Heritage Foods - Lower Procurement Prices Drive Q3 Earnings Growth: ICICI Securities
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ICICI Securities Report
Three highlights from Heritage Foods Ltd.’s Q3 FY21 earnings -
1. Ebitda margin expanded 790 basis points due to reduction in milk procurement prices. However, we expect milk procurement prices to rise in FY22 due to reopening of economy and higher global skimmed milk powder prices,
2. revenue decline of 10% was largely attributable to consumers not returning to urban centres, extreme weather conditions and lower out-of-home consumption.
The company lost revenues of approximately seven days due to excess rainfall. Reopening of economy, lower Covid-19 cases and initiation of vaccination drive will steadily lead to higher revenues, and
3. the company has sold its stake in Future Retail Ltd., which will reduce its debt and interest cost in FY22.
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