The Indian poultry sector is grappling with significant volatility due to multiple challenges, with bird flu outbreaks and fluctuating broiler prices being the most pressing concerns. According to an ICRA report, localized instances of bird flu in Maharashtra, Andhra Pradesh, Madhya Pradesh, Telangana, and Jharkhand in February 2025 severely impacted consumer sentiment. The fear of contamination led to a sharp decline in broiler realisations, with prices plummeting by 22-25% in the western and southern markets and 14-16% in the eastern and northern regions. Sequentially, February broiler prices fell by 18-19% in the western and southern regions and 11-14% in the east and north.
Financial Impact on Poultry Businesses
The financial impact has been severe for poultry companies, with many firms expected to report operating losses for Q4 FY2025. While the first nine months of FY2025 saw improved financial performance, the industry is projected to close the year with a modest 4-5% revenue growth and operating profit margins (OPM) of 4.5-4.7%. This decline in earnings comes despite relatively stable feed prices, with maize prices increasing by only 3% and soybean prices falling by 4% in FY2025 compared to the previous year.
However, 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 amortization (OPBDITA) is expected to improve slightly from 3.0 times in FY2024 to 2.8 times in FY2025. That said, companies heavily exposed to affected regions are experiencing financial strain due to supply shortages and increased mortality rates.
Persistent Threat of Bird Flu
One of the most concerning factors highlighted in the report is the recurring 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 face major setbacks, as many importing countries impose blanket bans on affected nations, limiting India’s ability to expand into international markets.
Outlook for the Industry
The report suggests that the upcoming quarter may bring some recovery. Reduced broiler placements by farmers due to the recent price collapse, coupled with increasing demand during the festival season, could help stabilize prices and improve profitability. The OPM for Q1 FY2026 is expected to rise to 5-6%. However, continued vigilance is required to address 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.
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