Venky's (India), which gave massive returns in 9 years until April 2018 (from 2009), has fallen 60 percent in the last 15 months — from April 2018 to June 2019. In 2019 alone, the stock has fallen over 22 percent as compared to a 10 percent gain in Sensex.
The stock of the only listed poultry firm in India surged from Rs 80 in June 2009, to its all-time high of Rs 4,711, in April 2018, a rise of over 5700 percent. However, it hit its 52-week low of Rs 1,455 by May 2019.
To put into perspective, an investment of Rs 1 lakh in the stock in 2009 would have grown to Rs 58 lakh till April 2018. But had an investment of Rs 1 lakh been made in the stock in April 2018, it would have fallen to Rs 31,000 by May 2019.
Major downward movement came in the stock after it was included in the additional surveillance framework list by Sebi on June 1, 2018, to check any abnormal rise in stock prices that is not commensurate with the financial health of companies. The stock was later removed from the list in August 2018. But, in two months, the stock had lost over 25 percent.
Soon after the company recovered from the ASM list, the company reported a decline in profit for three consecutive quarters, putting pressure on the stock again.
Its net profit for the September-quarter came in at an 80 percent year-on-year drop, which was the lowest in the past two years. The company's Q2FY19 net profit was Rs 5.5 crore against Rs 27.1 crore in Q2FY18 due to lower realisations. For Q3, the profit declined 3 percent on a YoY basis to Rs 67.7 crore. Meanwhile, in Q4, the company again reported a 41.5 percent YoY fall in net profit due to higher raw material costs. It was the third straight quarterly decline in net profit for the company.
Kotak Securities downgraded the stock last year in April on higher valuations. Kotak Securities expected Venky’s EPS growth to slow to 11 percent CAGR through FY18-FY20. It added that an investment case on Venky’s must be built on either positive earnings surprise or a meaningful change in the perception of Venky’s.
Venky's (India) Ltd, a part of the VH Group, is an integrated poultry group in Asia. The company has diversified its activities in the poultry sector that includes the production of SPF eggs chicken and eggs processing broiler and layer breeding animal health products Poultry feed & equipment soya bean extract among others.
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