Prataap Snacks Ltd - Set for a crunchy bite!

Stock Opportunities Not-so-Hidden Gems
24

Any idea as to why the company is struggling to grow this business, could annapurna swadisht also face similar issues in the coming years??

25

I guess in FMCG it is peculiar that smaller players always struggle to gain market share vs. larger or branded ones. Initially on a very small base, Prataap was able to manage strong growth, but on this base it is struggling. Only it has done well on margin front. But sales growth matter far more IMO. Real weak business in my view. The only hope is if its taken over by someone

26

it looks like 1000 to 2000cr mcap mark is possible to grow till, post that very difficult to grow further

27

Management Initiatives for increasing the topline:-

  • Namkeen segment - Currently only 25% of the outlets have Namkeen available(As the taste of Namkeen varies according to the region and currently only Indore plant has the capability to manufacture Namkeen). The management wants to increase its availability through range selling, Sales force automation and entry into modern trade and quick commerce. Management has already developed the products and will launch the products in East India and South India over next couple of months. They expect to increase the sales by 4-5% from this move. Currently Namkeen’s contribution to total revenue is about 16%.

  • Jammu Plant - The Jammu plant has been commissioned in March 2024 and the management expects to target areas like J&K, Punjab and Himachal which were earlier less accessible due to logistics issues. The management expects to generate 10 crores of revenue per month from this plant going forward.

  • Quick commerce - The management has taken the initiative to get themselves listed on Dmart and Reliance. The supply should start from Q125 itself. The potential could be 50 crores per year from these 2 outlets.

  • PLI scheme eligibility - The management needs to maintain 10% CAGR growth till FY 2027 (Base year for calculation - FY 20) in topline to be eligible to receive PLI benefits. Management have fulfilled the CAPEX criteria and the PLI benefits should start to kick in from FY 25.

  • Export market - They have received few orders from Oman market and the management will also participate in the upcoming conference in Dubai and they are hopeful of achieving 50-100 crores of topline in the next 1-2 years

Overall the management expects to hit 500 crores of revenue on a quarterly basis by Q3 25 and an annualized revenue of around 1900 crores for FY 25 lead by major growth in Extruded snacks, Pellets and Namkeen. With EBITDA margins being around 9% we could expect EBITDA around 171 crores (21% increase yoy) and EPS around 27-28. Plus the management expects to further enhance the EBITDA margin by 2-3% by focusing on optimizing operation cost and reducing channel distributor margins.

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