"We have a buy recommendation with a target price of Rs 350, an upside of 22 percent from the current level," says Sumit Bilgaiyan, Founder of Equity99.
Parag Milk Foods is one of the leading dairy products companies in India. The company has been successful in creating strong brands like Gowardhan, GO and in introducing new products like Whey Protein.
It has become the second player in processed cheese after Amul in a short span of 10 years and commands 33 percent market share. Rising revenue share of high-margin value added products is likely to boost its margins in coming years. Value added products like cheese, whey protein enjoy higher gross margins of 25-45 percent against 6-8 percent entailed in liquid milk.
Value added products forms 65 percent to its revenue which is the highest among the listed players versus 25-30 percent for others. Driven by recently launched products and higher share of value added products, its operating margins would improve to double digit in next few years.
We have a buy recommendation with a target price of Rs 350, an upside of 22 percent from the current level.Disclaimer: The author is Founder, Equity99. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.The Great Diwali Discount!
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