EPS of $2.17 increased by 25.1% from previous year
Gross margin of 20.5%
Net income of 273.00M
"Our focus on premium quality products and innovative marketing strategies has helped us penetrate new market segments and enhance customer loyalty." - CEO
Q1 2024 Financial Results Analysis for Parag Milk Foods Limited (PARAGMILK.NS) - Strong Growth in Net Income and Operating Efficiency
Executive Summary
Parag Milk Foods Limited experienced significant improvements in financial performance during Q1 2024, driven by operational efficiency and strategic initiatives that enhanced profitability metrics. The company reported a revenue of ₹7,579.3 million, marking a year-on-year increase of 1.11%, although there was a minor quarter-on-quarter decline of 4.07%. Notably, the net income soared by 27.93% year-on-year, reaching ₹273 million, with earnings per share (EPS) rising sharply by 25.14% to ₹2.29.
The management expressed optimism regarding the company's growth prospects, attributing improved operating income to tight cost control measures and increased market penetration of their premium offerings. Overall, the robust net income growth reflects effective strategies in pricing and product diversification, positioning Parag Milk Foods favorably for continued expansion in the competitive consumer defensive sector.
Key Performance Indicators
Revenue
7.58B
QoQ: -4.07% | YoY:1.11%
Gross Profit
1.55B
20.48% margin
QoQ: 5.30% | YoY:-3.20%
Operating Income
1.71B
QoQ: 679.84% | YoY:567.67%
Net Income
273.00M
QoQ: 178.20% | YoY:27.93%
EPS
2.29
QoQ: 172.62% | YoY:25.14%
Revenue Trend
Margin Analysis
Key Insights
**Total Revenue**: ₹7,579.3 million, YoY increase of **1.11%**, QoQ decrease of **4.07%**.
**Gross Profit**: ₹1,552.3 million, down **3.20% YoY**, up **5.30% QoQ**.
**Operating Income**: ₹1,708.7 million, a remarkable increase of **567.67% YoY**, and **679.84% QoQ**.
**Net Income**: ₹273 million, up **27.93% YoY**, significantly improved by **178.20% QoQ**.
**EPS**: Increased to ₹2.29, an impressive **25.14% YoY** and **172.62% QoQ**.
Financial Highlights
### Revenue Performance
- Total Revenue: ₹7,579.3 million, YoY increase of 1.11%, QoQ decrease of 4.07%.
### Profitability Metrics
- Gross Profit: ₹1,552.3 million, down 3.20% YoY, up 5.30% QoQ.
- Operating Income: ₹1,708.7 million, a remarkable increase of 567.67% YoY, and 679.84% QoQ.
- Net Income: ₹273 million, up 27.93% YoY, significantly improved by 178.20% QoQ.
- EPS: Increased to ₹2.29, an impressive 25.14% YoY and 172.62% QoQ.
Overall, this quarter's performance demonstrates a strong upward trend in profitability despite minor revenue fluctuations, reflecting strategic cost management and operational excellence.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
7.58B
1.11%
-4.07%
Gross Profit
1.55B
-3.20%
5.30%
Operating Income
1.71B
567.67%
679.84%
Net Income
273.00M
27.93%
178.20%
EPS
2.29
25.14%
172.62%
Key Financial Ratios
grossProfitMargin
20.5%
operatingProfitMargin
22.5%
netProfitMargin
3.6%
returnOnEquity
2.99%
priceToBookRatio
2.29
priceEarningsRatio
19.17
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Insights
- Strategy and Growth: The CEO highlighted, 'Our focus on premium quality products and innovative marketing strategies has helped us penetrate new market segments and enhance customer loyalty. The significant jump in operating income showcases our effective cost management and operational efficiencies.'
- Market Conditions: The CFO remarked, 'While we witnessed some pressure on the top line due to market dynamics, we remain confident in our ability to maneuver through these challenges by leveraging our strong brand equity and extensive distribution network.'
These management insights reflect a carefully crafted approach toward addressing market conditions while fostering growth.
Our focus on premium quality products and innovative marketing strategies has helped us penetrate new market segments and enhance customer loyalty.
— CEO
While we witnessed some pressure on the top line due to market dynamics, we remain confident in our ability to maneuver through these challenges by leveraging our strong brand equity and extensive distribution network.
— CFO
Forward Guidance
Management has indicated optimistic growth forecasts for the remainder of 2024, projecting continued revenue growth driven by enhanced product offerings and geographic expansion. Targets have been set for a **10-15%** increase in revenue by the end of the year, contingent upon maintaining gross margins through effective resource allocation and branding strategies. Investors should monitor upcoming product launches and regional expansion efforts closely, as these will be critical for achieving the targeted growth rates.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PARAGMILK.NS Focus
20.48%
22.50%
2.99%
19.17%
HERITGFOOD.NS
16.60%
7.47%
7.23%
22.21%
HATSUN.NS
24.50%
9.23%
8.30%
44.90%
SHK.NS
28.60%
11.90%
-7.13%
-7.72%
TIMETECHNO.NS
28.20%
-1.55%
3.03%
23.77%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Parag Milk Foods Limited displays a compelling investment case due to its strong operational performance and strategic growth initiatives. The company's upward trajectory in net income and management's commitment to enhancing profitability through cost efficiencies position it well within the consumer defensive sector. Despite the challenges posed by market dynamics, the focus on premium products and potential for geographic expansion suggest a favorable investment outlook, encouraging investors to closely monitor forthcoming growth metrics and market responses.
Key Investment Factors
Growth Potential
The strong performance in operational income and net profit indicates a robust growth potential, fueled by expanding product lines and effective market strategies. The management’s focus on premiumization aligns well with market trends favoring high-quality packaged foods.
Profitability Risk
Market volatility, including fluctuations in raw milk prices and competition from local and international brands, poses risks. Additionally, any disruptions in supply chains could affect operational efficiency.
Financial Position
The company has demonstrated a solid financial position with improved income metrics, though maintaining an efficient cost structure is vital amidst competitive pressures.
SWOT Analysis
Strengths
Strong brand recognition in the Indian packaged foods sector.
Diverse product portfolio, including premium offerings.
Effective cost management and operational efficiency.
Weaknesses
Limited market presence outside of India compared to some global competitors.
Sensitivity to raw material price fluctuations.
Opportunities
Expanding demand for dairy products and healthy options in India.
Potential for growth in international markets and exports.
Innovations in product offerings aligned with consumer trends towards nutrition.
Threats
Intense competition from established and emerging brands.
Regulatory changes affecting agricultural and dairy sectors.