The domestic poultry industry is expected to grow 8-10 per cent in 2023-24, driven by volumes and realisations following stable demand and higher penetration of processed chicken as well as value-added products, a report said on Friday.
However, earnings are expected to be volatile owing to fluctuations in the raw material prices particularly maize and limited ability of players to fully pass on cost increases, it said.
In the report, Icra said it expects the domestic poultry industry's revenues to grow at a steady pace of 8-10 per cent in FY24 due to growth in both volumes and realisations.
In addition to stable demand, the revenues will be supported by increased penetration of processed chicken and value-added products, which are growing consistently, it added.
According to the report, maize prices have grown significantly by 32 per cent on an annual basis in the first nine months of FY23. This was due to the growing global demand for Indian maize following the Russia-Ukraine conflict, which has subsequently resulted in an increase in the average feed price.
Earlier, the rising soybean prices had been putting pressure on feed costs, which have moderated in the current fiscal, the report said.
Icra said it expects poultry companies to invest towards forward integration in the medium-term, that is, towards setting up processing plants to enable shift towards higher margin value-added products.
The recent widespread global bird flu outbreaks are a reason for alarm and remain a significant vulnerability for the Indian chicken business, it said.
Although there are now only a few isolated instances in India, the report said the demand could be negatively impacted in the event of a widespread outbreak, leading to substantially lower realisations.