EIS's research report on VenkysWe have been expecting a better performance on sequential basis as there was slight sequential improvement in chicken prices on quarterly average basis. During 3QFY16, at sales level performance was better than our expectation but profitability continues to disappoint. The company witnessed 15% higher total revenues on yoy basis, better than our estimates. This was led by Oilseed business, which contributed around 45% of the sales, grew by huge 56% during the quarter. Animal Health Products business which contributed 7% of the business, posted a growth of 12%. However, the core business, Poultry & Poultry Products witnessed a de-growth of 6% and contributed 48% of sales.A very strong performance of Q1FY16 was not maintained during both Q2FY16 and Q3FY16 and the company posted a set of subdued performance on higher feed prices and lower chicken prices during most part of the quarter. The company’s performance depends a lot on volatile chicken prices. Cost of production has moved up a bit. During 2016, we expect chicken prices to stabilize at improved levels. And this will help margins in future as cost of production is still in control. Incorporating subdued 3QFY16 performance, we have revised both FY16 and FY17 earnings estimates downwards. Our downwardly revised TP is Rs 322 (9x FY2017E EPS) which suggests ~28.5% upside from current level. Hence, we maintain our Accumulate rating on the stock.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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