Buy what you see concept: Parag Milk Foods
Dairy Industry in India:
Dairy products in India are always in demand since milk forms ~90% of household dairy consumption (10% CAGR in last 10 years).
Most of the Dairy industry is being served by unorganized sector.
In recent times we have seen that organised players like Parag Milk Foods have done well in taking dairy industry to a new level.
The two challenges that an organised player faces is to procure milk in high quantity directly from farmers and to distribute them to customers by creating direct, indirect and value added products. Some examples of value added products are like cheese, flavored milk etc.
Parag milk Foods:
Parag Milk Foods Ltd, founded in 1992, is one of India’s elite private sector dairy company, with a diverse portfolio in over 15 consumer centric product categories. It is having several Dairy products under the brands “Gowardhan”, “GO”, “Topup” and “Pride of Cows”.
Highlights of Parag Milk:
single largest cheese-making capacity in any Indian company.
Launched high grade whey protein (a by product of cheese) for the first time in India in February 2015.
Parag’s product basket has greater the 150 SKU’s ( stock keeping units) which is one of the highest in India’s dairy sector
Aggregates milk from more than 3000 village level collection centers, managing 730 procurement cycles a year.
Diverse products range like cheese, ghee, UHT, milk, whey proteins, paneer, curd, yoghurt, milk-based beverages and milk powders with flagship brands ‘Gowardhan’ and ‘Go’ among the leading ghee, cheese and value-added milk product manufacturers in India.
Premium milk is sold under the ‘Pride of Cows’ brand
Topp Up is the brand under which flavoured milk is marketed
Milk processing capacity of 2 million litres per day; largest Indian raw cheese production capacity of 40 MT per day in one single unit.
Fully-automated dairy farm in Manchar (subsidiary Bhagyalaxmi Dairy Farm); the farm houses over 2,000 Holstein Friesian breed of cows delivering higher yields of superior milk quality
Supplies farm-to-home premium fresh milk in Mumbai and Pune through its ‘Pride of Cows’ brand
Leading institutional customers like Yum! Restaurants (India) Private Limited (for Pizza Hut, Taco Bell and KFC), Jubilant Foodworks Limited (for Domino’s Pizza) and Sankalp Recreation Private Limited (for Sam’s Pizza)
Key Financial Details:
Fundamental Conclusion: As seen in the above graphs, D/E is decreasing YoY. While EV/EBIDTA are increasing YoY and ROE at an average of 15.26%. A company which reduces its debt over years will get to keep the profits or reinvest it into business.
Bullish Signals in Charts
- Golden Crossover i.e. 50 SMA crossover 200 SMA in lower time frame
- Stock has reached previous demand level of IPO price and moving up from there.
- RSI had previous resistance at 60 and gradually this resistance increased to 80. This is called RSI Bull shift.