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Multi Baggers

Hem Securities

5.30 AM Jan 1st 1970

Kwality

BSE ID : 531882     NSE ID : KWALITY

RECOMMENDED PRICE 45.00

PEAK FROM RECO 169.05 275.67%

CURRENT PRICE 2.14 Resource id #12

Kwality Limited is India's premier dairy foods company, focuses on building leadership positions in branded and added value markets across the dairy sector. We initiate a 'BUY' on the stock with a target price of Rs 75.

Kwality Limited

Kwality Limited, formerly Kwality Dairy (India) Limited, is an Indian-based dairy products company. The Company is primarily engaged in the business of manufacturing, purchase and sale of ghee, skimmed milk powder, curd, whole milk powder, dairy lactose and milk.

The company has registered robust results for the quarter ending March 2014. The revenues from operations grew by ~29 percent to Rs.1317.38 crores vs. Rs.1021.20 cr. in the corresponding quarter last year. Operating profit climbed sharply by ~69 percent at about Rs.77.60 crores as against Rs.45.88 crores in the previous year quarter. The adjusted net profit almost doubled at Rs.36.31 crore for the quarter as compared to Rs.15.02 crore. EPS for the quarter stood at Rs.1.79. On the margins front, operating margin climbed about 150 bps at 5.89 percent as against 4.49 percent while net profit margin expanded 129 bps at 2.76 percent from 1.47 percent y-o-y.

The company has recently increased its milk prices by Rs.2 per litre across all variants in the Delhi-NCR region. The company has taken this step as cost of procurement of milk has gone up in last few months. After the proposed increase, the Kwality full cream milk will cost Rs 48 per litre, toned milk will be priced at  Rs 38 a litre and double toned would be available for Rs 34 a litre.

The company plans to maintain the growth momentum with the focus on increasing share of branded and value-added products and emerge as a leading dairy products company.

Valuation

With strong brand equity; increasing market presence and customer reach; increasing product portfolio; expansion plans and strong financial performance; Kwality Ltd. growth prospects and profitability looks positive. We believe the company is trading at an attractive valuation at 4.49x and 3.29x of FY15EPS of Rs.10.02 and FY16EPS of Rs.13.68. We initiate a 'BUY' on the stock with a target price of Rs.75 (appreciation of about 67 percent) with the medium to long term investment horizon.

For full details, Click on the attachment.

Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

Kwality_Multibagger_HemSec.pdf

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