Hold Prataap Snacks; target of Rs 729: Arihant Capital

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Arihant Capital's research report on Prataap Snacks

Prataap Snacks’ (PSL) overall Q4 performance was disappointing as it was below our estimates on all fronts, largely due to visible margin pressure resulting from high operating costs. Consolidated Revenue were INR 358 Cr vs INR 303 Cr in Q4FY21 (+16.57% YoY, - 5.45% QoQ) which was above our estimate of INR 312 Cr. Gross Profit was INR 88 Cr vs INR 81 Cr in Q4FY21 (+8.78% YoY, -12.53% QoQ). Gross Profit Margins were 24.52% vs 26.27% in Q4FY21 (-175bps YoY, -199bps QoQ). EBITDA was INR 8 Cr vs INR 14Cr in Q4FY21 (-51.3% YoY, -66.9% QoQ) as compared to our estimate of INR 13 Cr. EBITDA Margins were 1.88% vs 4.5% in Q4FY21 (-262bps YoY, -344bps QoQ). The margins delivered were below our estimate of 4%. Company has reported loss of INR 3 Cr as profit of INR 4 Cr in Q4FY21 as compared to our profit estimate of INR 2 cr.

Outlook

We expected Revenue/PAT to increase by 20%/39% respectively in FY23E. We have assigned a TP of INR 729, valued at a P/E multiple of 40x based on an FY23E EPS of INR 18. We have Hold rating on the stock.

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