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ICICI Securities Amul FY21 Annual Report Update
ICICI Securities Amul FY21 Annual Report Update
Revenue growth and profitability: Amul reported revenue growth of 1.9% in FY21,
marking slowest YoY growth in the past decade. Gross and EBITDA margins stood at
4.5% and 0.5%, respectively, in FY21. Profitability was stable YoY. Amul continued
introducing new products across categories in FY21.
Consumer products growing well: All value-added products of Amul have done well
in FY21. Revenue growth rates of key products were as follows: Cheese (21% YoY),
UHT milk (20%), Ghee in consumer packs (22.5%), Dairy Whitener (17%), Paneer
(47%) and Chocolates (79%). We believe Amul has gained market share in most
consumer product segments. Exports were up 60% YoY.
Stock calls: We maintain Heritage and Dodla dairy as our top picks in Dairy sector
with BUY rating. While we remain structurally positive on Hatsun, we need more
comfort on valuations to turn bullish. Hence, we rate Hatsun HOLD. We also maintain
HOLD rating on Parag. It generates c.35% revenues from B2B consumers. Key risks:
Higher than expected inflation in milk prices, irrational competition or delay in price
hikes.
Research Analysts: Key financials of GCMMF (Amul)
Year to March FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Aniruddha Joshi
aniruddha.joshi@icicisecurities.com Revenues (Rsmn) 1,81,435 2,07,504 2,29,851 2,70,625 2,92,463 3,31,943 3,85,757 3,93,222
+91 22 6807 7249 Growth (%) 32.1 14.4 10.8 17.7 8.1 13.5 16.2 1.9
Manoj Menon EBITDA (Rsmn) 688 1,113 1,510 1,447 1,683 2,214 1,946 2,091
manoj.menon@icicisecurities.com Growth (%) 27.3 61.8 35.7 (4.2) 16.3 31.5 (12.1) 7.5
+91 22 6807 7209 PAT (Rsmn) 378 415 438 470 488 528 562 609
Karan Bhuwania Growth (%) 12.3 9.9 5.4 7.4 3.7 8.3 6.5 8.4
karan.bhuwania@icicisecurities.com EBITDA margin (%) 0.4 0.5 0.7 0.5 0.6 0.7 0.5 0.5
+91 22 6807 7351 PAT margin (%) 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.2
Pranjal Garg RoE (%) 15.8 14.7 12.8 11.9 11.3 11.4 11.3 11.7
pranjal.garg@icicisecurities.com
RoCE (%) 1.0 5.3 5.5 4.5 5.4 5.6 4.3 4.2
+91 22 6807 7650
Source: Company data, I-Sec research
Please refer to important disclosures at the end of this report
Dairy sector, December 21, 2021 ICICI Securities
Amul showcased its products during the telecast of Ramayan and Mahabharat during
the lockdown in FY21 and it resulted in high brand recall value. It introduced immunity
boosting products such as Haldi Doodh, Tulsi Doodh, Ginger Doodh and Ashwagandha
Doodh.
(%)
2,50,000 20.0
2,00,000 15.0
1,50,000
10.0
1,00,000
50,000 5.0
- -
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Product-wise revenue growth rates: We note most value-added products of Amul are
doing well. Growth rates of other major dairy products were as follows: Cheese (21%),
UHT milk (20%), Ghee in consumer packs (22.5%), Dairy Whitener (17%), Paneer
(47%) and Chocolates (79%). Based on our analysis of the market as well as Amul’s
growth rates, we believe the company has likely gained market share in most of its
segments. Exports were up 60% YoY in FY21.
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Dairy sector, December 21, 2021 ICICI Securities
Table 1: Product-wise revenue growth rates, YoY
% FY18 FY19 FY20 FY21
Dairy commodities (60.0)
Cheese 26.0 17.0 18.0 21.0
Milk based beverages 38.5
Cream 34.0 34.0 Double digit
Paneer 21.0 23.0 21.0 47.0
Dahi (curd) 26.0 33.0 32.0
Buttermilk 21.0 27.0
Liquid Milk 12.0 5.0 11.0
Infant milk food 11.0
Dairy whitener 11.5 17.0
Butter 17.0 14.0
Ice cream 15.0 10.0
Ghee 28.0 22.5
Chocolates 69.0 27.0 79.0
UHT Milk 20.0
Source: Company, I-Sec research
Although Amul has reported 9.9% CAGR in milk procurement over FY07-21, we note
its milk procurement has increased by 14% YoY in FY21. Its milk procurement outside
Gujarat grew 41% YoY in FY21, much faster than milk procurement in Gujarat.
