Hatsun Agro Product LTD: Index Details

CMP: 685.
50 JAN 15th, 2019

HATSUN AGRO PRODUCT LTD
ISIN:
Result Update (PARENT BASIS): Q2 FY19 Overweight
INE473B01035
Index Details
SYNOPSIS
Stock Data
Hatsun Agro Product Limited is engaged in the
Sector Packaged Foods
business of manufacturing and selling of milk, milk
BSE Code 531531
products and ice creams.
Face Value 1.00
52wk. High / Low (Rs.) 890.36/568.15 Revenue for Q2 FY19 increased to Rs. 11871.01 mn
Volume (2wk. Avg.) 1925 from Rs. 10603.92 mn in corresponding quarter of
Market Cap (Rs. in mn.) 109549.76 the previous year.
Annual Estimated Results(A*: Actual / E*: Estimated) During the quarter, EBIDTA was Rs. 1240.05 mn as
Years(Rs. In mn) FY17A FY18E FY19E compared to Rs. 1080.33 mn in the corresponding
Net Sales 42897.99 47616.76 52378.44 period of the previous year.
EBITDA 3799.63 4566.09 5002.92
Net Profit During Q2 FY19, Profit before tax stood at Rs.
908.36 1256.71 1418.77
EPS 5.68 7.86 8.88 558.67 mn as compared to Rs. 481.59 mn in Q2
P/E 120.60 87.17 77.21 FY18.
Shareholding Pattern (%) During Q2 FY19, net profit stood at Rs. 382.63 mn
against Rs. 382.11 mn in the corresponding quarter
As on Dec 2018 As on Sep 2018 of previous year.
Promoter 73.54 73.54 EPS of the company stood at Rs. 2.39 in Q2 FY19
Public 26.46 26.46 against Rs. 2.39 in the corresponding quarter of
Others -- -- previous year.
Revenue of the company rose by 8.69% at Rs.

1 Year Comparative Graph
24227.79 mn in H1 FY19 as against Rs. 22291.30
mn in H1 FY18.
During H1 FY19, PAT of the company rose by

3.70% at Rs. 761.19 mn as against Rs. 734.01 mn in
H1 FY18.
Net Sales and PAT of the company are expected to

grow at a CAGR of 11% and 24% over 2017 to
HATSUN AGRO PRODUCT LTD S&P BSE SENSEX 2020E, respectively.
PEER GROUPS CMP MARKET CAP EPS(TTM) P/E (X)(TTM) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. In mn. (Rs.) Ratio Ratio (%)
Hatsun Agro Product Ltd 685.50 109549.76 6.03 113.71 29.91 400.00
Prabhat Dairy Ltd 94.00 9181.60 2.42 38.84 1.61 0.00
Kwality Ltd 7.93 1913.90 -- -- 0.17 10.00
Heritage Foods Limited 520.95 24171.00 16.25 32.06 3.11 40.00
Document code: FOTL_150120194_2 Copyright © 2016 Firstobject Technologies Ltd. All rights reserved
QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q2 FY19,
(Rs. In millions) Sep-18 Sep-17 % Change
Revenue 11871.01 10603.92 11.95%
Net Profit 382.63 382.11 0.14%
EPS 2.39 2.39 0.14%
EBIDTA 1240.05 1080.33 14.78%
Revenue for the 2nd quarter of FY 2018-19 increased by 11.95% at Rs.11871.01 million from Rs. 10603.92 million in
corresponding quarter of the previous year. EBIDTA of the company was Rs. 1240.05 million in Q2 FY19 against Rs.
1080.33 million in the corresponding period of the previous year. The Company’s net profit was Rs. 382.63 million from
Rs. 382.11 million in the corresponding quarter ending of previous year. Reported earnings per share of the company
stood at Rs. 2.39 a share during the quarter as against Rs. 2.39 per share in corresponding quarter of the previous year.
Break up of Expenditure
Value in Rs. Million

