Conagra in talks to sell controlling stake in India biz Agro Tech Foods

Conagra became the majority owner of Agro Tech Foods in 2011

American packaged foods company Conagra Brands is looking to sell a controlling stake in its Indian business, Agro Tech Foods Ltd, where it holds a 51.77 percent stake.

Agro Tech Foods is listed on Indian bourses and counts marquee investors such as Rakesh Jhunjunwala amongst its shareholders, said sources aware of the development.

At 11.05 AM, Agro Tech Foods stock was trading at Rs 900.20 per share on the BSE.

Agro Tech Foods sells consumer products across various categories such as ready to cook, ready to eat, spreads, breakfast cereals, chocolate confectionery and staples such as edible oils. Their popular brands include Act II popcorn, Sundrop, Popz and Duo.

Conagra became the majority owner of Agro Tech Foods in 2011, increasing its ownership of shares to a 51.77 percent stake. At the current market price, this stake is worth around Rs 1,123 crore.

The total market capitalisation of the company stood at Rs 2,163 crore at close of trading on Wednesday.

The US company is likely to sell its stake to private equity investors, the sources said.

It is likely that Conagra may sell only a part of its stake and may retain a minority position in the company, they added. The decision will hinge on the valuation that prospective buyers are willing to offer Conagra for a controlling position in the company, sources said.

Agro Tech Foods was incorporated in 1986 as ITC Agro-Tech to enter the oil seed and edible oils business. Over time, ITC decided to exit the edible oil business and Conagra came to acquire a majority stake in the company.

Emails sent to Conagra and Agro Tech Foods did not elicit a response.
Ace stock market investor Rakesh Jhunjunwala and his wife owned an 8.14 percent stake in the company, as of December 31, 2023. Other large public shareholders include Tata Mutual Fund’s Hybrid Equity Fund, which holds a 7.28 percent stake and foreign institutional investor Pari Washington India Master Fund and its affiliate, which together hold a 10.6 percent stake in the company.

Agro Tech Foods reported a consolidated revenue of Rs 193.03 crore in the quarter ending December 31, 2023, down from a revenue of Rs 224.98 crore in the same period last year. The company reported a profit of Rs 2.52 crore in the third quarter of FY24, as against a profit of Rs 6.83 crore in the same period last year.

“Q3 results reflect largely the drag on revenue of slow growth in RTC (ready to cook) and volume softness in Spreads. Both businesses are, however, responding to actions taken and as they return to the 8-10 percent growth levels, will drive total growth rate to our desired algorithm,” the company said in its post earnings commentary.