Buy Prabhat Dairy; target of Rs 211: Edelweiss

Edelweiss' research report on Prabhat Dairy

Prabhat Dairy’s (Prabhat) Q4FY18 revenue grew 7.4% YoY led by healthy ~30% YoY volume spurt driven by pouch milk, cheese & curd. Gross margin jumped ~400bps YoY to 23.3% YoY & EBITDA margin expanded ~200bps YoY to ~9.9%, leading to EBITDA growth of ~35% YoY. Under Vision 2020, the company is targeting INR20bn sales with B2C sales doubling to INR10bn (~45% CAGR; taking its share to 50% from 30% currently) riding 2x jump in retail reach to 200,000 outlets.

Outlook

We estimate adj. PAT CAGR of 35% over FY18-20. Maintain ‘BUY’ with TP of INR211.