Gopal Snacks, a well-known packaged food manufacturer with a strong presence in the savoury and ready-to-eat snacks segment, is eyeing significant revenue and margin growth in FY26. The company has set a revenue target of ₹1,750–1,800 crore, translating to a year-on-year growth of 18–20%, despite facing multiple challenges in FY25 including a fire outbreak at one of its major production facilities.

FY26 Revenue and EBITDA Growth Expectations

According to Rigan Raithatha, Chief Financial Officer of Gopal Snacks, the company is not only aiming to boost its topline but also expects a 25% increase in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) in absolute terms for FY26. The company intends to optimise cost structures and improve margins by adjusting its product mix and leveraging better input pricing in the coming quarters.

This growth plan comes despite the fact that the company faced a challenging fourth quarter (Q4FY25), where it recorded revenue of ₹317 crore and reported a slim margin of 0.6%.

Fire at Rajkot Facility – Major Disruption in Q4 FY25

One of the major factors behind the muted Q4 performance was a fire incident at the company’s Rajkot production facility, which led to a 110-day disruption in operations. This resulted in an exceptional loss of ₹47.2 crore and an estimated revenue loss of ₹80–100 crore.

The insurance claim assessment for the damage is currently underway, and the company hopes to recover part of the losses through insurance payouts. Despite this setback, the company remained resilient and has already restored production capacities, setting its focus firmly on FY26 targets.

Impact of Raw Material Costs and Import Duty on Palm Oil

Raithatha pointed out that another major contributor to lower margins in Q4 was the sharp increase in raw material costs, particularly due to the Government of India’s decision to raise import duty on palm oil from 5% to 25% in mid-September 2024. This policy change had a cascading impact on Gopal Snacks’ cost structure, given that palm oil is a critical input in many of its products.

However, he noted a silver lining—palm oil prices have started to decline in Q1 FY26, offering a favourable outlook for cost optimisation in the coming quarters. Prices of other essential ingredients such as chana (chickpeas) have also softened, creating a margin tailwind for the company.

Product Mix Strategy to Improve Revenue Quality

A major shift that Gopal Snacks is implementing is in its product mix strategy, specifically in terms of pack size contributions. Historically, the ₹5 price point packs formed a major portion of sales, accounting for about 75% of the total revenue.

The company has successfully brought this down to below 70% and plans to reduce it further to 62–63% in FY26. The rationale behind this strategy is to:

• Enhance margins by increasing the share of larger, more premium pack sizes.

• Diversify the product range to appeal to a broader consumer base.

• Increase average revenue per unit sold, which contributes positively to both revenue and profitability.

This move is particularly important in rural and semi-urban markets, where ₹5 packs have traditionally dominated but are now showing saturation.

Improved Cost Efficiency Expected in Q1FY26 and Beyond

With the decline in palm oil and chana prices, and the resumption of production at Rajkot, Gopal Snacks expects to see improved margins in Q1 FY26 and in the subsequent quarters. The company’s supply chain is stabilising, and cost-saving measures are starting to yield results.

Raithatha confirmed that internal benchmarks for profitability are being reset, and the company is looking to achieve sustainable operational efficiency across all facilities.

Stock Performance and Market Sentiment

Gopal Snacks currently holds a market capitalisation of ₹3,813 crore, and its stock is trading at ₹307.05 on the NSE (as of 2:17 PM). The stock has declined 4% over the past year, reflecting investor caution stemming from the Rajkot fire and input cost pressures.

However, with clear growth targets and margin-improvement plans in place, analysts expect sentiment to improve once the company begins showing results from its FY26 strategy. The management’s transparent communication and confidence in meeting targets may also help rebuild investor trust.

Insurance Claim and Future Resilience

While the insurance assessment is ongoing, Gopal Snacks remains focused on long-term value creation. The management has signalled that the fire incident has prompted a strategic review of risk management practices, and future investments may include advanced fire safety systems, redundant manufacturing capabilities, and more robust insurance coverage.

These steps aim to mitigate future disruptions, allowing the company to maintain its growth trajectory.

Conclusion: Growth Despite Adversity

Despite the setbacks in FY25, Gopal Snacks is entering FY26 with renewed optimism, backed by:

• Stabilising raw material prices

• A clear strategy to shift the product mix

• Recovery from the Rajkot facility fire

If all goes as planned, ₹1,800 crore in revenue and 25% EBITDA growth is well within reach, making Gopal Snacks a player to watch in the Indian packaged foods space.

The Upcoming IPOs in this week and coming weeks are 3B Films, N R Vandana Tex Industries, Scoda Tubes,Neptune Petrochemicals, Astonea Labs, Nikita Papers, Prostarm Info Systems, Victory Electric Vehicles International, Blue Water Logistics, Wagons Learning.

The Current active IPO are Aegis Vopak Terminals, Schloss Bangalore, Unified Data - Tech Solutions.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.