Highlights of the Interview given by Mr. RG Chandramogan, Chairman of Hatsun Agro Products Limited with CNBC TV-18 on 11th May, 2023:
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On Milk Inflation: In Q4 FY23, the company’s gross margins came at a 24 quarter low. However, the raw material inflation, i.e. the milk prices have started softening from April onwards. And the commodity prices have come down by 3-4% in April. Going forward, the company thinks FY24 will be a normal year after 2 years of disruption.
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On Gross Margins: Gross Margins for FY24 will be approximately 3% higher than FY23. Which comes to 30%.
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On demand trends in FY24: Milk is growing at a comparatively lesser pace, but ice-cream and curd are growing much better and faster. Overall growth will be better than last year.
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On Milk Volumes: In Q4 FY23, milk volume sales were stagnant. But in Q1 FY24, milk volumes are stepping up and things are improving. All the price corrections to combat inflation have been taken in Q4 FY23 and the market has settled. Inflation is behind and prices can cool off in the coming months.
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On lumpy skin disease: The lumpy skin disease is a history now and the problem exists no more.
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On FY24 Revenue guidance: Double digit revenue growth is definitely possible in FY24.
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On Capex: Over the last 4 years, the company has incurred a capex of Rs 1500-2000 crores. The increased gross block due to this will have a peak revenue potential of Rs 10,000 crores. FY23 revenues were Rs 7,500 crores.
Taking cues from Mr. Market, the company’s stock has started trading above all its moving averages. Also, the share price of other dairy companies such as Parag Milk Foods and Dodla Dairy have been trading above their 200 EMA since a month or so.
Although Hatsun trades at stretched valuations compared to its peers, it seems that taking a position here can be good for one’s financial health on the back of improving business operations! 
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