Venky's slips 6% on weak March quarter results, stock nears 52-week low

The company reported 41.5 per cent YoY decline in net profit at Rs 29.94 crore in March quarter, due to higher raw material costs.

Venky’s (India) shares slipped 6 per cent to Rs 1,820 on BSE in the intra-day trade on Friday after the company reported 41.5 per cent year on year (YoY) drop in its net profit at Rs 29.94 crore in March quarter (Q4FY19), due to higher raw material costs. It was the third straight quarterly decline in net profit for the company.

The stock of packaged foods company was trading close to its 52-week low of Rs 1,788 hit on July 19, 2018 in the intra-day trade.

The company’s operational revenue grew 11.7 per cent at Rs 829 crore on year-on-year (YoY) basis, while raw material expenses rose 23.5 per cent at Rs 599 crore over the previous year quarter. EBITDA (earnings before interest, tax, depreciation and amortisation) margin contracted to 6.99 per cent from 13.51 per cent.

Maize and soya prices are firm for the third quarter in a row. Venky’s has not been able to pass on the higher raw material costs.

Analysts at Quantum Securities had expected EBITDA margin of 10 per cent and net profit of Rs 42 crore for the quarter.

“The prices of poultry (49 per cent of revenues) have not gone up on quarter-on-quarter (QoQ) basis, in spite of raw material prices moving up – we believe the average price of fully grown broilers for the quarter would be at Rs 75/kg, same as that for Q3FY19. Day Old Chick prices have also not moved up q-o-q. So overall, we have assumed 7 per cent YoY growth in poultry revenues, driven by volumes. EBITDA margin in poultry, in our opinion, would have been impacted by prices not moving up accompanied by higher raw material prices,” the brokerage firm had said in the result preview note. 

Venky's (India) is a part of the VH Group is an integrated poultry group in Asia. The company has diversified its activities in poultry sector that includes production of SPF (specific-pathogen-free) eggs, chicken and eggs processing, broiler and layer breeding, Poultry feed & equipments, nutritional health products, soya bean extract and many more.

At 12:50 pm, the stock was trading 5 per cent lower at Rs 1,843 on the BSE, as compared to 0.11 per cent rise in the S&P BSE Sensex. A combined 2,13,126 equity shares have changed hands on the counter on the BSE and NSE so far.