Poultry profitability expected to improve by 200 bps in FY21: Crisil

Mumbai, Dec 10 The profitability of the poultary sector is expected to improve by 200 bps in FY21, rating agency Crisil Ratings said on Thursday.

As per a Crisil analysis of 87 poultry companies, higher realisations and lower input prices will lead to improvement in profitability.

"The poultry industry will shake off the woes heaped by the Covid-19 pandemic and post a better performance this fiscal because of higher realisations and lower input prices, leading to a 200 basis points (bps) improvement in operating profitability, despite flattish revenues," the agency said.

"Better profitability and modest capital spending, will help improve credit profiles for the industry's players."

According to the agency, wholesale prices of broiler chicken crashed to a low of around Rs 50 per kg in March 2020 from Rs 90 per kg in Jan 2020, due to fears over spread of Covid-19 virus through poultry.

"The unviable prices led to culling of broiler birds, as costs were not being covered, and creation of a supply shock.

"Thereafter, with fears of the virus not being spread through poultry abating and with demand outpacing supplies, prices of broiler chicken surged more than 20 per cent to Rs 90-100 per kg on average in the first half of the current fiscal from Rs 75-80 per kg last fiscal...."

Besides, the agency noted that supplies took time to catch up as poultry farms waited for the monsoon to get over, thereby inflating prices.

"Broiler prices are expected to average at Rs 100-105 per kg this fiscal."