JPMorgan initiates coverage on Orkla India with 'overweight', sees up to 21% upside

JPMorgan initiates coverage on Orkla India with 'overweight', sees up to 21% upside

Global brokerage JPMorgan initiated coverage on Orkla India, parent of ready-to-eat brand MTR Foods, with "overweight" rating.

JPMorgan gave a price target of Rs 745, which represents up to 21% upside from previous close.

At 2:10 pm on December 17, Orkla India shares were trading 1% lower at Rs 608 apiece.

JPMorgan said Orkla is a leading player in packaged spices and convenience foods, sees tailwinds from shift to branded spices and rising demand for ready-to-cook meals.

The brokerage expects revenue/EPS CAGR of 9%/13% over FY26–28, with EBITDA margin expanding 80 bps on operational efficiencies and eastern India portfolio turnaround.

It noted attractive valuation at 25x FY27E P/E versus peers.

Upside risks include faster convenience food adoption and export growth and downside risks stem from raw material volatility and regional concentration, said JPMorgan.

The ‍group's convenience foods business, which sells vermicelli and ready-to-cook breakfast kits, made ‌up 33.4% of revenue last year, up from 31.5% a year earlier, with its spices portfolio accounting for the rest.

Last month, Orkla India reported a 7.26% decline in its net profit at Rs 76.68 crore in the September quarter.

The company had posted a net profit of Rs 82.69 crore during the July-September period a year ago.

Its revenue from operations grew 4.92% to Rs 650.28 crore in the September quarter. It was Rs 619.76 crore in the corresponding period a year ago.

Total expenses of Orkla India were Rs 558.28 crore, up 4.64%.