Prataap Snacks Q2 Review - Margin Improvement Remains A Concern: Systematix
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Systematix Research Report
Prataap Snacks Ltd.'s Q2 FY22 revenues grew 13% YoY (versus our estimate of 9%) to Rs 3.7 billion as economic activities regained momentum.
Sales volumes surpassed pre Covid-19 levels in several product categories.
Distribution channels normalised with the easing of lockdown restrictions, leading to a recovery in impulse purchases.
Process re-engineering and cost-optimisation mitigated the impact of a ~34% YoY inflation in palm oil (~14% of sales) on Prataap Snacks’ margins.
Gross margin contracted 178 basis points to 28.1% while Ebitda margin contracted 62 bps to 6.5% (versus our estimate of 3%).
Fire accident at the newly setup plant in Kolkata on November 03, 2021 will not impact sales but may dent margins marginally.
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