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ICICI Securities Report
Takeaways from Aavin’s financials:
- Its milk procurement has grown at compound annual growth rate of 6.1% versus 9.6% for Hatsun Agro Products Ltd. over FY11-19 indicating market share gains for Hatsun Agro
- Hatsun has increased its realisations at rate higher than Aavin but still outperformed Aavin in volume growth over FY11-19
- Aavin has reported losses in eight out of 12 years over FY08-19 whereas superior financials of Hatsun has allowed it to invest more in brand building and strengthen the moats
- Aavin has invested aggressively in animal feed business and volume CAGR of animal feed business is 45.3% over FY11-19. We believe this investment has helped Aavin to strengthen its relationship with the farmers
- Other dairies (Heritage Foods Ltd. and Parag Milk Foods Ltd.) have limited presence in Tamil Nadu and are not material competitors to Hatsun or Aavin.
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