Hold Heritage Foods; target of Rs 475: ICICI Direct

hold

ICICI Direct's research report on Heritage Foods

Heritage Foods Ltd (Heritage) aims to become a full-fledged FMCG player, rather than just a dairy company – the key inference from its recently held investor meet. Discussions encompassed: (1) Heritage aims to grow revenue at 15–16% CAGR by FY30 on the back of stronger VAP mix and higher realisation. (2) Organised sector’s share in revenue climbed to ~18% in Q2FY26, from ~6% in FY22. Under-penetration of VAP and GST rate cuts provide further headroom for growth. (3) It plans to incur capex of ~INR 2,000mn every year on expansion of VAP categories, procurement efficiencies and other general purposes. (4) Heritage acquired 51% stake in Peanutbutter and Jelly Pvt Ltd (which owns Get-a-Way brand). It plans to aggressively invest in ice cream business. (5) It aims to deepen the penetration in its key existing markets. It does not have any plan to enter new geographies.

Outlook

Management reiterated their intent on investing to build capital assets, brand and distribution network without impacting the company’s financial metrics. We maintain HOLD with a DCF-based TP of INR 475 (implied target P/E of 15x of FY28E EPS) as we model near-term earnings impact led by inflation in milk procurement prices.

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Heritage Foods - 03122025 - icici