Experienced partners and established track record of Operations:
Mahendra feeds and foods (MFF) has experience of more than one decade in feed manufacturing and poultry business. The firm is currently managed by Mr. Palansamy and Mr. Thailagan. The experience of the partners has enabled the firm to maintain long term relationship with its suppliers and customers. MFF procures raw material like maize, soya, broken rice, rice bran, bajra, jowar, sunflower, mustard cake and other raw materials from various places in Tamil Nadu, Karnataka, Andhra Pradesh and Uttar Pradesh. Firm process the raw material and manufactures feeds for poultries, firm also supplies feeds to farmers and procures eggs in return. MFF has in house poultry business with a capacity of 70,000-80,000 birds, the process includes farming, hatching, extracting eggs and producing broiler chicken. Further, firm is also into solar power generation business with an installed capacity of 14.5 MWs, and entered into purchase power agreements with various companies and institutions near Namakkal with an average rate of Rs.7.2 per unit. Acuite believes that experience of the partners and established track record of operations combined with diversified source of revenue will continue to benefit MFF over the medium term.

Scale of operations:
The firm reported a marginal decline in revenue to Rs.513 crore in FY25 from Rs.524.01 crore in FY24, primarily due to lower raw material trading and reduced realization from feed sales; however, performance has strengthened in the current year, with revenue increasing to Rs.591.34 crore in 10M FY26 from Rs.443.14 crore in 10M FY25, indicating medium-term growth momentum. Despite moderation in revenue, operating margins improved significantly to 5.78% in FY25 from 3.14% in FY24 due to lower raw material prices, while PAT margins strengthened to 2.89% in FY25 from 1.03% in FY24. Acuité believes operating performance to improve, supported by the YTD performance and profitability, though raw material price volatility will remain a key monitorable.

Efficient Working Capital Management:
MFF’s working capital management remained efficient, with GCA days at 48 days in FY25 compared to 45 days in FY24. Debtor days increased to 26 days in FY25 from 14 days in FY24, largely due to year-end billing, although the firm generally receives immediate payments from major customers and extends limited credit of 30–40 days to select clients based on relationships. Inventory levels remained stable with inventory days at 17 days in FY25 against 18 days in FY24. Other current assets declined significantly to Rs.5.74 crore in FY25 from Rs.19.30 crore in FY24 due to reduced advances to suppliers. Accounts payable days stood at 7 days in FY25 as against 6 days in FY24. Acuité believes the working capital cycle is expected to remain efficient over the medium term.

Moderate Financial Risk Profile:

The financial risk profile of the firm remains moderate, supported by moderate net worth, improved gearing and healthy debt protection indicators. Net worth increased to Rs.41.28 crore in FY25 from Rs.39.16 crore in FY24, while total borrowings declined to Rs.69.62 crore in FY25 from Rs.79.08 crore in the previous year, resulting in improved gearing of 1.69 times in Fy 25 against 2.02 times in FY 24. Debt protection metrics remained stable with ICR and DSCR stood at 4.54 times and 2.21 times respectively in FY25, while TOL/TNW and Debt/EBITDA stood at 1.93 times and 2.33 times in FY 25. The firm is in the early planning stage for a 10 MW solar power plant with an estimated capex of about Rs.50 crore, of which Rs.40 crore is proposed to be funded through bank debt and the remaining through internal accruals and partners’ capital; the project is expected to be operational by end-FY27. Additionally, a term loan of Rs.5 crore has been planned for equipment purchase, also expected to be capitalized by FY27. Acuité believes that although the upcoming debt-funded capex may lead to moderate variation in the financial risk profile, it is expected to remain above average over the medium term; however, given the partnership structure, any significant capital withdrawal by partners will continue to be a key monitorable.

Exposure to inherent risks in the poultry industry: 
The poultry industry remains vulnerable to outbreak of diseases, which can adversely impact sales volume and selling prices. Such diseases also have an impact on production of healthy chicks. Moreover, seasonality in demand also causes fluctuation in product prices.