Gopal Snacks stock slumps 3% despite positive Q2 results; Emkay remains bullish

Gopal Snacks board has announced a first interim dividend of Re 1 per share, representing 100 percent of the face value of Re 1 each for FY25. The interim dividend will be disbursed on or before November 12

Shares of Gopal Snacks tumbled more than 3 percent in trade on October 15 despite the company reporting positive earnings for the quarter ended September 30, 2024 (Q2FY25).

The company's net profit rose 7 percent on-year to Rs 28.89 crore as against Rs 27 crore during the year-ago quarter. Its topline rose 12 percent YoY to Rs 398.86 crore during the quarter under review.

Gopal Snacks' Q2 earnings before interest, tax, depreciation and amortisation (EBITDA) stood at Rs 46.7 crore, compared to 45.5 crore in the same quarter a year ago. Meanwhile, the EBITDA margin came in at 11.73 percent as against 12.8 percent in the year-ago period.

The company's board has announced a first interim dividend of Re 1 per share, representing 100 percent of the face value of Re 1 each for FY25. The interim dividend will be disbursed on or before November 12, 2024, according to the company’s filing.

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Earlier this week, Emkay initiated coverage on the stock with a 'buy' rating and a price target of Rs 600 per share. The company valuations have been stressed since listing, due to slower revenue growth and weak profit margins, impacted by inflation.

However, with an attentive management team in place, Gopal has been addressing loose ends and gradually accelerating growth, the brokerage said.

Analysts at Emkay expect Gopal Snacks to see revenue CAGR of 15 percent and earnings CAGR of 29 percent over FY24-27. Given Gopal’s strong financial ratios, they expect the company's business growth to resume, driving a potential valuation re-rating.

The brokerage said that Gopal Snacks is well-placed to leverage the formalisation opportunity in the savoury snacks industry, which is poised for double-digit growth.

"Leveraging its strong ahead-of-time backend capability, with utilisation at 35-40 percent and fleet of own logistics vehicles, Gopal is looking at a pan-India march," it added.

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At 11:16 am, Gopal Snacks shares were trading 3 percent lower at Rs 424.20 on the National Stock Exchange (NSE). So far this year, the stock has risen around 17 percent, slightly outperforming Nifty's returns of 15 percent.

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