Add Heritage Foods, target price Rs 550: ICICI Securities

ICICI Securities has add call on Heritage Foods with a target price of Rs 550. The current market price of Heritage Foods Ltd. is Rs 495.9. Time period given by analyst is one year when Heritage Foods Ltd. price can reach defined target.

Heritage Foods Ltd., incorporated in the year 1992, is a Small Cap company (having a market cap of Rs 2303.66 Crore) operating in FMCG sector.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 650.90 Crore, up 4.49 % from last quarter Total Income of Rs 622.90 Crore and down -7.97 % from last year same quarter Total Income of Rs 707.29 Crore. Company reported net profit after tax of Rs 31.59 Crore in latest quarter.

Investment Rationale
The brokerage models Heritage to report revenue and PAT CAGRs of 15% and 8%, respectively, over FY21-FY23E. Core return ratios are expected to strong ~25% over FY21-23E. The brokerage is positive on the business model but current valuations limit the upside potential, the brokerage downgrades the stock to ADD rating and value the stock as per DCF methodology at Rs550 (Implied P/E 14x FY23E).

Promoter/FII Holdings
Promoters held 39.9 per cent stake in the company as of June 30, 2021, while FIIs held 3 per cent, DIIs 30.6 per cent and public and others 43.3 per cent.