Khambatta Securities has given Buy recommendation for Prataap Snacks with a target price of Rs. 848 in its research report issued on Nov 16, 2021
Khambatta Securities’ research report on Prataap Snacks
Prataap Snacks Limited (PSL) reported good results for the quarter. The company has witnessed recovery across several product categories with sales volume surpassing pre–covid levels (except the Rings) led by momentum in the economic activities. The Operating revenue has witnessed 13% y-o-y growth from ₹ 326.7 crores to ₹ 370.6 crores. EBITDA grew marginally by 3.5% y-o-y at ₹ 24.2 crores for 2QFY22; however, the margins declined by 62 bps to 6.5% due to rise in input prices and transportation costs. Sequentially EBITDA grew by 118% and margins have improved by 256 bps. Higher Palm oil prices (up 34% y-o-y in 2QFY22) and escalation in other materials such as packaging films and corrugated boxes have impacted the margins. The Net Profit for the quarter jumped by 74% y-o-y to ₹ 14.7 crore. The Net profit margin registered a growth of ~140 bps and 453 bps on a y-o-y and q-o-q basis respectively to 4% for 2QFY22.
We roll forward our valuation to FY24E earnings and value the stock at 25X FY24E EPS at ₹ 848, informing a BUY rating with an upside potential of 15% from the current levels.