After 3 straight months of decline, B&K Securities sees a 40% upside in FMCG stock Hindustan Foods, initiates coverage
₹678, indicating an upside potential of 40 percent from its current market price of ₹484.20. "Hindustan Foods Limited (HFL), the largest consumer contract manufacturer in India, has built durable moats by scaling up its manufacturing base, building strong clientele, constructing the widest array of product portfolio and creating operational efficiencies. Over the last four years (FY19-23), HFL has scaled up its sales and EBITDA five-fold, while profitability six-fold.
80-85 percent of the current business model works on a steady state RoE (18-22 percent)," said the brokerage. Read here: FPI inflows to be volatile amid US Fed rate cut; earnings growth key driver The stock has experienced a downturn, witnessing a decline of over 9 percent over the past year and a further drop of 13.5 percent year-to-date in 2024. Notably, it has yielded negative returns in each of the three months of the current calendar year thus far.
It has shed 6 percent in March so far after a 4.8 percent and 3.4 percent decline in February and January 2024, respectively. The stock is currently almost 28 percent away from its 52-week high of ₹669.00, hit on April 12, 2023. Meanwhile, it is trading just over 3 percent higher than its 52-week low of ₹468.05, hit last week on March 14, 2024.
Read here: Multibagger Alert! SJVN soars 490% in 4 years, jumps from ₹20.75 to 122.4 Industry tailwinds: As per the brokerage, the Indian FMCG (Fast-Moving Consumer Goods) industry boasts a substantial valuation of approximately $104 billion as of FY23. Personal care products hold the lion's share, contributing 50 percent, closely followed by Home/Healthcare at 31 percent, with Food & Beverages accounting for the remaining 19 percent of total industry sales. According
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