February 09, 2017 / 15:42 IST
KR Choksey's research report on Kwality Kwality Ltd is the largest private player with the strong presence in north India. It was incorporated in 1992 as Kwality Ice creams Ltd. Kwality ice cream brand was sold to Hindustan Unilever Ltd. Later in 2002 the company was acquired by Dhingra Family. Kwality Ltd has 6 processing facility with around 3.4 MLPD capacity. Its Haryana plant is one of the largest, 4 in U.P, and 1 in Rajasthan.
Outlook
We remain positive on the stock with the growth and changing strategy from B2B to B2C player, as this would help expand in margins. Its key strategy and focus remains on procurement model, developing branded value added products & brand development. We are expecting the growth to be around 10-12% in FY17E and FY18E with improvement in EBIDTA margins to 6.8% in FY18E. We assign PE of 20x to its FY18E EPS of INR 11.9 and recommend ‘BUY’ rating on the stock with the target price of INR 237 and an upside of 70.7%.
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