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ICICI Securities Report
Takeaways from Hatsun Agro Products Ltd.'s Q2 FY23:
Revenue growth of 6.9% YoY is largely price led and we believe volumes were flat YoY. Unprecedented and prolonged rains in South India also impacted procurement,
With higher milk procurement prices, Hatsun's Ebitda margin declined 268 bps YoY but we remain enthused with sequential recovery in margins. We believe the margins have bottomed out in H1 FY23 and model recovery from H2 FY23 and
Hatsun plans to incur capex of Rs 4.5 billion to expand manufacturing capacities.
We model it to report profit after tax compound annual growth rate of 25.3% over FY22-24E with:
high single-digit growth in milk procurement,
commencement of three new plants and
higher share of value-added products.
We remain structurally positive on Hatsun due to its competitive advantages and strong growth opportunity in South India. We cut our earnings estimates to factor in delayed price hikes and weak Q2 FY23.
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