TDP effect! Heritage Foods shares zoom 50% in 4 sessions

Shares of Heritage Foods continued gaining streak for the fourth straight session on Thursday, surging as much as 50% during the same period despite sharp volatility in the market after Lok Sabha Election results. The share price of Heritage Foods, one of the largest private dairies in South India, touched 20% upper circuit on Wednesday and 10% in today’s session after its founder TDP Chief N. Chandrababu Naidu emerged as kingmaker in the 2024 general elections. Naidu is also set to become Andhra Pradesh Chief Minister for the fourth time on June 9 after his party, Telugu Desam Party (TDP), received a thumping majority in assembly elections.

The TDP emerged as the winner in Andhra Pradesh polls, which went for elections on May 13 for 25 Lok Sabha and 175 assembly seats. The party secured 135 seats in state assembly and 16 in Lok Sabha elections.

Heritage Foods was incorporated as a dairy company in 1992 by Naidu, which sells milk and dairy products under the Heritage brand in Southern states such as Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu. It ventured into organised retail in 2006 by opening stores under the Heritage Fresh brand. On March 31, 2017, the group demerged its retail business undertakings consisting of retail (136 stores spread across 4.81 lakh square feet), agri and bakery divisions to Future Retail Ltd (FRL). The group also has captive solar and wind power plants with installed capacity of 10.5 megawatt.

Boosted by the stellar performance of Naidu in Indian politics, investors are rushing to invest in Naidu’s lone entrepreneurial venture, in which he holds 41.30% stake through his family members. As per the data available on the BSE, Naidu’s wife, Bhuvaneswari Nara, holds a 24.37% stake in Heritage Foods as of March 2024.

Continuing its gaining streak for the fourth straight session, Heritage Foods shares hit its 10% upper circuit limit of ₹601.60 on the BSE, while its market capitalisation rose to ₹5,556 crore. The stock price has nearly tripled from its 52-week low of ₹207.05 on June 8, 2023, to hit a fresh record high of ₹601.60 in intraday trade today.

In the fourth quarter ended March 2024, Heritage Foods registered a more than two-fold jump in its consolidated net profit from continuing operations at ₹40.5 crore from ₹17.93 crore a year earlier, driven by strong demand for its dairy products amid higher milk prices. The revenue from operations climbed 16.26% year on year to ₹950.57 crore as compared to ₹817.6 crore in Q4 FY23. The board of the company also recommended final dividend of ₹2.50 per equity share of the face value of ₹5 each for FY24, subject to shareholders’ approval.

Segment wise, revenue from dairy stood at ₹935.61 crore (up 15.79% YoY), while renewable energy generated revenue of ₹1.96 crore (up 24.84% YoY). The feed revenue was at ₹43.06 crore (up 41.23% YoY) during the period under review.

During the quarter, average milk procurement was at 1.59 million litres per day (MLPD), up 11.32% YoY. Milk sales volumes continued its steady growth in Q4, registering a growth by 3.74% YoY to 1.11 MLPD. 

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