Break up of
Expenditure
Q2 Q2 %
FY19 FY18 Change
Cost of Materials
8172.43 8206.25 0%
consumed
Purchase of Stock in
1.18 3.32 -64%
Trade
Employee Benefit
195.28 366.19 -47%
Expenses
Depreciation &
488.62 406.15 20%
amortization expense
Other expenses 1858.20 1630.03 14%
Segment Revenue:
COMPANY PROFILE
Hatsun Agro Product Limited is engaged in the business of manufacturing and selling of milk, milk products and ice
creams. The Company's dairy products include dairy whitener, skimmed milk powder, ghee, milk, curd, paneer and ice
creams, among others. Its brands include AROKYA, Hatsun, Arun Icecreams, IBACO, Oyalo, Santosa Cattle Feed and
Aniva Sweets. AROKYA offers full cream milk, double toned milk, toned milk, curd and milk cans. Arokya Milk offers
milk-based refreshments, such as milkshakes, yogurt shakes, yogurt toppings, paneer snacks and coffee. Arun Icecreams
offers Arun Icecreams iCone, Arun Icecreams iBar and Kid's Bars. IBACO offers Ice Cream Cakes and Signature Cones.
Under the Hatsun brand, the Company offers curd, paneer, ghee, butter, cooking butter and dairy whitener. Its Hatsun
Dairy Ingredients products include milk powder, such as full cream milk powder and dairy whitener, and Cream products,
such as butter oil, frozen cream and lactic butter.
FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as of March 31, 2017 -2020E

FY17A FY18A FY19E FY20E
ASSETS
1) Non-Current Assets
a) Property, Plant and Equipment 9799.17 12051.21 12653.77 13286.46
b) Capital Work in Progress 902.74 2593.35 3319.49 3983.39
c) Goodwill 77.41 77.41 81.28 84.53
d) Other Intangible Assets 37.16 37.43 48.66 60.83
e)Financial Assets
i) Investments 2.51 1.26 1.32 1.40
ii) Other Financial Assets 439.48 533.09 575.74 604.53
f) Other non -current assets 399.31 259.46 116.76 87.57
g) Non current tax assets 18.14 46.84 0.00 0.00
Sub Total Non- Current Assets 11675.92 15600.06 16797.03 18108.71
2) Current Assets
a) Inventories 2965.32 3837.32 2724.49 2043.37
b) Financial Assets
i) Trade receivables 409.55 70.52 107.18 147.91
ii) Cash and Cash equivalents 553.20 328.42 420.38 504.45
iii) Other financial assets 17.60 37.45 149.44 186.80
c) Other Current Assets 255.65 1240.43 1166.00 1131.02
Sub Total - Current Assets 4201.32 5514.13 4567.49 4013.56
Total Assets (1+2) 15877.23 21114.19 21364.52 22122.26
EQUITY AND LIABILITIES
1) EQUITY
a) Equity Share Capital 152.20 152.20 159.81 159.81
b) Other Equity 3333.93 3503.11 4759.82 6178.59
Total Equity 3486.13 3655.31 4919.63 6338.40
2) Non Current Liabilities
a) Financial Liabilities
i) Borrowings 3693.55 5420.70 4987.04 4737.69
b) Deferred Tax liabilities (Net) 275.11 280.75 244.25 229.60
c) Other non -current liabilities 8.06 7.66 8.04 8.36
Sub Total - Non Current Liabilities 3976.71 5709.10 5239.33 4975.65
3) Current Liabilities
a) Financial Liabilities
i) Borrowings 3204.85 4669.87 4249.58 4037.10
ii) Trade payables 1700.27 1714.30 1885.73 1957.59
iii) Other financial liabilities 3298.97 4159.75 3826.97 3597.35
b) Provisions 19.21 21.09 29.10 39.29
c) Current Tax liabilities 15.18 0.00 125.28 131.54
d) Other current liabilities 175.91 1184.77 1088.90 1045.34
Sub Total - Current Liabilities 8414.39 11749.78 11205.56 10808.22
Total Equity and Liabilities (1+2+3) 15877.23 21114.19 21364.52 22122.26
Annual Profit & Loss Statement for the period of 2017 to 2020E
Value(Rs.in.mn) FY17A FY18A FY19E FY20E

