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Parag Milk Foods reported 18.3% PAT growth for Q4FY18

Aggressive distribution expansion and product launches aided healthy growth for the company

Parag Milk Foods reported a healthy set of numbers for the quarter with 20.9% yoy growth in the revenue to Rs517.8cr. The growth was primarily driven by aggressive distribution expansion and addition of new variants in the value added product category. Gross margin for the quarter was marginally down by 29bps yoy to 32%, however on sequential basis it improved by 124bps (primarily led by lower milk prices). Led by strong revenue growth and increasing proportion of value added products, EBITDA grew by 42.5% yoy to Rs55.1cr. EBITDA margin of the company expanded by 162bps yoy to 10.6% led by lower other expenses as percent of sales. However, the company’s PAT grew by 18.3% because of higher interest and tax outgo.

The company enjoys 33% market share in the Indian cheese industry, which is growing at 31% CAGR. In order to tap this growing opportunity and increase its share, company is aggressive in launches, distribution network and retail segment. It launched Go Cheese cubes in order to increase its penetration in the retail segment, primarily strengething its distribution network in the tier II and tier III cities, where cheese penetration is increasing rapidly. Further, the growing QSR industry in India also provides huge opportunity in the institutional segment.

The company has indicated that it would continue with the product innovation in order to drive growth going forward. Earlier in April, company acquired the Danone Foods and Beverages India Pvt Ltd.’s manufacturing facility at Sonipat, Haryana. The facility manufactures curd, yogurt and other related products with current milk processing capacity of 0.75 LLPD and curd processing capacity of 15 MT.

Parag Milk Foods Ltd is currently trading at Rs311.35 down by Rs0 or 0% from its previous closing of Rs311.35 on the BSE.
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