The poultry sector is likely to witness a 10 percent growth in this financial year due to a sustained increase in demand amid moderating realisations, a report said on Tuesday.

Along with revenue, Crisil Ratings in a report said that operating profitability is also likely to bounce back 70 basis points (bps) this fiscal as input feed costs declined on softer soy and maize prices.

This will help strengthen credit profiles despite additional debt set to be contracted for the capacity increase over the medium term, it added.

According to the report, the revenue of the Indian poultry sector will grow 10 percent this fiscal on the back of sustained demand growth amid moderating realisations, even as new capacities come on stream and drive-up volume.

"Consumption of broiler meat and eggs is seen rising to 5.2 lakh tonnes (up 11-13 percent year-on-year) and 150 billion (up 6-8 percent), respectively.

"This is led by improvement in rural demand, higher per-capita consumption of meat, and increasing preference for protein-rich diets. Increased volumes will support sectoral revenue growth despite dampening realisations," Crisil Ratings Director Himank Sharma said.

Further, the report said that broiler meat realisation is likely to drop 6-8 percent year-on-year to Rs 114-116 per kg this fiscal largely on account of increased supplies with new capacities coming onstream.

However, poultry feed costs, driven largely by maize and soy, may moderate from their highs seen last year, which should prop up operating margins to over 5.5 percent - 70 bps higher on a year-on-year basis, it said.

While poultries have undertaken 8-10 percent capacity addition (partly debt-funded), with demand remaining firm, the capacity added in the last two quarters of the previous fiscal will also see a quick ramp-up this fiscal.

ALSO READ: Why did tomato prices shoot up to Rs 100 per kg?

"Hence, deleveraging is expected to continue in the poultry sector, supported by improving volumes and healthy profitability. The addition in debt will not have a bearing on financial risk profiles," Crisil Ratings Director Jayashree Nandakumar said.

(Edited by : Keshav Singh Chundawat)