Dairy products' stocks rally post Hatsun Agro's Q1 results; Dodla zooms 20%

Shares of dairy products company zoomed up to 20 per cent on the BSE in Thursday's intra-day trade after Hatsun Agro Products reported strong earnings for the quarter ended June (Q1FY24). The industry is likely to benefit from the much-anticipated flush season during October-November 2023.

The stock of Hatsun Agro Products surged 12 per cent to Rs 1,094 after the company reported 54.3 per cent year-on-year (YoY) jump in its profit after tax (PAT) at Rs 80.16 crore as compared to Rs 51.95 crore in the year ago quarter. The company had posted PAT of Rs 24.99 crore in the previous quarter. Revenue from operations grew 6.7 per cent YoY and 20 per cent sequentially at Rs 2,150 crore.

The board declared an interim dividend of Rs 6 per equity share of Re 1 each (600 per cent). This is the first interim dividend for the financial year 2023-24.

"The board, at its meeting held on July 05, 2023, approved the sale of windmills of the company to an identified buyer for a consideration of Rs 135 crore by way of transfer of all the related Assets and Liabilities on a slump sale basis. The sale is expected to be completed by October 31, 2023 upon obtaining required approvals from appropriate authorities and execution of necessary documentation," the company said.

Meanwhile, shares of Dodla Dairy were locked in upper circuit of 20 per cent at Rs 741.65, also its 52-week high, on the BSE at 02:38 PM. The board of directors of the company is scheduled to meet on Friday, July 21, 2023 to consider June quarter results.

Dodla procures, processes, and sells milk and milk products. The company’s product portfolio consists of Milk, Butter Milk, Ghee, Curd, Paneer, Flavoured Milk, Doodh Peda, Ice Cream and Milk Based Sweets.

The management said the business has been growing 10 per cent by volume and 17 per cent by value on an average over the years. Robust business model, modern state-ofart dairy plants, diversified product portfolio, and a balance sheet having adequate cash balance are the propellants for organic and inorganic growth of the business. In addition, the upcoming flush season in Q2FY24 will enhance the business opportunities," the company said in its FY23 annual report.

Going forward, the Company is also looking at greenfield acquisition or domestic M&A in FY2024. Acquisitions will empower the Company to enter new geographical territories, the company said.

Meanwhile, shares of Parag Milk Foods (PMFL) rallied 7 per cent to Rs 144.20 on the BSE. The stock hit a 52-week high of Rs 148.80 on June 30, 2023.

In May, rating agency Icra had downgraded the credit rating for the credit facilities availed by the company. The rating action on PMFL considered its weaker than expected financial performance in FY23 as marked by modest operating margins and elevated debt levels, leading to moderation in the company’s liquidity profile and debt protection metrics, and Icra’s expectation that PMFL’s credit metrics are likely to remain moderated in FY24.

The 'Negative' outlook on the long-term rating reflects Icra's expectation that PMFL’s earnings are expected to remain under pressure due to high raw material prices.

"Coupled with elevated debt levels, this is likely to result in moderate debt protection metrics for FY24 as well. Improvement in accrual generation and reduction in working capital intensity, leading to reduced reliance on debt and improvement in the liquidity profile, along with strengthening of management team in timely manner will be key for improvement in PMFL’s financial profile in the near term," ICRA had said.