Packaged Foods company Hindustan Foods announced Q2FY24 & H1FY24 results:
1. Revenue Stability:
- Revenues remained flat at Rs 1,297.1 crore in H1FY24 compared to Rs 1,262.3 crore in H1FY23.
- Revenues also remained flat at Rs 677.0 crore in Q2FY24 compared to Rs 663.7 crore in Q2FY23.
2. Profit Growth:
- EBITDA grew by 29% to Rs 106.9 crore in H1FY24 from Rs 82.7 crore in H1FY23.
- EBITDA grew by 26% to Rs 55.6 crore in Q2FY24 from Rs 44.0 crore in Q2FY23.
- PAT increased by 42% to Rs 48.0 crore in H1FY24 from Rs 33.8 crore in H1FY23.
- PAT increased by 31% to Rs 24.7 crore in Q2FY24 from Rs 18.9 crore in Q2FY23.
3. Progress in New Facility:
- The factory being set up in Guwahati, Assam for the manufacture of juices is progressing well and is expected to start commercial production by Q4FY24.
- The Company's capex plans for setting up the Soap & Bars project were commercialized in Q1FY24 and continue to ramp up satisfactorily.
- The upgradation capex in the beverage facility in Mysuru for the new MNC customer was completed and commercial production started in October.
- The company is raising funds to the tune of Rs 400 crore in the form of preferential warrants to be used as growth capital.
5. Expansion Plans:
- The Company plans to invest up to Rs 100 crore to set up, acquire, and invest in the area of sports shoe manufacturing. A share purchase agreement to acquire 100% share capital of KNS Shoetech Pvt. Ltd. has been executed.
- The Board has authorized an investment of Rs 75 crore for setting up a Greenfield Ice Cream facility.
Commenting on the results, Sameer R. Kothari, Managing Director said, “The overall slowdown in the FMCG demand and the deflation in the commodity prices continues to affect the short-term performance of the company. Additionally, the delay in getting the approvals for our Baddi acquisition has also hurt our plans for this financial year.
However, we do believe that this phase is temporary and that this environment will lead to further consolidation of the industry and offer interesting opportunities for M&A. We have accordingly, decided to raise some capital in the form of warrants which will not only give us access to the capital but will also allow us the luxury of drawing down this capital as and when these opportunities manifest.
One such opportunity identified by the company is in the sports shoe manufacturing sector where the company has agreed to invest up to Rs 100 crore. We do believe that this sector will see some unprecedented growth aided by the tailwinds of government policies and global realignment of supply chains. Another sector is ice cream manufacturing where we have further authorized an investment of Rs. 75 crore as we believe that per capita consumption and increasing reach of e-commerce will lead to a further decentralization of the supply chain and require more capex for setting up manufacturing facilities.
We continue to be bullish about the Indian consumption story and are still confident of reaching our stated target by FY25.”
Mayank Samdani, Group CFO, said, "While our turnover for the quarter on a consolidated basis was flat with a growth of only 2% YoY, the PAT rose by 31% YoY.
Our PAT for the quarter surpassed its previous high owing to the commercialization of the new facilities, and thus for the half year also, we have posted our highest-ever PAT of Rs 48.0 crore. We were able to achieve 21% ROE which we expect to sustain.
Our consolidated cash flow from operations was stable in spite of the increase in the inventory levels due to the commencement and ramping up of the new facilities."