ICICI Securities: Hatsun Agro Q2 Review - Limited Room For Upside
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ICICI Securities Report
Three-pointers from Hatsun Agro Products Ltd.’s Q2 FY21:
1. dairy business reported low single-digit revenue growth led by procurement growth in mid-single-digit,
2. the fall in milk procurement prices will likely lead to life-high gross and Ebitda margins in FY21E, and
3. the company managed to stabilise volumes despite multiple challenges such as lockdown and volatile procurement prices.
We model Hatsun Agro to report an earnings compound annual growth rate of 56.5% over FY20-FY22E with -
- high single-digit growth in milk procurement,
- lower milk procurement prices due to lower offtake by Hotel Restaurant Cafe and commencement of the flush season
- commencement of three plants in FY21E.
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