INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Smart money is chasing milk and milk-based value-added businesses on Dalal Street on hopes of better margins and robust growth in
the organised dairy sector.
Shares of Parag Milk, Prabhat Dairy, Umang Dairies and other existing players like Heritage Foods and Hatsun
Agro have attracted many biggest investors, including institutional players, in recent months
revenues.
Brokerage ICICIdirect, which is overweight on the dairy sector, cites strong revenue growth momentum, a drop in procurement prices
leading to better margins, steady improvement in distribution, new launches and a favourable base.
Organised players account for just 26 per
cent of the overall milk market and this share is expected to grow quickly now
A drop in milk procurement prices should benefit by B2C players, resulting in higher margins, ICICIdirect said.
Renowned investor Vijay
Kedia held 1 per cent stake in Heritage Foods as of June 30, while Ashish Kacholia and Mukul Agrawal held 1.70 per cent and 1.20 per cent
stakes in Parag Milk Foods
Institutional investors such as SBI Mutual Fund and DSP Blackrock Mutual Fund held 1.5 per cent stake each in Hatsun Agro at the end of
DSP Blackrock Micro Cap Fund and Sundaram Alternative Opportunities Fund held over 1 per cent stake each in Prabhat Dairy
ICICIdirect is positive on Heritage Foods, Parag Milk Foods and Prabhat Dairy with price targets of Rs 860, Rs 331 and Rs 185 against
and generates most part of its revenues from south India
The company recently entered north India by acquiring Reliance Dairy.
Hatsun Agro is focused on fresh milk and milk-based value-added
It has plans to expand its business in Andhra Pradesh and Maharashtra
Hatsun reported Rs 37.90 crore profit for the June quarter against Rs 35.20 crore reported for the same quarter last year.
KR Choksey Shares
and Securities said the company is in expansion mode and the capex cycle should get over in the next couple of quarters
Debt, depreciation and interest cost would put pressure its bottom line in the near term
India being the largest producer and consumer of dairy in the world, a rise in demand for different products, increase in disposable income,
been buzzing in recent time
make a foray into the dairy business
French dairy giant Lactalis acquired Tirumala dairy in 2014
Crisil estimates revenue from value-added dairy products (VAP) to grow at a healthy 14-15 per cent annually over the next three years, or
around 50 per cent faster than the overall sectoral growth rate.
That, along with a steady growth in milk sales should crank up sectoral
revenue to Rs 7.5 lakh crore by financial year 2021 from Rs 5.7 lakh crore in financial year 2018, it said
Diary stocks have not delivered positive returns to investors this year
Shares of Hatsun Agro, Heritage Foods, Parag Milk Foods, Prabhat Dairy and Umang Dairies were all down up to 31 per cent YTD till July
milk consumption has jumped from 110 gm per day per person in the 1970s to 360 gm at present
gm over the next few decades
India Ratings expects the milk production to grow at 6.29 per cent to 186 million tonnes in 2018-19
The size of the liquid milk industry is expected to expand to Rs 7.45 lakh crore in the same period
With increasing production, per capita milk availability is set to rise to 383 gm a day in FY19, it said.
Growth in the sector is likely to
New categories like cheese and cream may grow at 20 per cent and 30 per cent, respectively, while old categories like butter, ghee may grow
at around 8-10 per cent.
Value-added dairy products account for a meagre 2.3 per cent of the total dairy industry at present.
Globally, the
EU, India and the US are the largest milk and dairy product producers and consumers
These countries account for 20.3 per cent, 18.3 per cent and 11.9 per cent share, respectively, in global dairy production.
