XA Update Report | PT Indofood Sukses Makmur Tbk. (INDF) – Solid Delivery, Watching Input Costs Into 2H26
By Steven Willie (Research Associate)
29-May-2026
INDF posted a solid 1Q26, with revenue growing +7% YoY to IDR 33.9 tn — coming in on track at a 26% run-rate of our FY26F estimates. Gross margin narrowed to 32.9% (vs. 34.5% in 1Q25 / 33.6% in 4Q25), as higher input costs weighed on overall profitability. OPM similarly contracted to 19.3% (vs. 21.9% in 1Q25 / 19.9% in 4Q25), reflecting OPEX that rose +17% YoY in the quarter. Despite operating-level pressure, net profit rose +9% YoY to IDR 2.96 tn — in line with our estimates at 27% of FY26F. The key support came from below the operating line: finance expenses declined sharply by -35% YoY, driven by a -56% YoY reduction in net foreign exchange losses from financing activities.
🔹 FY25 & 4Q25 Financial Performance
• On track, broad-based delivery. INDF posted a solid 1Q26, with revenue growing +7% YoY to IDR 33.9 tn — coming in on track at a 26% run-rate of our FY26F estimates. Growth was broadbased across segments, with CBP leading the charge at +8% YoY (+11% QoQ), followed by Bogasari at +7% YoY (+3% QoQ) and Distribution at +5% YoY (+14% QoQ). The lone laggard was Agribusiness, which grew only +3% YoY and contracted -20% QoQ, as CPO prices softened to IDR 14,202/kg in 1Q26 (vs. IDR 14,412/kg in 1Q25).
• Margin compression deepens — Agribusiness the swing factor. Gross margin narrowed to 32.9% (vs. 34.5% in 1Q25 / 33.6% in 4Q25), as higher input costs weighed on overall profitability. OPM similarly contracted to 19.3% (vs. 21.9% in 1Q25 / 19.9% in 4Q25), reflecting OPEX that rose +17% YoY in the quarter. The most pronounced drag came from Agribusiness, where EBIT margin compressed significantly to 16% (vs. 21% in 1Q25 / 23% in 4Q25) — translating to a -20% YoY decline in segment EBIT.
• Bottomline lifted by financing tailwind; core earnings remain subdued. Despite operatinglevel pressure, net profit rose +9% YoY to IDR 2.96 tn — in line with our estimates at 27% of FY26F. The key support came from below the operating line: finance expenses declined sharply by -35% YoY, driven by a -56% YoY reduction in net foreign exchange losses from financing activities. NPM held steady at 9%, consistent with both 1Q25 and 4Q25. Stripping out nonrecurring items, however, core profit grew only +1% YoY.
🔹 Input Price Volatility Remains the Challenge
• CPO sentiment mixed — near-term export drag clouds the bull case. CPO price hovered around MYR 4,500/ton (+14% YoY, +12% YTD), supported by firmer Dalian vegetable oil prices, declining Malaysian output concerns, and Indonesia’s plan to route palm oil exports via a state-owned trading entity from September. Separately, crude oil prices face additional pressure as a tentative U.S.–Iran ceasefire extension has eased Middle East supply concerns.
• CBP pressure set to persist. Headwinds in the CBP segment are expected to continue into the coming quarters, driven by a confluence of rising input costs. Beyond CPO, wheat prices have surged +16% YoY (+22–23% YTD), adding meaningful cost pressure to flour-intensive product categories. Compounding this, USD/IDR depreciation of approximately +9.7% YoY (+7% YTD).
🔹 OVERWEIGHT Recommendation with Target Price at IDR 7,750/Share
• We maintain our OVERWEIGHT rating on INDF with a target price of IDR 7,750. INDF’s diversified business model and export contributions continues to provide earnings resilience. With the stock currently trading at a compelling 5.7x P/E, we view current levels as an attractive entry point for investors seeking defensive exposure to Indonesia’s staples sector.
• Risks : (1) Weaker-than-expected consumer purchasing power; (2) higher-than-anticipated input costs, particularly key raw materials; (3) intensifying competition from substitute and competing brands; and (4) IDR depreciation.
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NH Korindo Sekuritas Indonesia berizin dan diawasi Otoritas Jasa Keuangan (OJK). Untuk informasi lebih lanjut, anda dapat menghubuni CS kami via email CSO@nhsec.co.id
