Edelweiss' research report on Heritage Foods
Heritage Foods (HFL) reported Q1FY19 revenue growth of ~4% YoY (3% below estimate) on a high base (~32% growth driven by incremental volumes from Reliance Dairy in Q1FY18), but value-added dairy products (VADP) posted solid ~18% YoY growth. EBITDA margin expanded ~280bps, lifting EBITDA ~71% YoY (in line with our estimate) on the back of lower procurement cost, a favourable sales mix and improved performance of Reliance Dairy. While volume offtake growth took a hit owing to deepening penetration of new entrants/unorganized players in the current soft milk price environment, management guided for ~10% and ~15%-plus volume growth in liquid milk and VADP, respectively.
Outlook
Furthermore, HFL is focusing on marketing campaigns and processing capacity & distribution expansion to achieve its targets under ��Vision 2022��. Hence, we estimate ~37% EBITDA CAGR over FY18��20. Maintain ��BUY�� with TP of INR903.
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Read More First Published on Aug 2, 2018 03:38 pm
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