Hello Sir,
Hope you are doing well.
If you love eating non-veg, specially Chicken and Eggs, there’s a high probability you might be aware of the brand “Venky’s”.
Venky’s India is a part of the VH Group (Venkateshwara Hatcheries) and is primarily engaged in the business of production and sale of day old broiler chicks, layer chicks, chicken processing (including ready to eat products), production of SPF eggs, manufacturing of medicines and poultry feed supplements and processing of soya.
Last 2-3 years have been tough for the company on account of issues with poultry and oil seeds business. The stock is down 40% from the peak and we therefore decided to look at the company.
Below, we have shared our notes from the Q4 FY 24 con-call of the company to understand the outlook for the business.
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Venky’s India – Notes from Q4 FY 24 concall
– Introduction
- The overall financial performance of Venky’s for the Q4 FY 24 has been better as compared to the previous quarter
– Poultry segment
- After witnessing a subdued performance in terms of realization up to December 2023, the poultry and poultry products segment performance improved in the fourth quarter due to improved realization from the sale of the old chicks and grown up broilers
- In April month average realization (per kg) closed around 108 to 116 all over India, same is the trend expected for the month of May also
- Profit margins of this segment have also improved due to lower cost of maize and soya as compared to last year
- For FY’23, the average maize price was close to Rs 24 and soya price was close to Rs 53. For FY’24, this maize price reduced to Rs 22.50 and soya price was close to Rs 47.50
- Realization – For broiler chicks, the realization in FY 24 was Rs 30.38 against Rs 27.57 in FY 23. In terms of layer commercial chicks, the realization in FY 24 was Rs 38.51 against Rs 36.38 in FY 23. In terms of broiler bird, the realization was down in FY 24; it is Rs 84.16 per Kg which was Rs 89.36 in FY 23
- if you calculate winter versus summer – the mortality is usually 5% to 6% in the winter season, during summer season, that mortality touches to 10% to 11%. At the same time, body weight which usually in winter is 2.4 to 2.5 Kg; bird struggle to achieve that body weight and body weight comes down to around 2.1 to 2.2 Kg
- As far as the margin wise, the broiler chicks and layer chicks and broiler birds are having better margins in in general than the processed chicken
– Animal Health segment
- The animal health product division expansion was taken in the last financial year. All the completion and regulatory clearance has come in the January
- Now, the production has already started. We have already completed the trial batch and first batch is likely to be on
- We are looking forward for the overall improvement in the volumes of animal health division from 310 crores to plus-20% for this financial year
- New plant initially we will be utilizing around 35% to 40% of the capacity and the old plant is almost running at 75% to 80% of the capacity
– Oil Seeds segment
- Performance of Oil Seed segment was affected mainly due to unfavorable market conditions
- Since the poultry and poultry allied business segment was bad up till December and likewise unfavorable conditions has also affected the soya oil seed segment also, there was a reduction in the overall total sales of the soya during the year in comparison to the last year
- 4% to 5% margin is when the market is so much bullish or uptrend is like Rs 1,25,000 per ton of soya and now it is reeling between Rs 45,000 per ton
- As the poultry consumption will grow, automatically, this segment will also improve in terms of the top line and the bottom line
– CAPEX
- All our major projects are already completed, like AHP project was there. As such, there is no major capitalization during ’24-25
(End)
Disclaimer: This is not a recommendation to buy/sell Venky’s India. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
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