(Reuters) -India’s Heritage Foods reported an about 13% decline in second-quarter profit on Wednesday, as higher milk procurement prices crimped margins in its mainstay dairy segment.
The company reported a profit before tax of 584 million rupees ($6.63 million)compared to 674.7 million rupees a year ago. It recorded a one-time gain of 93.6 million rupees, lifting its after-tax profit.
Revenue for the quarter ended September 30 rose 9.1% to 11.13 billion rupees. However, expenses rose 10.6% 10.59 billion rupees, outstripping the rise in revenue.
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KEY CONTEXT
Heritage, a branded-products player in a largely unorganized dairy market, has been riding a profitable wave of urban consumers increasingly opting for pre-packaged dairy products.
In the second quarter, however, the company saw a “sharp increase” in milk procurement costs, due to muted supply and monsoon rains, it said. Milk procurement was down 2% year-on-year, leading to a lower consolidated profit in its mainstay dairy segment.
Heritage expects demand for its milk and value added items to accelerate in the third quarter ended December, benefitting from festive season consumption and the goods and services tax cuts.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth (%) growth (%) rating* analyst price yield
s target** (%)
Heritage Foods 17.99 11.14 12.26 17.58 Buy 2 0.83 0.52
Dodla Dairy 23.91 14.93 16.33 16.86 Strong 3 0.81 0.31
Buy
Hatsun Agro Product 48.07 17.93 11.77 27.00 Hold 2 1.02 1.21
Parag Milk Foods 18.13 10.86 11.52 -13.15 Strong 1 0.88 0.38
Buy
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY TO SEPTEMBER STOCK PERFORMANCE
($1 = 88.0950 Indian rupees)
(Reporting by Ananta Agarwal in Bengaluru; Editing by Mrigank Dhaniwala)
