Venky's (India) revenue for Q1FY19 came in at Rs756.2cr, up by 14% yoy. The operating profit for Q1FY19 increased marginally by 9.6% yoy to Rs119.08cr. The EBITDA margin declined by ~62bps yoy to 15.8% in Q1FY19. Net profit for the quarter stood at ~Rs71.1cr, up by 36.8% yoy. The revenue, EBITDA and net profit beat the street estimates of Rs716cr, Rs112cr and Rs55cr by 6%, 6% and 29% respectively.
• The rise in revenue is majorly driven by higher levels of volumes across oilseed and animal healthcare product segments during the quarter.
• Gross profit margin of the company declined marginally by ~74bps on account of decline in the realization levels for oilseeds and animal healthcare due to likely input cost inflation coupled with subdued realizations.
• Employee benefits expense and other expenses increased by 15.6% and 11.6% yoy to Rs45.2cr and Rs73.01cr respectively in Q1FY19. The lower operating leverage lead to likely marginal decline in EBITDA margin of the company by ~62bps yoy to 15.8% in Q1FY19.
• Effective tax rate of the company declined significantly to 34.7% in Q1FY19 as against 44.5% in Q1FY18. This led to higher-than-expected increase in the net profit of the company.
• Poultry segment - The segment revenue increased marginally by 3.5% yoy to Rs366.4cr in Q1FY19. The segment EBIT increased by 12.3% to Rs87.8cr in Q1F19 with an expansion in segment EBIT margin by ~189bps yoy to 24.0%. The subdued volumes are on account of lower poultry consumption during the quarter due to religious activities. The rise in segment EBIT is on account of stabilization of raw material costs during the quarter.
• Oilseed segment - The segment revenue increased significantly by 28.7% yoy to Rs356.7cr in Q1FY19. However, the segment EBIT decreased by 6.3% to Rs20.9cr in Q1F19 with a decline in segment EBIT margin by ~189bps yoy to 17.8%. The decline in EBIT despite higher volumes is on account likely drop in the realization levels on account of excess market supply and likely input cost inflation under the segment.
• Animal Health Products - The segment revenue increased by 13.1% yoy to Rs56.8cr in Q1FY19. However, the segment EBIT declined marginally by 2.7% to Rs20.9cr in Q1F19 with a decline in segment EBIT margin by ~369bps yoy to 17.8%. The decline in EBIT margin is on account of likely cost inflation of raw materials and lower realizations.
Venkys (India) Ltd is currently trading at Rs. 3,236.55, up by 223.1 points or 7.4% from its previous closing of Rs. 3,013.45 on the BSE.
The scrip opened at Rs. 3,080 and has touched a high and low of Rs. 3,247.90 and Rs. 3,052 respectively. So far 3,05,720 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.
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