Karvy's research report on KwalityKwality started its procurement from it’s MCCs in 2008 and currently set up 24 MCCs in northern states of Punjab, Rajasthan, UP & Haryana near its milk processing facilities in Haryana & UP. For procurement of quality milk, the company plans to open another 30 MCCs in next 2 years to ensure uninterrupted supply of milk and to reach the target of procuring milk from its own MCCs at 50% in next 3 years. Kwality is one of the leading dairy players and is on investment mode to strengthen its backward and forward integration. The company has changed its business model towards sale of more branded products and towards retail segment. Value added products are likely to support margins for the company going forward. Stock is currently trading at 8.9x FY17E EPS and we initiate coverage on Kwality with a “BUY” recommendation, we value the company at 10.5x and arrive at target price of Rs.135 for holding period of 9-12 months, with an upside of 18%. For all recommendations, 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.
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