1
Please refer to important disclosures at the end of this report
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1
Hatsun Agro Product Ltd (Hatsun) is the largest private sector dairy company in India,
with a product portfolio comprising well-established brands such as Arokya, Arun,
Ibaco and Hatsun. The company has superior brand equity, a wide product portfolio,
well-spread distribution network and an aggressive marketing strategy. The
procurement base is also diversified geographically, with 70-75% within TN and 25-
30% from Karnataka, Andhra Pradesh, Telangana and Maharashtra. Though bulk of
revenue is now concentrated in TN, growing presence in other states should further
strengthen the market position. Hatsun has undertaken capex of around `420cr in
fiscal 2017 and has plans of undertaking capex of around `300 to `350cr in fiscal
2018. The proposed capex will lead to improvement in efficiency and profitability,
stabilisation of operations and accrual of benefits as envisaged will remain key
monitorables. For fiscal 2018, Hatsun is expected to report healthy revenue growth
because of widening geographical reach and planned capex to increase sale of
value-added products. It has reported healthy revenue and bottom line growth of
20% & 30% CAGR over FY2012-2017 respectively due to increased penetration and
rising share of value added products such as ice-cream, butter, ghee and curd in
revenue. It has been maintaining a healthy average dividend payout of 50% since
2012 and has a good return on equity (ROE) track record, last 3 Years ROE
30.89%.Operating margins has also improved from 6.61% in FY2015 to 9.27% in
FY2017 due to increased share of value added products. Hatsun has also maintained
healthy cash flows (from `51.56cr in FY2012 to `438.56cr in FY2017).Hence BUY.
BUY
CMP `872
52 Week High / Low
970/335.15
Avg. Daily Volume
190,915
packaged Foods
Market Cap (` cr)
13,311
1
BSE Sensex
33,152
Nifty
10,215
Face Value (`)
Reuters Code
HAPL.NS
HTSMF:IN
-0.2
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Hatsun Agro Products Ltd
Others | Packaged Foods
Nov 17, 2017
2
Hatsun Agro Product Ltd |Packaged Foods
Oct 13, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Hatsun Agro Product Ltd
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)