Heritage Foods reports 116.96% profit growth despite mixed Q2 results

INDIA – Heritage Foods released its second-quarter results on October 23, 2024, reporting impressive growth in profitability despite facing challenges in revenue and operating income. 

The company achieved a 116.96% year-over-year increase in profit, alongside a 4.19% increase in revenue. 

However, compared to the first quarter of 2024, there was a slight revenue decline of 1.27%, and profits decreased by 16.96%, indicating a mixed performance amid fluctuating market conditions.

The Selling, General & Administrative (SG&A) expenses rose by 3.8% quarter-over-quarter and 25.76% year-over-year, reflecting rising operational costs that could potentially impact future profitability. 

Operating income also faced a decline, dropping 14.62% from the previous quarter but exhibiting a significant year-over-year increase of 105.52%. 

Earnings per share for Q2 reached ₹5.24, marking a substantial 116.53% increase from the previous year, underscoring the company’s operational efficiency and profitability. 

Despite a recent downturn, with a -6.78% return in the last week, Heritage Foods has showcased impressive long-term performance, achieving a 78.78% return over the past six months and a remarkable 96.11% return year-to-date.

As of October 24, 2024, Heritage Foods boasts a market capitalization of ₹5,519.51 crore, with its stock trading within a 52-week range of ₹727.35 (high) and ₹209.3 (low). 

Among analysts, sentiment remains positive, with one giving a ‘Buy’ rating and another recommending a ‘Strong Buy,’ indicating confidence in the company’s future performance.

In terms of financial metrics, Heritage Foods reported a profit of ₹910.38 million for the year ended March 31, 2024, compared to ₹658.89 million for the previous year. 

The weighted average number of equity shares outstanding during the year was 92,796,000, yielding an earnings per equity share (EPES) of ₹7.19. The company has not had any potential dilutive equity shares during this period.

The board of directors proposed a final dividend of ₹2.50 per equity share for the fiscal year ending March 31, 2024, consistent with the previous year. 

This dividend proposal is subject to shareholder approval in the upcoming Annual General Meeting. The amount allocated for the dividend totals ₹231.99 million, in line with the prior year’s payout.

Additionally, Heritage Foods has disclosed that it has not advanced any funds to intermediaries with the expectation of those funds being lent or invested in identified parties.

Furthermore, no funds have been received from any parties with the understanding that the company would lend or invest in other identified entities.

The company also recognized an impairment loss related to its investment in Heritage Novandie Foods Private Limited, a joint venture. 

As of March 31, 2024, the carrying value of this investment was ₹409.45 million, with an assessed business value of ₹241.50 million, resulting in an impairment loss of ₹167.95 million.

Overall, while Heritage Foods faces short-term revenue challenges, its strong year-over-year profit growth and strategic focus on operational efficiency position it well for future growth in the competitive dairy industry.

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