Shares of Parag Milk Foods
hit an all-time low of Rs 161, down 5 per cent on the BSE on Tuesday. The stock has fallen 38 per cent in the past one month after it reported weak operational performance during April-June quarter (Q1FY20). Shares of the packaged goods company were trading at lowest level since its listing on May 19, 2016.
Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin contracted 190 basis points (bps) from 10.9 per cent to 9 per cent in Q1FY20, which was impacted mainly due to decline in gross margins.
Ebitda declined 4.6 per cent to Rs 56.9 crore from Rs 59.6 crore in the year-ago quarter on account of increase in milk procurement prices. The management said due to drought effect of last year and delayed monsoons, feed availability was severely constrained leading to stress at farmer level. Therefore, raw milk prices paid to farmers increased sequentially during the quarter.
The company’s consolidated net profit for the quarter ended June 30, 2019 slipped 2.7 per cent year-on-year (YoY) to Rs 27.5 crore. Operational revenue grew 14.6 per cent to Rs 630 crore, driven by an increase in revenue from milk products.
Over the last three quarters, revenue have been hovering in the range of Rs 600-670 crore and growth outlook appears hazy in the light of difficulties faced to scale up revenue of products launched over the last couple of years in the Health & Nutrition category. Steep fall in gross margins should take couple of quarters to recover, analysts at SPA Securities said in a result update.