Hatsun reported strong revenue growth of 17.2% YoY. Organic revenue growth (adjusting for Milk Mantra acquisition) was 14.9% YoY. Considering the reduction in inventory, the brokerage believes the company has also sold the accumulated stock of SMP as well as fats.
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ICICI Securities Report
Hatsun Agro Products Ltd. reported strong Q2 FY26 and we believe the organic revenue growth was in high single digits adjusting for the sale of accumulated inventory of skimmed milk product and Fats. Takeaways:
The company has materially reduced the inventory (~Rs 4,000 million in H1 FY26) and it has released resources for growth. It has also repaid debt and it should result in lower interest cost ahead.
While its margins are near the top end of the range, we believe the difference in standalone and consolidated margins indicates potential for margin expansion in Milk Mantra.
The revenues were affected in Q2 FY26 due to difference in dates for announcement and implementation of GST rate cuts.
We believe trade/consumers would have postponed the purchases. Intense monsoon also affected offtake of value added product, in our view.
We believe Hatsun will likely be key beneficiary of cut in GST rates across dairy products and faster pace of sector formalization.
To factor in reduction in debt, we raise FY27 PAT estimates by 5.6%. We remain constructive and maintain Add.
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