have initiated a position in kwality dairy at 120 rs today.
broadly the points which got me interested :
- the company has been in the dairy business for long and knows through functioning of the sector. supplies milk to all the big houses like itc hul britannia etc etc. which is their b2b business.
- one would tend to agree with the broad theme of urbanisation and the growing demand for value added products. i rem myself consuming products like flav milk , yoghurt etc often only after getting my first job.
- they have roped in a seasoned veteran and star akshay kumar as their brand ambassador for marketing and branding purposes. akshay kumar according to me has decent recall and value esp in the north indian stars.
- kkr would have done due diligence before investing 550 crores , also the fy 16 ar brings out that the management is clear in its resolve to push for value added products for higher margins and profits. they again and again reiterate the point that the company is at a inflection point. if a company with vast exp like kwality will not be able to execute it then who will be able. ( odds are on their side )
- overall i have this gut feel that the change of the business dynamics has favorable tailwinds.
- also dairy stocks as a sector don make much headlines and news. if the turnaround happens and this catches market fancy the returns can be really handsome, otherwise with the current price at max i can end up having either mediocre returns ( either profit or loss).
regards
divyansh