The company’s milk procurement (fats) price has also increased from Rs765/kg in FY20
to Rs795 in FY21, indicating an increase of 8.2%.
Chart 2: Rising milk procurement by Amul… Chart 3: …and higher milk procurement prices
(Rs/kg fat)
500
15
400
10 300
200
5
100
- 0
FY07
FY09
FY10
FY11
FY12
FY14
FY16
FY17
FY19
FY21
FY07
FY10
FY11
FY12
FY15
FY16
FY17
FY20
FY21
FY08
FY13
FY15
FY18
FY20
FY08
FY09
FY13
FY14
FY18
FY19
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Dairy sector, December 21, 2021 ICICI Securities
Chart 4: Marketing spends as % of net sales Chart 5: Marketing spends as % of gross profits
57.0
3.5
56.0
3.0
55.0
2.5
54.0
2.0
53.0
(%)
(%)
1.5 52.0
1.0 51.0
0.5 50.0
- 49.0
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
4
Dairy sector, December 21, 2021 ICICI Securities
Chart 3: Supply chain and distribution network of Amul
5
Dairy sector, December 21, 2021 ICICI Securities
Plans to improve relationships with farmers
As direct milk procurement is the largest entry barrier/moat in dairy industry, Amul has
focused aggressively on expanding its relationships with farmers. We note Amul
procures milk from 3.64mn farmers across 18,565 villages. Apart from farmer education
and awareness programmes, it has invested in two key initiatives to strengthen its
relationships with farmers. It provides organised animal feed as well as services of
artificial insemination and veterinary care.
Amul’s animal feed division reported CAGR of 6.9% over FY08-21. It has also resolved
2.1mn veterinary cases in FY21.
Chart 6: Veterinary cases resolved by Amul Chart 7: Steady growth in animal feed sales
2.5 2.5
2 2
1.5 1.5
(mn MT)
(mn)
1 1
0.5 0.5
0 0
FY13 FY15 FY17 FY19 FY20 FY21 FY08 FY10 FY12 FY14 FY16 FY18 FY19 FY20 FY21
While Amul’s milk procurement outside Gujarat declined 20% in FY19 over FY18, it
increased again by 41% in FY21 over FY19. We expect milk procurement outside
Gujarat to grow at steady rates FY22 onwards.
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Dairy sector, December 21, 2021 ICICI Securities
Chart 8: Milk procurement* outside Gujarat
20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Source: Company, I-Sec research *Milk procured outside Gujarat/ Total milk procurement
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Dairy sector, December 21, 2021 ICICI Securities
Chart 5: New product launches by Amul …1
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Dairy sector, December 21, 2021 ICICI Securities
Chart 9: Key financial ratios of GCMMF (Amul)
6.0 0.35
5.0 0.30
0.25
4.0
(%)
0.20
(%)
3.0
0.15
2.0
0.10
1.0
0.05
-
-
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
8,000
18.0 RoE RoCE 6,000 OCF FCF
16.0 4,000
14.0 2,000
12.0 (Rs mn) 0
10.0 (2,000)
(%)
8.0 (4,000)
6.0 (6,000)
4.0 (8,000)
2.0 (10,000)
- (12,000)
(14,000)
FY08
FY09
FY11
FY12
FY13
FY15
FY16
FY17
FY19
FY20
FY10
FY14
FY18
FY21
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
700 PAT Growth (RHS) 45.0 10 Net working capital days
600 40.0
35.0 5
500
30.0
400 25.0 0
(Rs mn)
(days)
(%)
300 20.0
15.0 (5)
200
10.0
100 5.0 (10)
0 0.0
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
(15)
FY07 FY09 FY11 FY13 FY15 FY17 FY19 FY21
Source: Company, I-Sec research
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Dairy sector, December 21, 2021 ICICI Securities
Table 7: Profit & loss statement
(Rs mn)
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Gross Sales 1,37,520 1,81,715 2,07,809 2,30,170 2,71,016 2,92,618 3,31,943 3,85,757 3,93,222
Less: Excise Duty 168 280 304 319 392 155 - - -
Net Sales 1,37,351 1,81,435 2,07,504 2,29,851 2,70,625 2,92,463 3,31,943 3,85,757 3,93,222
