Hello Sir,

Hope you are doing well.

Everyone is looking for good investment opportunities that can turn out to be multibaggers.

I was recently looking at Venky’s India. If you love eating non-veg, specially Chicken and Eggs, there’s a high probability you might be aware of the brand “Venky’s”.

 

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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 50% from the peak and we therefore decided to look at the company.

Below, we have shared our notes from the Q2 FY 25 con-call of the company to understand the outlook for the business.

 

Venky’s India – Notes from Q2 FY 25 concall

– Key Highlights:

  • Profit Decline: The decline in profits is primarily attributed to the losses in the poultry and poultry product segment
  • Seasonality: The 2nd quarter traditionally witnesses weaker performance for the poultry segment due to seasonal patterns, fasting months, and religious rituals.
  • Animal Health: Satisfactory performance was noted in the Animal Health product segment.
  • Oilseed Segment: Performance was impacted by unfavorable market conditions

– Poultry Segment:

  • Realizations:
    • In Q1: Price realizations ranged from Rs. 106/kg to Rs. 110/kg, with a production cost of Rs. 87–88/kg
    • In Q2: Price realizations dropped to Rs. 99/kg on average, with August at Rs. 86 and September at Rs. 84. Production costs remained stable at Rs. 87–88/kg.
    • By October, prices dipped further to Rs. 74/kg but rebounded in late October to Rs. 95–100/kg due to post-festival demand
  • Margins: Margins in Q1 were strong, at around Rs. 20/kg. Similar trends are expected in Q3 and Q4, depending on price realizations
  • Demand Growth: Year-on-year, poultry demand is growing steadily at 8–9%, a trend expected to continue
  • Market Share: Poultry within the non-veg segment has grown to 55%, with expectations for further increases

– Oilseed Segment:

  • Capacity utilization has been increasing since October. Seed prices are currently below MSP levels both internationally and in India
  • Government Actions: The government has identified internal oilseed availability improvement as a priority to reduce import dependency and foreign exchange costs. Corrective measures are underway to boost this segment

– Balance Sheet:

  • Cash and cash equivalents as of September 30, 2024: Rs. 306.24 crore.

– Guidance:

  • Poultry Products: Improved realizations for poultry products are expected in the coming months, leading to a better Q3 performance compared to Q2
  • Oilseed Segment: Capacity utilization in the Oilseed segment is anticipated to show significant improvement

(End)

 

Disclaimer: This is not a recommendation to buy/sell any of the stocks mentioned above. The securities quoted are for illustration only and are not recommendatory.

 

Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

 

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