be higher in the first two years and lower in the last three years. (Respondent: Unidentified_3)
Q: What is the strategy to regain market share in the spreads category, particularly peanut butter? A: Sundrop Brands has launched new high-protein and competitively priced products to address competition in the spreads category. The company aims to regain market share by targeting specific segments with these new offerings while maintaining margins. (Respondent: Unidentified_6)
Q: What are the long-term growth and margin expectations for Sundrop Brands? A: Sundrop Brands aims to achieve strong double-digit EBITDA margins over the next four years by expanding scale and leveraging synergies between its businesses. The company plans to grow significantly ahead of industry growth, targeting a 2x growth rate compared to the industry. (Respondent: Unidentified_3)
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
