Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

Heritage Foods - Highest EBITDA margin in past decade - ICICI Securities

Posted On: 2020-07-29 22:13:54

Heritage reported revenue decline of 11.4% and PAT growth of 65.1% YoY. EBITDA margin expanded 270bps, YoY. We expect it to report revenue CAGR of 8.2% over FY20-22. We also model value-added products to report revenue decline in FY21-22. Post lockdown, the milk procurement prices have corrected and are expected to be lower with commencement of flush season. We expect EBITDA margins to be above 150bps higher in FY21 due to (1) price hikes of ~12% in FY20, (2) lower sales of ghee and SMP which have lower margins and (3) ~15% correction in milk procurement prices. We model Heritage to report PAT CAGR of 38.3% over FY20-FY22 with improvement in core return ratios. Maintain BUY with a target price of Rs360 (15x FY22E).

- Lower HoReCa sales: Heritage reported revenue decline of 11.4%, YoY. The liquid milk volume declined 20.8%. We believe Heritage generates ~15% revenues from HoReCa and institutions. Decline in off-take by HoReCa resulted in liquid milk revenues. The revenues of Value-added products declined 34% due to (1) decline in ice cream revenues, (2) lower HoReCa sales and (3) early monsoon.

- EBITDA margin expansion due to better realisations and lower RM prices: EBITDA margin expanded 270bps, YoY, due to (1) Carry-over of price hikes (~12%), (2) Lower procurement prices and (3) lower other expenditure (Some cost saving measures & lower ad-spend). Milk realisation increased by Rs6.6/ltr to Rs 46.4/ltr in Q1FY21 from Rs39.8/ltr in Q1FY20.

- Correction in procurement prices post lockdown: Milk procurement prices have corrected 15% QoQ post lockdown due to lower demand of milk. Lower off-take by HoReCa and lower sales of value added products has impacted milk demand. The correction in milk procurement price will lead to better margins for rest of FY21.

- Decline in revenues of value added products to continue: While revenues of liquid milk continue may recover in FY21, we expect other value added products to report revenue decline in FY21.

- Recovery in H2FY21 is essential: Consensus expects there is a shift of some consumption from H1FY21 to H2FY21 with postponement of marriages and other events. Also off-take by HoReCa will commence in H2FY21. We believe improvement in demand outlook is necessary to sustain single digit revenue growth for Heritage. However, recovery may be delayed due to localised lockdowns.

- Retain BUY: We expect Heritage to report revenue and PAT CAGRs of 8.2% and 38.3%, respectively, over FY20-FY22. Core return ratios are expected to improve over the same timeframe. We have valued the stock as per DCF methodology at Rs360 (Implied PE 15x FY22E).

Shares of Heritage Foods Limited was last trading in BSE at Rs.281.95 as compared to the previous close of Rs. 278.85. The total number of shares traded during the day was 34063 in over 3196 trades.

The stock hit an intraday high of Rs. 292.75 and intraday low of 270. The net turnover during the day was Rs. 9657623.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Pidilite Industries - Q1FY21 Result Update - ICICI Securities

Dwarikesh Sugar - Q1FY21 Result Update - ICICI Securities

Divi's Laboratories - Q1FY21 First Cut - ICICI Securities

Amber Enterprises India - Q1FY21 First Cut - ICICI Securities

Mahanagar Gas - Q1FY21 First Cut - ICICI Securities

Container Corporation of India - Q1FY21 First Cut - ICICI Securities

Bata India - Q1FY21 First Cut - ICICI Securities

RBI Monetary policy - August 6, 2020 - Xanadu Realty

MPC pauses; allows one-time restructuring - Economy - ICICI Securities

RBI Monetary Policy - V Swaminathan, Joint President - Government Business & Gold Loans, Kotak Mahindra Bank

Mr. CVR Rajendaran, CEO & MD, CSB Bank on the monetary policy announcement

Mr. Satish Magar's statement on RBI announcement on Monetary Policy

Mr. R.K.Gurumurthy, Head - Treasury, Lakshmi Vilas Bank on the RBI Monetary policy

Mr. Rajnish Kumar, Chairman, SBI and Chairman, IBA on RBI Monetary Policy

Mr. Umesh Revankar, MD and CEO, Shriram Transport Finance on the RBI monetary policy

Views on RBI Policy: Ms. Bekxy Kuriakose, Head - Fixed Income, Principal Asset Management

RBI Monetary Policy - Aug 2020 - Sujata Guhathakurta, President, Debt Capital Markets-Sales, Kotak Mahindra Bank

View on RBI Monetary Policy - Aug 2020 - Shanti Ekambaram, Group President - Consumer Banking, Kotak Mahindra Bank

Views on RBI Policy - Aug 2020 - Mr. Dhiraj Rellu, MD & CEO, HDFC Securities

Monetary Policy

View on RBI Monetary Policy - Suvodeep Rakshit, Vice President & Senior Economist at Kotak Institutional Equities

Views on RBI's monetary policy - Jyoti Roy, DVP - Equity Strategist, Angel Broking Ltd

Monetary Policy - Aug 2020: Views of Mr. Amar Ambani, YES SECURITIES

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, on the RBI policy announcement - Aug 2020

Banks and NBFCs - RBI comes to the rescue again - HDFC Securities

Realty sector on RBI's decision to permit a one-time restructuring of loans

1QFY21 Results of Alkem Lab - Angel Broking

UPL - Quant Pick - August 2020 - ICICI Securities

Mahindra & Mahindra - Q1FY21 First Cut - ICICI Securities

Motilal Oswal Financial - Company Update - August 2020 - ICICI Securities

Indian Hotels - Q1FY21 Result Update - ICICI Securities

Gujarat Pipavav Port - Company Update - August 2020 - ICICI Securities

Kajaria Ceramics - Q1FY21 First Cut - ICICI Securities

1QFY21 results of HPCL - Angel Broking

Maintain REDUCE on PSP Projects - In-line performance - HDFC Securities

Tata Consumer Products - Q1FY21 Result Update - YES Securities

TV Today - Q1FY21 First Cut - ICICI Securities

Balrampur Chini - Q1FY21 First Cut - ICICI Securities

1QFY21 results of Mahindra & Mahindra - Angel Broking

DLF - Stable performance - HDFC Securities

Mindspace Business Park REIT Listing - Angel Broking

Maintain ADD on Hindustan Petroleum Corporation - High marketing margins lead the way - HDFC Securities

1QFY21 results of Gujarat State Petronet Ltd - Angel Broking

1QFY21 results of Torrent Power Ltd - Angel Broking

1QFY21 results of Lupin Ltd - Angel Broking

1QFY21 results of Vodafone Idea - Angel Broking

1QFY21 results of KEI Industries Ltd - Angel Broking

Honeywell Automation India (Q1FY21) - BUY (Target Rs36310, Upside 33%) - YES Securities

Lupin - Q1FY21 First Cut - ICICI Securities

Lemon Tree Hotels - Q1FY21 First Cut - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019