The Indian poultry sector is experiencing volatility due to multiple challenges, with bird flu outbreaks and fluctuating broiler chicken prices being the most pressing concerns. The Icra report indicates that localised instances of bird flu in Maharashtra, Andhra Pradesh, Madhya Pradesh, Telangana, and Jharkhand in February 2025 significantly affected consumer sentiment. The fear of contamination led to a sharp decline in broiler chicken realisations, with prices dropping 22-25 per cent in the western and southern markets and 14-16 per cent in the eastern and northern regions. On a sequential basis, February broiler prices fell by 18-19 per cent in the western and southern regions and 11-14 per cent in the east and north.
The financial impact has been severe for poultry companies, with many firms set to report operating losses for Q4 FY2025. While the first nine months of FY2025 saw better financial performance, the industry is expected to close the year with a modest 4-5 per cent revenue growth and operating profit margins (OPM) of 4.5-4.7 per cent. The decline in earnings comes despite relatively stable poultry feed raw material prices, with maize prices increasing only 3 per cent and soybean prices falling 4 per cent in FY2025 compared to the previous year.
The report also notes that the industry’s credit profile has remained largely stable despite the losses. Interest coverage is estimated at 4.4 times as of March 31, 2025, compared to 4.0 times the previous year, while total debt-to-operating profit before depreciation, interest, tax, and amortisation (OPBDITA) is expected to improve slightly from 3.0 times in FY2024 to 2.8 times in FY2025. However, financial strain is evident for companies heavily exposed to affected regions, with supply shortages and increased mortality rates further exacerbating the crisis.
One of the most concerning factors highlighted in the report is the persistent threat of bird flu in India. The virus continues to surface in different parts of the country, primarily due to migratory birds during the winter season. While consumer awareness has improved over the years, any outbreak still leads to immediate demand contraction, significantly affecting prices and industry profitability. Additionally, poultry exports take a direct hit as many importing countries impose blanket bans on affected nations, limiting India’s ability to tap into international markets, it added.
The report suggested that the upcoming quarter may bring some recovery. Reduced broiler placements by farmers due to the recent price collapse and increasing demand around the festival season could help prices stabilise and profitability recover. The OPM for Q1 FY2026 is expected to improve to 5-6 per cent. However, continued vigilance is required to address the structural risks in the industry, including disease management, supply chain disruptions, and price volatility.
While the poultry sector remains a crucial part of India’s agribusiness, the latest ICRA report underscores the vulnerabilities it faces. The industry’s long-term stability depends on stronger biosecurity measures, diversified revenue streams, and greater resilience to market shocks. Without these, short-term gains could be easily offset by recurring challenges, keeping profitability volatile and unpredictable.
Source – businessworld
