Buy Hatsun Agro, target price Rs 1,250: ICICI Securities

ICICI Securities has a buy call on Hatsun Agro Products with a target price of Rs 1,250. The current market price of Hatsun Agro Products is Rs 1131. Hatsun Agro, incorporated in 1986, is a Mid Cap company with a market cap of Rs 25147.17 crore operating in the FMCG sector.

Hatsun Agro Products Ltd. key products/revenue segments include Milk & Milk Products, Scrap & Others for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Standalone Total Income of Rs 2078.72 crore, down -12.56 % from last quarter Total Income of Rs 2377.23 crore and up 8.29 % from last year same quarter Total Income of Rs 1919.52 crore. The company has reported net profit after tax of Rs 64.32 crore in the latest quarter.

Investment Rationale
ICICI Securities expects margins of Hatsun Agro's ice cream business to expand from current levels, driving up overall margins. Their expectation is premised on (1) higher capacity utilisation at Govindapur plant and operating leverage, (2) lower trade margins vs peers as Hatsun provides access to refrigeration and also leverages HAP Daily for distribution and (3) launch of premium variants/SKUs. The brokerage maintains a BUY call. They model Hatsun to report FY24?27E revenue/PAT CAGR of 14.0%/37.2%. Our DCF-based TP stands at INR 1,250, implying a P/E of 53/40x FY26/27E.

Promoter/FII Holdings
Promoters held 73.17 per cent stake in the company as of 30-Sep-2024, while FIIs owned 3.29 per cent, DIIs 10.17 per cent.