Prataap Snacks FMCG STAR

Dear investor,

Please find below mentioned short term fundamental stock for delivery purpose.

 

Company	CMP	Target	BSE Code	NSE Code
Prataap Snacks Ltd.	573	640	540724	DIAMONDYD

 

Fundamental :- Food - Processing - Indian

• Market Cap:  1,344 Cr.
• Current Price:  573.00
• 52 weeks High / Low  989.00 / 435.10
• Book Value:  259.24
• Stock P/E: 28.64
• Dividend Yield: 0.17 %
• ROCE: 10.24 %
• ROE: 8.28 %
• Sales Growth (3Yrs): 15.63 %
• Listed on BSE and NSE
• Company Website
• Face Value:  5.00

• PEG Ratio: 0.54
• Promoter holding: 71.44 %
• Pledged percentage: 0.00 %
• Debt:  73.33 Cr.
• Price to Earning: 28.56
• EPS:  20.00
• Net profit:  46.92 Cr.
• Profit growth: 8.04 %
• Profit growth 7Years: 19.81 %
• Net profit preceding 12months: 40.87 Cr.
• Profit growth 3Years: 12.06 %
• Dividend yield: 0.18 %
• Debt to equity: 0.12
• Sales last year:  1,171 Cr.
• Sales growth: 19.06 %
• Unpledged promoter holding: 71.44 %
• Investments:  0.00 Cr.
• Intrinsic Value:  173.85

Prataap Snacks Ltd is a leading Indian Snacks Food Company that offers multiple variants of products across categories of Potato Chips, Extruded Snacks, Namkeen all under the highly popular and vibrant Yellow Diamond brand. The Company enjoys a meaningful market share and is one of the leading players in the Rings (extruded snacks) segment.

 

Investment rationale

 

One of the leading players with a robust product portfolio: Prataap Snacks has established itself as a top market player in the organized snacks industry. The Company has created a diverse product portfolio at strategic price points and pack sizes with more than 100 Stock Keeping Units (SKUs) at strategic price points starting from Rs. 5 to Rs. 100 pack sizes. It holds three strong brands including the parent Yellow Diamond brand, Rich Feast for Sweet Snacks, and the recently acquired Avadh brand. Its product portfolio includes potato chips, ring, puffs, Namkeen, pellet snacks, cake, fryums etc.
 

Strategic plants and wide distribution networks- A key entry barrier: Prataap started its journey in 2005 with a single facility located at Indore. In the initial years, the Company steadily built a presence in urban markets of Mumbai and Delhi, the key distribution hubs of western and northern India by taking advantage of reverse logistics. The Company then set up a new facility in the East (Guwahati, enjoying tax benefits) and then entered in 3P manufacturing in South India. All these facilities are strategically located to service the different geographies effectively and also reap the benefits of being located close to raw material sources. From a nascent stage, operations today span 14 manufacturing facilities, 240 super stockiest, 4,100 distributors, and over 1.7 million retail touchpoints across 27 states selling over 11 million packets a day.
 

Gradual unlocking after initial impact due to lockdown: The Company in compliance with the directives of the Central Government has suspended operations at its Indore and Guwahati plants as well as 3P Manufacturing Facilities. Demand was impacted due to sudden stalling of economic activity as well as the reduced movement of People. Irregular operations of retail outlets and grocery stores impacted sales. Its mother plant in Indore restarted its operations only in mid-May on account of Indore being a COVID hotspot. Following the resumption of manufacturing and improving trade channels and logistics, the Company is focused on regularizing operations. The Company has taken various initiatives to ramp up production which is currently at 80% of pre-COVID levels on an overall basis.

 

Strong balance sheet, attractive valuation: The Company has a debt-free balance sheet on a net basis. Financial performance in recent quarters has been robust. The company’s Q4 performance is not much impacted however; Q1 & Q2 of FY21 may witness demand headwinds due to the complete shutdown of economic activities. The stock has corrected >40% from its 52W high and current valuation looks attractive for long term investors.

Duration of recommendation: Short to Medium term

Note :_ before investment advice your financial advisor.