Krishival Foods (KRISHIVAL) Q2 FY27 Profit Climbs 23% Despite Softer Sales
The cashew and ice cream maker posted a 23% sequential profit jump on better margins, but a surge in working capital is draining cash.
Krishival Foods' Q2 FY27 profit rose 23% sequentially to ₹6.9 crore, driven by a sharp margin improvement in its ice cream division. However, revenue dipped 4% from the prior quarter, and rapid expansion is fueling a significant cash outflow.
For Krishival Foods, the September quarter was a story of two diverging lines. While the profit statement showed a healthy 23% sequential jump in earnings, the cash flow statement revealed the cost of funding that growth. The company is successfully scaling its higher-margin ice cream business, but that expansion is currently being financed through working capital, not operating cash.
Revenue of ₹85.66 crore grew a solid 29% from a year ago, though it eased 4% from the June quarter's peak. Profit, however, climbed to ₹6.9 crore, pushing the net profit margin up 180 basis points sequentially to 8.1%. The quarterly scorecard shows the mixed trajectory.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 85.66YoY +28% | 88.96 | 66.67 |
| Profit (₹ Cr) | 6.90YoY +19% | 5.60 | 5.80 |
| Net Profit Margin | 8.1%YoY -6.9% | 6.3% | 8.7% |
The Ice Cream Engine Fires
The profit improvement was powered by the Melt N Mellow ice cream division. According to the company's investor presentation, this segment's revenue surged 65% year-on-year to ₹22.50 crore. More importantly, its EBITDA margin expanded to 16% from just 4% a year ago, as reported by scanx.trade. This operating leverage from a rapidly scaling vertical more than offset a slight dip in overall sales.
The Cash Cost of Growth
This growth is not yet cash-accretive. Research from scanx.trade highlights a stark divergence: while H1 revenue grew 50%, net cash used in operations widened to ₹49.74 crore. The cause is a steep rise in working capital, with inventories and receivables climbing by over ₹80 crore in six months. Sales are expanding on the back of inventory build-up and extended credit.
Funding this expansion has led to a sharp rise in debt. Borrowings have increased significantly to support capacity and freezer network rollout, contributing to a 163% year-on-year jump in interest expense. The company's strategic push, including a ₹100 crore rights issue, is aimed at building scale for the long term.
How Long Can This Last?
Management has set ambitious targets, including ₹1,500 crore revenue by FY29, as noted in its presentation. The near-term guidance is for 50% sales and profit growth this fiscal year, a target H1 revenue growth has already met. The path hinges on improving capacity utilization and, critically, converting sales into cash.
The market's initial read was cautiously positive, with the stock closing up 3.6% on the results date. Analytics firm MarketsMojo upgraded its technical rating to 'Hold' from 'Sell' just prior to the announcement, reflecting a shift in sentiment.
Key Points
- Profit rose 23% quarter-on-quarter to ₹6.9 crore, driven by a 400 basis point expansion in the ice cream division's EBITDA margin.
- Revenue of ₹85.66 crore grew 29% year-on-year but dipped 3.7% sequentially from the previous quarter's high.
- Operating cash flow turned deeply negative as working capital requirements surged to fund inventory and receivables for expansion.
- Management maintains its full-year guidance of 50% growth in both sales and profit.
Hexa Perspective
Krishival Foods is demonstrating it can build a profitable, scaled ice cream business alongside its core nuts division. The margin expansion this quarter is a clear operational win. The tension lies in the cash flow statement, which shows the company is spending ahead of its earnings to fund this growth. For the story to hold, the current working capital bulge must be a temporary investment phase, not a permanent feature of the model. Investors are betting that the newly built freezer network and expanded capacity will drive sufficient volume and cash generation to cover the rising debt costs. The next few quarters will test whether sales momentum can be sustained without further straining the balance sheet.
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