Description 12m 12m 12m 12m
Net Sales 41996.60 42897.99 47616.76 52378.44
Other Income 56.19 83.15 23.45 26.97
Total Income 42052.79 42981.14 47640.21 52405.41
Expenditure -38202.03 -39181.51 -43074.12 -47402.49
Operating Profit 3850.76 3799.63 4566.09 5002.92
Interest -701.96 -876.38 -902.68 -938.78
Gross profit 3148.80 2923.25 3663.41 4064.14
Depreciation -1456.05 -1736.44 -1996.91 -2196.60
Profit Before Tax 1692.75 1186.81 1666.51 1867.54
Tax -353.09 -278.45 -409.79 -448.77
Net Profit 1339.66 908.36 1256.71 1418.77
Equity capital 152.20 159.81 159.81 159.81
Reserves 3333.93 3503.11 4759.82 6178.59
Face value 1.00 1.00 1.00 1.00
EPS 8.80 5.68 7.86 8.88
Quarterly Profit & Loss Statement for the period of 31st Mar, 2018 to 31st Dec, 2018E
Value(Rs.in.mn) 31-Mar-18 30-Jun-18 30-Sep-18 31-Dec-18E

Description 3m 3m 3m 3m
Net sales 10515.78 12356.77 11871.01 11277.46
Other income 21.33 6.99 5.07 3.04
Total Income 10537.11 12363.76 11876.09 11280.51
Expenditure -9759.60 -11128.24 -10636.04 -10259.11
Operating profit 777.51 1235.53 1240.05 1021.40
Interest -259.80 -259.49 -192.76 -204.33
Gross profit 517.72 976.03 1047.29 817.07
Depreciation -445.79 -483.96 -488.62 -527.70
Profit Before Tax 71.93 492.08 558.67 289.37
Tax -47.10 -113.52 -176.04 -92.02
Net Profit 24.83 378.56 382.63 197.35
Equity capital 152.20 152.20 159.81 159.81
Face value 1.00 1.00 1.00 1.00
EPS 0.16 2.49 2.39 1.23
Ratio Analysis
Particulars FY17A FY18A FY19E FY20E
EPS (Rs.) 8.80 5.68 7.86 8.88

