Angel Broking's report on Heritage Foods (HFL)
"HFL, based in Hyderabad, is among the leading corporates in the dairy industry. HFL has ~77 percent of its revenue coming in from the dairy business. The dairy industry, as per industry reports, is expected to grow at a CAGR of 13-15 percent till FY2020. The expected robust growth would be on the back of the urbanization trend, leading to changing consumption patterns backed by increasing disposable incomes. Being one of the leading players in south India with established brands, we expect the boom in the dairy industry to drive growth for HFL. However, we believe the company’s retail segment, which has been incurring losses since inception, will continue to be a drag on its profitability. A strong growth in the dairy industry, increasing contribution of value added dairy products (VADP), and widening geographical reach for dairy products are strong growth drivers for HFL going forward. We initiate coverage on HFL and recommend Buy with a target price of Rs 275", says Angel Broking research report.
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