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Heritage Foods Q2 Review - Revenue Growth Remains Strong; Margin Recovers Sequentially: ICICI Securities

Heritage Foods will benefit from steady value migration from cooperatives, unorganised players to private organised players

<div class="paragraphs"><p> Heritage Foods Products (Source: Company website) </p></div>
Heritage Foods Products (Source: Company website)

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ICICI Securities Report

While 19% increase in milk procurement prices impacted Heritage Foods Ltd.'s Ebitda margin (in-line with expectations), we note the positives as-

  1. the revenue growth was strong and share of value added products has increased to 27% now,

  2. Ebitda margin has improved sequentially.

We believe the Ebitda margin has probably bottomed out now and should move upwards in H2 FY23. We model Heritage Foods to report profit after tax compound annual growth rate of 25.4% over FY22-FY24E with:

  1. high single-digit growth in milk procurement, and

  2. steady increase in the share of VAP portfolio.

We believe Heritage Foods will benefit from steady value migration from cooperatives and unorganised players to private organised players. We cut our earnings estimates due to delay in price hikes and likely impact on milk prices due to lumpy skin disease.

Click on the attachment to read the full report:

ICICI Securities Heritage Q2FY23 Result Update.pdf

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