Heritage Foods hits 30-month low; stock down 5%

In the past seven trading days, the stock has tanked 19 per cent, as compared to a 3 per cent rise in Sensex

Shares of Heritage Foods hit a 30-month low of Rs 390, down 5 per cent in intra-day trade on the BSE on Monday, in an otherwise firm market. The stock was trading at its lowest level since November 11, 2016. In comparison, the S&P BSE Sensex was up 0.70 per cent at 39,991 points at 11:28 am.

In the past seven trading days, the stock has tanked 19 per cent, as compared to a 3 per cent rise in the benchmark index. The market price of the packaged foods company nearly halved from its 52-week high level of Rs 720, touched on June 1, 2018.

The Andhra-based company was founded and is owned by the Chandrababu Naidu, the current leader of the TDP (Telugu Desam Party), and engages in dairy business that includes procurement of milk from dairy farmers at village level, and distribution of processed milk to the households in 15 states.

Meanwhile, the company’s FY19 revenue grew by a mere 6 per cent year-on-year (YoY). One reason was glut in milk supply for the year, which led to lower milk sales prices as the unorganized dairy firms entered the urban market to sell excess milk, thereby increasing undercutting and competition.

The management plans to achieve the target by maintaining a revenue growth run-rate of 15-20 per cent over the next five years by territorial expansion in milk-rich regions and areas where consumption of milk is high, penetrate deeper in existing regions, and increase the value-added products portfolio by capacity creation of new products as well as existing ones, analysts at Elara Capital said in result update.