For Q2FY2019, Parag Milk Foods (PARAG) posted decent performance with 14%/22% yoy growth in revenue/ PAT led by 23 bps expansion in margin. The company has maintained its revenue target of `2700 crore+ for FY2020 backed by widening distribution network and product portfolio.
We have maintained our earnings estimates in view of new products pipeline and robust H1 performance. We expect PARAG to report a CAGR of ~17%/35% in revenue/ earnings over FY18-20E. The stock is currently trading at 13.4x its FY2020 earnings, which looks attractive looking at its evolving FMCG story. We maintain BUY with a revised target price of `330 (17x FY2020E EPS).

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