Chhota (to) Mota Ideas - Venky's India Ltd - BUY - TP Rs.3000 - Result Update - Kotak

- Venky's India 2QFY18 earnings surprised positively, as gross margins came in higher than estimates, and the sharp decline in debt led to lower interest expense outgo. Reported EBITDA/ PAT came in 22%/33% ahead of estimates. Gross margin outlook for the company continues to be favorable as: 1/ input prices (maize, and soya) continue to be favorable, 2/ output prices continue to be robust, and 3/ product mix continues to improve (higher sale of chicks versus broilers). We raise our FY18/FY19 EPS estimates by 8%/5%. We also think that the sharp net debt reduction affected by the company (over Rs 1.5 Bn net debt reduced over the past six months, helped by profit generation as well as more efficient working capital management) provides reason for greater comfort in earnings, and also provides the company a better platform to explore options of greater B2C play over the medium/ long-term. We raise our target valuation multiple to~ 16X FY19E PER (15X earlier), and arrive at a fresh (August, 2018) price target of Rs 3000. Maintain BUY.

Shares of VENKY'S (INDIA) LTD. was last trading in BSE at Rs.2385.7 as compared to the previous close of Rs. 2582.6. The total number of shares traded during the day was 46304 in over 5432 trades.

The stock hit an intraday high of Rs. 2612 and intraday low of 2352.65. The net turnover during the day was Rs. 115396330.

Source : Equity Bulls

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