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Buy Heritage Foods; target of Rs 360: ICICI Securities

ICICI Securities is bullish on Heritage Foods has recommended buy rating on the stock with a target price of Rs 360 in its research report dated May 28, 2020.

May 28, 2020 / 12:19 PM IST
 
 
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ICICI Securities research report on Heritage Foods


Heritage reported revenue growth of 2.8% and PAT decline of 65.6% YoY. EBITDA margin declined 350bps, YoY. We expect it to report revenue CAGR of 8.2% over FY20-22 with (1) volume CAGR of 3% and (2) price hikes of 5%. We also model value-added products (except curd) to report revenue decline in FY21-22. Post lockdown, the milk procurement prices have corrected and we expect EBITDA margins to be above 6% in FY21 due to (1) price hikes of ~10% in FY20, (2) lower sales of ghee and SMP which have lower margins and (3) correction in milk procurement prices.


Outlook


We model Heritage to report PAT CAGR 38.3% over FY20- FY22 with improvement in core return ratios. Maintain BUY with a target price of Rs360 (15x FY22E; Earlier TP-Rs404).




For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: May 28, 2020 12:19 pm

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