Chhota (to) Mota Ideas Update: Venky's India Ltd - SELL - TP Rs.3700 - Kotak

Venky's stock has now run up 216% since we initiated coverage (July, 2017) on the stock. In the last three months, the stock has appreciated 85%, as strong earnings performance in recent quarters has led to better perception among investors, aiding a re-rating. In our last update (March, 2018), we had noted signs of weakening poultry prices. Over the last month, decline in poultry prices has been sharper (more than 20% decline y/y), which is likely to affect near-term performance of the stock negatively. Moreover, industry sources indicate that there may be an excess supply in the poultry market (supply has risen faster than anticipated demand growth), which could affect medium-term earnings. We lower our (poultry) pricing assumptions, leading to a cut in gross margins/ earnings. With FY19E/20E earnings estimates 15%/16% lower, we cut our price target to Rs 3700 (Rs 4600 earlier). Downgrade to SELL as we think there is a high likelihood of significantly lower entry points in the stock (for longer-term play)

Shares of VENKY'S (INDIA) LTD. was last trading in BSE at Rs.4571.5 as compared to the previous close of Rs. 4563.95. The total number of shares traded during the day was 83921 in over 10247 trades.

The stock hit an intraday high of Rs. 4694 and intraday low of 4455. The net turnover during the day was Rs. 385391355.

Source : Equity Bulls

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