Heritage Foods reported strong Q1 FY25 results with net sales rising 11.8% to ₹1,032.67 crore, net profit up 249.07% to ₹58.43 crore, and EBITDA increasing 140.96% to ₹99.37 crore. The company’s EPS also improved significantly. Stock performance showed an 84.37% gain over six months and a 105.42% gain over 12 months. ICICI Securities has revised its rating to Add with a target price of ₹610.
Heritage Foods has delivered an outstanding financial performance for the quarter ending June 2024, marked by significant growth across key metrics. The company’s results highlight robust market presence and effective operational strategies. Here’s a detailed look at Heritage Foods’ performance and recent developments.
Financial Performance Overview
- Net Sales: Heritage Foods reported net sales of ₹1,032.67 crore for the quarter, reflecting an 11.8% increase from ₹923.68 crore in the same quarter of the previous year. This growth underscores the company’s strong market presence and successful business strategies.
- Net Profit: The quarterly net profit surged dramatically by 249.07%, reaching ₹58.43 crore compared to ₹16.74 crore in June 2023. This substantial increase indicates significant improvements in profitability driven by effective operational management and strategic initiatives.
- EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) climbed to ₹99.37 crore, representing a 140.96% increase from ₹41.24 crore in the previous year. This growth highlights the company’s enhanced operational efficiency and successful cost management efforts.
- Earnings Per Share (EPS): Heritage Foods’ EPS rose to ₹6.30 from ₹1.80 in June 2023, reflecting the company’s improved profitability and value creation for shareholders.
Stock Performance and Brokerage Insights
- Stock Performance: Heritage Foods’ shares closed at ₹575.60 on July 23, 2024 (NSE). The stock has delivered impressive returns, with an 84.37% increase over the past six months and a remarkable 105.42% rise over the past 12 months. This stellar performance highlights the company’s strong growth trajectory and positive market sentiment.
- Brokerage Rating: Following strong stock performance, ICICI Securities has revised its rating for Heritage Foods from Buy to Add. The brokerage has set a revised target price of ₹610, based on a discounted cash flow (DCF) model, implying a price-to-earnings (P/E) ratio of 21 times FY26E. This adjustment reflects the recent strong performance and revised market expectations.
Key Drivers of Performance
- Margin Expansion: The strong margin expansion observed during the quarter is attributed to lower milk procurement prices. This has significantly contributed to improved profitability and operational efficiency.
- Operational Management: Heritage Foods’ success is also a result of effective operational management and strategic initiatives that have driven growth in sales and profitability.
Heritage Foods’ financial performance for Q1 FY25 underscores a period of exceptional growth and operational success. With substantial increases in net sales, profit, and EBITDA, along with strong stock performance, the company continues to demonstrate its capability to deliver value to its stakeholders. The revised brokerage rating and target price further reflect the positive outlook for Heritage Foods as it builds on its current success.
