Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Hatsun Agro Products - Healthy revenues; strong margins - ICICI Securities

Posted On: 2020-10-19 22:14:16 (Time Zone: Arizona, USA)


Three pointers from Q2FY21: (1) dairy business reported low single-digit revenue growth led by procurement growth in mid single-digit, (2) the fall in milk procurement prices will likely lead to life-high gross and EBITDA margins in FY21E, and (3) Hatsun managed to stabilise volumes despite multiple challenges such as lockdown and volatile procurement prices. We model Hatsun to report an earnings CAGR of 56.5% over FY20-FY22E with: (1) high single-digit growth in milk procurement, (2) lower milk procurement prices due to lower offtake by HoReCa and commencement of flush season and (3) commencement of three plants in FY21E. While we remain structurally positive on the company, the stock price upside is capped at current valuations. Retain HOLD with a DCF-based target price of Rs830 implying P/E of 49x FY22E (earlier target price: Rs650).

- Dairy business reports low single-digit growth: Hatsun reported 3.8% revenue growth in Q2FY21. Milk and milk product revenues grew 1.8% while other businesses (cattle feed, Oyalo pizza, etc.) grew 26.4%. Considering the carryover effect of price hikes in FY20, we believe volumes were flattish during the quarter.

- Expect EBITDA margin to remain elevated in FY21E: Price hikes, lower input prices and some cost-saving measures were the chief reasons for 400bps higher EBITDA margin YoY. We expect milk procurement prices to be lower in rest of FY21E due to commencement of flush season. We estimate Hatsun's EBITDA margin at 13.4% for FY21E vis--vis 10.4% in FY20.

- Onset of festive season and gradual opening up of HoReCa augurs well: With the onset of festive season and opening up of the HoReCa channel, demand for value-added products such as ice cream will likely recover in H2FY21E.

- Capex projects: (1) Solapur, Maharashtra: Full-fledged commercial plant with production capacity of 4-LLPD of milk expected during Nov'20; (2) Dharapuram, Tamil Nadu: Hatsun will install milk products manufacturing facility in Dec'20 and milk processing unit with capacity of 1.5-LLPD in Mar'21; (3) Sangareddy district, Telangana: Plant is expected to be commissioned in Q4FY21 with expected capex outflow at about Rs2.45bn.

- Maintain HOLD: We expect Hatsun to report PAT CAGR of 56.5% over FY20-FY22E with RoE higher than the cost of capital. Though we remain positive on the company's business model due to the established moats and growth opportunities, we believe upside is limited at current valuations. Hence, we retain HOLD on the stock with a DCF-based target price of Rs830 (implied P/E 49x FY22E).

Shares of HATSUN AGRO PRODUCT LTD. was last trading in BSE at Rs.847.3 as compared to the previous close of Rs. 841. The total number of shares traded during the day was 14086 in over 2259 trades.

The stock hit an intraday high of Rs. 864 and intraday low of 808.55. The net turnover during the day was Rs. 11901792.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


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. www.equitybulls.com, 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. www.equitybulls.com 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:

ADD on Bajaj Finance - Priced to perfection - HDFC Securities

Maintain BUY on IRB Infra - Smart recovery - Q3FY21 - HDFC Securities

Maintain BUY on Federal Bank - Sustained improvement in key metrics - HDFC Securities

Maintain ADD on L&T Infotech - Leadership continues - HDFC Securities

Maintain REDUCE on L&T Technology Services - Trajectory improving, but priced in - HDFC Securities

Tata Communications - Transition hiccups? - ICICI Securities

Federal Bank - Steady performance in most business metrics; collections back at pre-covid level - ICICI Securities

L&T Technology Services - Large deal wins are more than priced-in! - ICICI Securities

Newgen Software Technologies - Incremental growth hinges on travel - ICICI Securities

Larsen & Toubro Infotech - How high is high? - ICICI Securities

CEAT - Volume growth, mix helps sustain margins - ICICI Securities

ICICI Lombard General Insurance Company - Health segment faces short-term challenges; long-term fundamentals remain intact - ICICI Securities

Q3FY21 Result update - Rallis India - ICICI Direct

Q3FY21 Result update - Alembic Pharma - ICICI Direct

Quant Pick - Bosch Limited - ICICI Direct

Federal Bank - Q3FY21 First Cut - ICICI Direct

Hindustan Zinc - Q3FY21 First Cut - ICICI Direct

HDFC AMC - Q3FY21 First Cut - ICICI Direct

Phillips Carbon Black - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - VST Industries - ICICI Direct

Q3FY21 Result update - Bajaj Finance - ICICI Direct

Q3FY21 Result update - Larsen & Toubro Infotech - ICICI Direct

Q3FY21 Result update - Tata Communication - ICICI Direct

Q3FY21 Result update - Sterlite Technologies - ICICI Direct

Sagar Cements - Q3FY21 First Cut - ICICI Direct

Bajaj Finance - Q3 FY21 First Take - YES Securities

Home First Finance Limited - IPO - YES Securities

Maintain BUY on Gateway Distriparks - An all-round results beat, encouraging outlook - HDFC Securities

REDUCE on ICICI Lombard General Insurance Company Ltd - COR continues to improve - HDFC Securities

Maintain BUY on IRB Infra - Smart recovery - HDFC Securities

Union Budget 2021-22 - Preview Report - YES SECURITIES

Alembic Pharma (Q3 FY21) - 'First signs of sartans weakness' - YES Securities

CSB Bank Q3 Earnings Call - Key Takeaways - YES Securities

ICICI Lombard - Q3FY21 Result Report - YES Securities

Gateway Distriparks - Q3FY21 - Multiple triggers at play - ICICI Securities

Prince Pipes and Fittings - Improving governance; rerating inevitable - ICICI Securities

CEAT - Margins resilient due to healthy replacement mix - ICICI Securities

Hatsun Agro Products - Commencement of three plants and lower tax rate to boost return ratios in FY22 and beyond - ICICI Securities

Alembic Pharmaceuticals - India recovers, US sees pressure - ICICI Securities

Q3FY21 Result update - MindTree Ltd - ICICI Direct

Q3FY21 Company update - Shoppers Stop - ICICI Direct

IPO - Indigo Paints Ltd - ICICI Direct

Larsen & Toubro Infotech Ltd - Q3FY21 First Cut - ICICI Direct

Tata Communications - Q3FY21 First Cut - ICICI Direct

Maintain ADD on Mindtree - Into another operating orbit - HDFC Securities

NBFCs Q3FY21 Results Preview - Micro headwinds > Macro tailwinds - HDFC Securities

Mindtree - Margin beat and raise cycle seems to be over! - ICICI Securities

Shoppers Stop - Focusing on omni-channel growth - ICICI Securities

Piramal Enterprises - Strategic synergies, optional value to follow DHFL's buyout - ICICI Securities

Motherson Sumi Systems - Focus remains on growth and cost efficiency - ICICI Securities



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

disclaimer copyright © 2005 - 2020