ICRA Sees Poultry Earnings Improving As Broiler Prices Recover In FY27

India's organised poultry industry is expected to report improved earnings and stronger credit metrics in FY2027 as a recovery in broiler prices offsets stable feed costs, despite risks from an uncertain monsoon and higher soyabean prices, according to a report by ICRA.

The ratings agency said operating profit margins (OPM) for its sample of poultry companies are projected to rise to 5.8-6.0 per cent in FY2027 from an estimated 5.6 per cent in FY2026, supported by better broiler realisations, economies of scale and increased vertical integration.

The improvement follows a difficult first half of FY2026, when oversupply in the domestic market pushed broiler prices lower and squeezed margins. Prices recovered from the end of the third quarter after organised producers reduced broiler placements and smaller players exited the market, helping rebalance supply, ICRA said.

The agency expects that recovery to continue through FY2027 unless a major disruption, such as a widespread bird flu outbreak, significantly affects demand.

Average broiler realisations fell about 7 per cent in FY2026 after declining sharply during the first half of the financial year due to persistent oversupply. However, prices rose around 31 per cent year-on-year in the fourth quarter as supply tightened.

Broiler realisations in the first quarter of FY2027 have already increased 8-10% year-on-year, prompting ICRA to forecast revenue growth of 9-11% for its sample companies during the year.

The report said improved pricing and higher sales volumes among large integrated producers would also strengthen credit profiles. Interest coverage is projected to improve to 4.8-5.0 times by March 2027 from an estimated 4.7 times a year earlier, while total debt to operating profit before depreciation, interest and tax is expected to improve to 2.6-2.8 times from 2.9 times.

Feed costs, which account for roughly 70% of variable costs for poultry companies, remain a key monitorable.

Although overall feed costs declined around 2% in FY2026 as maize prices dropped 10%, soyabean prices increased around 6% during the year and rose sharply in May 2026 because of lower domestic production and strong demand from feed manufacturers.

ICRA said a 17.5% decline in soyabean output during FY2026, coupled with a 40% rainfall deficit recorded in June 2026, has raised concerns about kharif production if the south-west monsoon remains below normal.

While maize prices are expected to remain largely range-bound due to improved domestic production, they could still experience volatility depending on rainfall patterns and demand from ethanol producers and the animal feed sector, the report said.

The agency also highlighted structural changes that continue to favour larger organised poultry companies over smaller producers.

It said vertically integrated companies benefit from economies of scale, better access to finance and stronger control over feed procurement, hatcheries, breeding and processing facilities. These advantages have enabled them to better withstand fluctuations in raw material prices and poultry realisations.

ICRA's sample of five large poultry groups plans to invest between ₹2,750 crore and ₹3,500 crore over FY2027 and FY2028 to expand feed plants, hatcheries, breeder farms, slaughterhouses and other integrated facilities. The investments are expected to increase their gross block by more than 25% and will be financed through a mix of debt and equity or internal accruals.

The agency said government support schemes, including subsidised financing and capital incentives for poultry infrastructure, are also expected to strengthen organised players while accelerating industry consolidation.

Bird flu remains a recurring risk, although ICRA said outbreaks have generally been localised and temporary in recent years. Improved consumer awareness has reduced the severity of demand shocks following outbreaks, although temporary declines in broiler prices and exports may still occur.

India is the world's fifth-largest chicken producer and second-largest egg producer. According to ICRA, the domestic poultry industry expanded at a compound annual growth rate of around 6% between calendar years 2018 and 2025, while revenues of its sample companies grew at around 10%, reflecting an ongoing shift towards organised producers.