Comments: 0 | Likes: 0 | Current Price: ₹ 201
Parag Milk Foods Limited: Favourable Dynamics and Product Launches Make Up A Case
To enhance product reach, Parag Milk Foods Limited plans to strengthen distributor & stockists base to target higher retail penetration. Parag Milk Foods Limited plans to increase Ad spend on various channels like television, newsprint, digital media to strengthen its brands. Target of increasing value-added product portfolio should be achieved by focusing on health and nutritional aspect in development of premium products.
About Parag Milk Foods Ltd
Established in 1992, Parag Milk Foods Limited is largest private dairy FMCG Company, which has pan-India presence. It has its own manufacturing facilities with in-house technology which are strategically located at Manchar in Maharashtra, Palamner in Andhra Pradesh and Sonipat in Haryana. Its goal is to be a largest dairy FMCG Company, emphasizing on health and nutrition to consumers through innovation.
Business Model
Parag Milk Foods Limited has an integrated business model, encompassing entire value chain of dairy-based F&B business and includes activities such as manufacturing and processing to branding and distributing a wide variety of products. The company has well-established relationships with farmers in proximity of its facilities, and its continuous engagement with them helps Parag Milk Foods Limited to consistently procure raw milk at competitive prices.
Growth Enablers of Parag Milk Foods Ltd
Absurdly Cheap Valuations Means Going Long
Parag Milk Foods Limited has compounded its revenues at ~10.3%, EBITDA at ~9.2% and PAT at ~18.6% over FY16-FY20. The company’s profitability measures should be supported by strong distribution network and cost rationalization measures. Even though milk consumption has been increasing, per capita consumption is still meagre, when compared with other developed markets such as US and EU, and markets like Russia and Brazil. India is a milk drinking nation. Society values dairy products as they are an important source of protein and nation is home to largest population of vegetarians. All these points hint for large headroom which is available for growth. Indian dairy industry is seeing large-scale changes due to consumer behaviour. The company’s presence across various consumer distribution channels and collaborations with channel partners should support it to foster a stronger connect and respond to unique needs.
The company plans to introduce products across price points servicing all strata of consumers and giving them healthy, nutritious and quality dairy products. Focus will be on its core categories of ghee, cheese, paneer and curd. The company saw continued buoyancy in demand, led by opening up of economy in a structured manner post COVID 19. E-commerce emerged as fast-growing leg and has gained strong prominence in overall distribution.
Parag Milk Foods Limited has a total market cap of ~INR86,935.08 lakhs and has a free float market cap of ~INR40,926.73 lakhs.
I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.
I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.
Articles
Comments