Parag Milk Foods up by nearly 30 per cent in a month; is it recovering?

Parag Milk Foods up by nearly 30 per cent in a month; is it recovering?

Geyatee Deshpande
/ Categories: Trending, DSIJ News

The stock of Parag Milk Foods has gained by 28.01 per cent since the beginning of August 2020, outperforming Sensex. 

The company recently announced that it has received intimation from the promoters on further release of 20 lakh pledged shares. The shares were released by Kotak Mahindra Investments Limited, to which, the shares were pledged by promoters for personal borrowings. At the end of June 30, promoters had pledged 96.43 lakh shares.

Parag Milk Foods also launched Pride of Cows Curd made from pure Pride of Cows milk, which will be delivered to the consumer’s doorstep through a completely contact-free process that involves a fully-automated milking & production system. It also includes a cold chain network to maintain a constant temperature throughout so as to retain the curd’s authentic flavour and aroma.

According to various analysts, the profit margins of the dairy companies may see an increase in the coming quarters after a sharp contraction in Q4FY20 and Q1FY21 caused due to a sharp decline in demand as a result of the disruptions caused by COVID-19. Further, dairy companies with strong business positions like better-positioned brands, distribution networks, and a strong balance sheet will be able to enjoy a lower cost of capital as any material change in risk premium will be very low, thus enjoying a better return on equity.

Parag Milk Foods is engaged in the manufacturing, marketing, and selling of milk and milk products. It is one of India's largest producers of cheese under its brand Go as well as Gowardhan for cow ghee. Its other popular brand includes Pride of Cows.

After touching its 52-week low of Rs 48.50 per share on March 19, 2020, the scrip rose by almost 88.20 per cent. Even then, the scrip is still more than 30 per cent away from reaching its 52-week high of Rs 177 per share. On a YTD basis, the shares of Parag Milk Foods have declined by nearly 21.33 per cent per share while in a year’s time, it fell by 19.70 per cent.

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