EBITDA Margin (%) 9.17% 8.86% 9.59% 9.55%
PBT Margin (%) 4.03% 2.77% 3.50% 3.57%
PAT Margin (%) 3.19% 2.12% 2.64% 2.71%
P/E Ratio (x) 77.88 120.60 87.17 77.21
ROE (%) 38.43% 24.80% 25.54% 22.38%
ROCE (%) 23.06% 15.00% 18.15% 18.57%
Debt Equity Ratio 1.98 2.75 1.88 1.38
EV/EBITDA (x) 28.74 31.40 25.92 23.55
Book Value (Rs.) 22.90 22.92 30.78 39.66
P/BV 29.93 29.91 22.27 17.28
Charts
OUTLOOK AND CONCLUSION
 At the current market price of Rs. 685.50, the stock P/E ratio is at 87.17 x FY19E and 77.21 x FY20E respectively.
 Earning per share (EPS) of the company for the earnings for FY19E and FY20E is seen at Rs. 7.86 and Rs. 8.88
respectively.
 Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 24% over 2017 to 2020E
respectively.
 On the basis of EV/EBITDA, the stock trades at 25.92 x for FY19E and 23.55 x for FY20E.
 Price to Book Value of the stock is expected to be at 22.27 x and 17.28 x for FY19E and FY20E respectively.
 Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.
INDUSTRY OVERVIEW
India has emerged as the fastest growing major economy in the world and it is expected to be one of the top three
economic powers of the world over the next 10-15 years. With the smoother implementation of the new goods and
services tax (GST), recovery of corporate earnings and the recapitalization of public banks the investment and exports, are
becoming major growth engines.
Today’s dairy sector is moving towards bringing novelty in dairy products with special focus on value-added products.
The consumers who have greater preference for branded milk and milk products are the drivers for the growth of
organised dairy players who see faster growth in next three years. The consumption of branded milk products viz., curd,
butter, paneer, cheese, ice-cream and lassi has been on the increasing trend in comparison with milk consumption which is
a positive signal for dairy based companies to expand their product portfolios. On the other hand thanks to the millions of
small & marginal dairy farmers who have been backbone for not only making the country to become self-sufficient in
milk production but also the world’s leading milk producer.
To attain self-sufficiency in milk, it is very much essential to bring efficiencies at all levels in the dairy value chain by
providing market access through transparent milk procurement systems at village level and setting up viable milk
collection operations and logistics given limited resources, environmental constraints and a huge animal population with
low productivity. The challenges faced today by dairy companies is covering more villages when the volumes per
collection point are relatively lower and many areas lack basic physical infrastructure like all-weather roads and
electricity.
The greener side of dairying is that it offers as great opportunity to increase employment, incomes and livelihoods in rural
areas though there has been untapped potential in the dairy sector in our country to propagate modern dairying and
livestock management practices which are technology driven and that can bring greater efficiency. There has been noble
initiatives from the Government of India viz., extension of the Kisan Credit Card for dairy farmers, income tax relief for
Farmer Producer Organisations, conversion of cattle dung and solid waste in farms to compost, bio fertiliser, bio-gas, bio
CNG and facilitating purchase of surplus solar power produced by farmers which goes a long way in spurring growth in
the dairy sector apart from enhancing farmer’s income and welfare.
Today’s dairy sector is moving towards bringing novelty in dairy products with special focus on value-added products
which gives enormous scope for the Company to venture into value-added products including custards, desserts,
puddings, sauces, mousse, stirred yogurt and nectars. There is also increasing demand for branded and packaged dairy
produce especially in urban centres as the population with higher disposable income and greater health consciousness will
definitely choose for quality dairy products which will create a positive impact on the Company’s line of business.
The Company’s strength lies in its efficient and effective supply and cold chain management and this allows it wide reach
and targeted coverage in its markets. As milk forms part of regular diet for many households, there is steady rise in the
milk consumption which paves way for continuous demand and substantial growth potential for the Company.
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Exposure/Interest to
Sectorscompany/sector Under
Name of the Analyst Qualifications
CoveredCoverage in the Current
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M.B.A, Diversified
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Goods
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FMCG
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CMP: 685.

50 JAN 15th, 2019

Revenue of the company rose by 8.69% at Rs.

During H1 FY19, PAT of the company rose by

Net Sales and PAT of the company are expected to

Results updates- Q2 FY19,

(Rs. In millions) Sep-18 Sep-17 % Change

Revenue 11871.01 10603.92 11.95%

Net Profit 382.63 382.11 0.14%

EPS 2.39 2.39 0.14%

EBIDTA 1240.05 1080.33 14.78%

Value in Rs. Million

Other expenses 1858.20 1630.03 14%

Balance Sheet as of March 31, 2017 -2020E

Value(Rs.in.mn) FY17A FY18A FY19E FY20E

Value(Rs.in.mn) 31-Mar-18 30-Jun-18 30-Sep-18 31-Dec-18E

Particulars FY17A FY18A FY19E FY20E

EPS (Rs.) 8.80 5.68 7.86 8.88

Important Disclosures on Subject Companies

Firstcall Research - Overall Statement

Firstcall Research Provides

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