Stock of this packaged foods company has zoomed 208% in six months

Shares of Hindustan Foods hit a new high of Rs 2,286, rallying 10 per cent on the BSE in intra-day trade on Friday in otherwise weak market. In the past one week, the stock of packaged foods company has gained 24 per cent after reporting the highest quarterly revenues and profit after tax (PAT) in its history for the quarter ended December 2020 (Q3FY21).

In the past three months, the Hindustan Foods' stock has zoomed 152 per cent, as compared to 17 per cent rise in the S&P BSE Sensex. In the last six months, the stock has soared 208 per cent, as against 32 per cent surge in the benchmark index.

The company is one of India’s most diversified contract manufacturers of fast moving consumer goods (FMCG). In 2013, Vanity Case Group bought a controlling stake in Hindustan Foods, and since then it has diversified across various FMCG categories with manufacturing competencies in food & beverages, home care, personal care, fabric care, leather products and pest control.

In the third quarter of 2021-21 (Q3FY21), Hindustan Foods' standalone PAT grew by 97 per cent year on year (YoY) at Rs 12.60 crore from Rs 6.40 crore in Q3FY20. Revenues jumped 85 per cent to Rs 384 crore in Q3FY21. Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 49 per cent to Rs 22.4 crore, while margins declined 146 basis points (bps) over the previous year quarter. The performance was supported by sharp decline in Covid cases and improved mobility.

The management said the demand for contract manufacturing in FMCG industry has been growing rapidly, and that the company has been in discussion for new projects with its customers. As a result of such discussions, the company had recently announced a capex of Rs 125 crore in Northern India for a large FMCG brand. It aims to achieve goal of Rs 2,000 crore in turnover by FY22, the management said.

As a result of the financial practices, India Ratings had recently upgraded the company’s long-term credit rating to IND A with positive outlook. "The positive outlook reflects upon company’s sustained growth in revenue and profitability, driven by commissioning of upcoming capacities and proposed mergers, while maintaining a strong credit profile. This has resulted in decrease in the borrowing costs for the company and we intend to leverage the low interest regime to further increase our capex plans in the next couple of quarters," it said.

At 02:01 pm; Hindustan Foods was trading 7 per cent higher at Rs 2,222 on the BSE, as compared to 0.59 per cent decline in the S&P BSE Sensex. A combined around 40,000 equity shares changed hands on the counter on the NSE and BSE.