Growth (%) 17.7 32.1 14.4 10.8 17.7 8.1 13.5 16.2 1.9
Expenditure
Cost of Goods Sold 1,30,558 1,73,120 1,97,732 2,19,043 2,58,198 2,79,116 3,16,447 3,69,001 3,75,664
Staff Cost 751 1,123 1,206 1,049 1,635 1,545 1,742 2,184 2,039
Manufacturing expenses 960 1,103 1,349 1,415 1,498 1,687 2,006 1,901 2,299
Marketing & selling expenses 3,816 4,512 5,142 5,914 6,913 7,429 8,378 9,482 9,862
Other Expenses 726 888 961 921 932 1,003 1,157 1,245 1,267
EBITDA 541 688 1,113 1,510 1,447 1,683 2,214 1,946 2,091
EBITDA margin (%) 0.4 0.4 0.5 0.7 0.5 0.6 0.7 0.5 0.5
Depreciation 361 659 799 871 883 944 1,248 1,360 1,377
EBIT 179 29 314 639 564 739 966 585 714
Interest Expense & Bank Exps 21 82 86 327 188 297 464 245 169
Other Income 341 629 406 355 340 307 297 513 330
Profit Before Tax 499 575 634 667 717 749 799 854 875
Income Taxes 162 197 218 230 246 262 271 291 266
Effective tax rate (%) 32.5 34.3 34.4 34.4 34.4 34.9 33.9 34.1 30.4
Profit After Tax 337 378 415 438 470 488 528 562 609
Source: Company data, I-Sec research
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Dairy sector, December 21, 2021 ICICI Securities
Table 9: Cashflow statement
(Rs mn)
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
OCF before W/C changes 717 930 1,205 1,210 1,268 1,582 1,704 1,735 1,755
W/c Changes (1,457) 4,365 (2,347) (3,106) 3,076 (1,287) 4,296 3,071 (11,923)
OCF After W/C Changes (740) 5,296 (1,142) (1,895) 4,344 294 6,000 4,805 (10,169)
Cash Flow from Investing
Capital Expenditure (1,209) (1,759) (1,009) (2,107) (1,047) (3,148) (1,776) (970) (1,696)
Disposal 78 102 18 10 20 37 2 127 7
Investments - - (1,600) (1,637) 2,499 (2,494) (3,778) 3,964 (612)
Acquisitions - - - - - - - - -
Net Cash used in Investing (1,131) (1,657) (2,591) (3,734) 1,473 (5,606) (5,553) 3,121 (2,300)
Cash Flow from Financing
Changes in Share Capital 0 0 500 400 500 - - - -
Changes in Loans 68 884 3,780 5,764 (5,614) 6,208 (51) (8,205) 14,025
Dividends & change in reserves (150) (150) (150) (213) (275) (341) (360) (360) (360)
Net Cash used in Financing (82) 734 4,130 5,951 (5,389) 5,866 (412) (8,565) 13,665
Extraordinary Items - - - - - - - - -
Changes in Cash & Equivalents (1,953) 4,373 398 322 429 555 36 (638) 1,196
Opening Cash & Equivalents 3,848 1,894 1,609 2,007 2,329 2,758 3,312 3,348 2,710
Closing Cash & Equivalents 1,894 6,267 2,007 2,329 2,758 3,312 3,348 2,710 3,906
Free Cash Flow (1,871) 3,639 (2,133) (3,992) 3,318 (2,817) 4,225 3,963 (11,857)
Source: Company data, I-Sec research
Other ratios (%) (0.8) (2.1) 0.5 2.1 0.3 1.3 0.8 (0.6) 1.8
Net debt/Equity (x) (555.8) 962.3 (513.3) (911.8) 705.4 (577.8) 800.5 704.7 (1,945.8)
FCF/EPS (0.5) 2.9 (0.6) (0.8) 1.6 0.1 1.8 1.2 (2.6)
OCF/Sales FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Source: Company data, I-Sec research
11
Dairy sector, December 21, 2021 ICICI Securities
Price charts
Hatsun Agro Heritage Foods
2,000 600
1,500
400
(Rs)
1,000
(Rs)
500 200
0
0
Jun-19
Jun-20
Jun-21
Dec-18
Dec-19
Dec-20
Dec-21
Jun-19
Jun-20
Jun-21
Dec-18
Dec-19
Dec-20
Dec-21
Parag Milk Foods Dodla Dairy
300 740
250 640
200 540
440
(Rs)
150
340
(Rs)
100 240
50 140
0 40
Jul-21
Oct-21
Nov-21
Dec-21
Aug-21
Sep-21
Jun-19
Jun-20
Jun-21
Dec-18
Dec-19
Dec-20
Dec-21
Source: Bloomberg
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Dairy sector, December 21, 2021 ICICI Securities
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BUY: >15% return; ADD: 5% to 15% return; HOLD: Negative 5% to Positive 5% return; REDUCE: Negative 5% to Negative 15% return; SELL: < negative 15% return
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