Q2FY25 sales growth of 12.6% is a gradual expansion in momentum, which should sustain as the company enhances execution in core and seeks to aggressively expand in focus (29% Q2 growth; 25% of sales) and other states (4% of sales). Gross margin stood firm QoQ at 29% in Q2 (+25bps YoY); the management sees stability ahead as custom duty increase in edible oil has been passed. OPM stood steady QoQ at 11.6% in Q2, but contracted by 110bps YoY given increase in A&P spends. On a low 2HFY24 base, we see healthy earnings ahead. Overall, we maintain 29% EPS CAGR over FY24-27E. The management aspires for Rs20-22bn revenue by FY27 and OPM at 14-14.5%.
OutlookWe maintain our BUY rating (refer note) with Sep-25E TP of Rs600/sh on 40x P/E. With the key growth pillars in place, we see 15% revenue CAGR over FY24- 27E.
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