Edelweiss maintains buy on Parag Milk Foods, target price Rs 276

Edelweiss has maintained buy rating on Parag Milk Foods with a target price of Rs 276. Shares of Parag Milk Foods ended down 3.75% at Rs 159.15 on Tuesday while the BSE Sensex plunged 642.22 points to 36,481.09.

Company Financials

For the quarter ended 30-06-2019, the company has reported consolidated sales of Rs 629.74 crore, down -6.31% from last quarter sales of Rs 672.15 crore and up 14.62% from last year same quarter sales of Rs 549.42 crore. The company has reported net profit after tax of Rs 27.51 crore in the latest quarter.


Investment Rationale

A robust value-added dairy products portfolio, product launches and margin levers underpin sales CAGR estimate of about 14% CAGR and 60 bps expansion in EBTIDA margin to 9.9% over FY19–21. Parag is on track to achieve its Vision 2020: revenue of Rs 2,700-3,000 crore, sustained healthy EBITDA margin of 11–12% and RoCE growth to 18–20%.