Heritage Foods - Strengthening Its Base To Deliver Industry-Leading Growth: Systematix

Systematix Research Report

We attended the investor meet of Heritage Foods Ltd., to gain a perspective on the management’s long-term vision and growth strategy, as it looks to surpass market growth.

The company aspires to achieve Rs 60 billion of revenue over the next four years, through organic means, which translates into ~22% compound annual growth rate over FY22-27E (organised industry CAGR estimated at ~15%) with steady-state Ebitda margin of 7-8%.

The four key growth pillars that Heritage Foods would pursue are-

1. consumer centricity, to expand its -added portfolio,

2. customer leadership, to expand its retail reach to three lakh outlets and multiple channels like modern trade and e-commerce,

3. procurement scale up, to fully utilise its current processing capacity of 2.3-2.4 million litres per day, and

4. margin expansion, by increasing process efficiency and through a superior supply chain.

Despite near-term headwinds in the sector, Heritage Foods is upbeat on the long-term growth potential of the organised private sector dairy companies who have appropriate products and a strong procurement/processing base.

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