Buy Prabhat Dairy, target Rs 230: Jayant Manglik

Jayant Manglik

Prabhat Dairy is an integrated milk and dairy products company, catering to both institutional (B2B) as well as retail (B2C) customers. The company’s growth prospects look bright, given the robust outlook of dairy sector, PDL’s plan to grow its business into new segments, product innovation in consumer business and strengthening distribution reach across India.

Good monsoon would result in better productivity yield and boost the company’s volume growth and improve its margins trajectory. We expect the company's net revenue and PAT to grow by 13.5 percent and 18.6 percent CAGR over FY18-FY20E.

With the company’s plans to reduce debt and improve working capital cycle, we expect a marked improvement in its return ratios also.