Buy Parag Milk Foods Ltd; target of Rs 274: KRChoksey

KRChoksey's research report on Parag Milk Foods Ltd

Parag Milk Foods Ltd (PMFL) posted its Q1FY18 results whose Sales were in-line with estimate and margins remain subdued. Its Revenue in Q1FY18 stood at INR 4128.8 Mn which was a growth of 7.7% yoy and de-growth of 3.6% qoq. Revenue was affected majorly due to inventory build up during the quarter. EBIDTA reported was INR 293.8 Mn with EBIDTA margins of 7.1% due to increase in raw material price of milk. PAT remained around INR 105.3 Mn with PAT margins of 2.5% which was a decrease of 27 bps yoy and 512 bps qoq.

Outlook

At CMP of INR 236, %we recommend “BUY” rating on the stock with the target price of INR 274, with potential upside of 16.0%.