Wednesday 3 July 2019

Parag Milk Foods Ltd - Value Pick

CMP: 270 (ACE Equities clients at 250)
Market Cap: 2200 crores
Book Value: 98
52 Week High/Low: 344.70/197
FY19: Sales 2396 crores, Net Profit 121 Crores, EPS 14.36.
Mcap/Sales: 0.91X, P/E 18.80.
Promoter Holding: 45.97%.

Parag Milk is one of the very prominent dairy players in India, Parag is slightly better on the margin side compared to its peers because of great focus on value added dairy products such as Cheese. Parag owns brands such as: Gowardhan (ghee milk paneer), GO (cheese, yogurt, value added products), PRIDE OF COWS (superior quality milk with zero human intervention from by far one of the most modern dairy farm in India), TOPP UP (flavored milk drinks), Avvatar (India's first domestic manufactured pure Whey Protein from a dairy farm. For FY19, Parag Milks had a revenue of 2396 crores, with net profit of 121 crores and an EPS of 14.36. At current market price of 270, Parag is at a p/e of 18.80 and with Mkt Cap of 2200 crores mcap/sales is nearly 0.90x. With continued focus on consumption names, I think Parag is a good stock at current valuations.

The company today announced induction of Mr Venkat Shankar as the CEO, so far the company was largely managed by the family only now with Mr Shankar's induction who is the Ex VP of Britannia's dairy division and has also served Pepsico in past, I think Parag makes a case in point for some major re-rating. P/E valuations of close to 30 means almost 60% price appreciation from current levels.

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have Parag Milk Foods Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

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