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For 3QFY2019, Parag Milk Foods (PMFL) posted healthy set of numbers,
exceeding our expectations on bottom-line front. The company’s revenue grew by
~16% yoy, while the operating margins contracted by 97bps yoy. On the bottomline
front, PMFL reported growth of ~21% yoy to `31cr on the back of lower
interest cost and taxes.

Outlook and Valuation: Parag Milk Foods is anticipated to post strong growth in
value added products on the back of its diversified product basket, strong brands
and wide distribution network. Further, PMFL would benefit from a shift in mix in
favor of the organized market for dairy products. At the current market price, the
company trades at a P/E of 11.8x its FY2020E EPS. Thus, we maintain our Buy
recommendation on PMFL with Target Price of `359.

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