Dalal Street Investment Journal - - RECOMMENDATIONS -

An in­te­grated poul­try firm, Venky's In­dia is into the busi­ness of poul­try and poul­try prod­ucts, an­i­mal health prod­ucts and oilseeds. The com­pany holds a restau­rant chain pro­vid­ing va­ri­ety of pro­cessed chicken prod­ucts. Its ma­jor part of rev­enue came from de-oiled cake for poul­try feed (70%), grown-up com­mer­cial boil­ers (19%) and day-old com­mer­cial chicks S.P.F eggs (14%) in FY17. Big in­sti­tu­tions have been in­creas­ing their stakes in the com­pany. The in­sti­tu­tional stakes have in­creased to

27% in March 2017 from De­cem­ber 2016 as the de­mand for chicken is con­sis­tently grow­ing at 15-18% an­nu­ally. Con­sid­er­ing the lat­est quar­ter, the com­pany posted a rev­enue and PAT growth of 7.2% and 25%, re­spec­tively, while the an­nual data shows 16.4% and 226% rev­enue and PAT growth, re­spec­tively, in FY17. De­cline in maize prices (nearly 70% of raw ma­te­rial cost of Venky’s) would help the com­pany main­tain its op­er­at­ing ef­fi­ciency go­ing for­ward. Con­sid­er­ing the con­sis­tent de­mand from Venky’s lovers, we rec­om­mend Buy in the scrip for a tar­get of ₹2806 and with a stop loss of ₹2278.

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