Venky's (India) Q3 FY21 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
N/A
Order
N/A
Capex
Yes
1 of 3 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 3- Poultry and poultry products are expected to grow by 8% to 10% annually.
- Processed food sector anticipated to grow at a minimum of 25%, driven by consumer demand for convenience and retail expansion.
- Volume growth in poultry was 10% in the latest quarter; expected to maintain similar or better growth going forward.
- Expansion plans include increasing Venky's Express outlets 2.5 times in the west, doubling in the north, and growth in east and south regions targeting A and B grade cities.
- Expected volume of broiler chicks to increase from 11 Crores (2021) to 13-14 Crores depending on market demand and production capacity.
- Soya plant expansion expected to contribute approximately Rs. 500 Crores in business volume from 2021-2022.
- Capacity utilization across segments shows available room for growth, supporting future sales increase.
- Recovery from bird flu impact and COVID disruptions expected to support improved realization and volumes.
See what Venky's (India) management said on margin guidance — free account, 30 seconds.
Fundraise plans
- No specific mention of any new fundraising through debt or equity in the conference call transcript.
- The company has been reducing term loans and working capital limits, leading to reduced interest costs.
- Net cash flow from operations (Rs. 216 Crores for nine months) has been used for reducing bank borrowings, capex, and inventory buildup.
- Debt-equity ratio improved from 0.36 in March 2020 to 0.20 in December 2020.
- Future capital expenditure planned at Rs. 40 to 50 Crores per annum for the next 2-3 years focused on existing operations, without indicating fresh fundraising.
- The company relies on internal cash generation and currently has sufficient production capacities.
See what Venky's (India) management said on order book — free account, 30 seconds.
Capex plans
Yes- Completed Capex in 2018-2019 and 2019-2020 for SPF project expansion and soya extraction plant.
- Sufficient production facilities currently available across units (broiler chicks, layer chicks, soya extraction, feed mill, SPF, AHP).
- Planned capital expenditure of approximately Rs. 40 to 50 Crores per year for the next 2-3 years (2021-2022 and 2022-2023).
- This Capex will cover existing operations and unit capitalization needs.
- Capacity utilization as of December 2020: 70-75% for layer and broiler parent capacity, 75% for feed mill, 59% for SPF facilities, 80% for AHP powder section, 71% for AHP liquid section, 65% for soya extraction, 83% for soya DOC, and 95% for refined oil.
- Overall, sufficient capacity and planned moderate Capex indicate focus on optimizing existing assets rather than large-scale expansion in short term.
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Margin guidance
Category 3- Venky's expects continued growth with utilization of existing production capacity catering to layer chicks, broiler chicks, animal health products (AHP), and soya segments.
- The poultry segment has shown exceptional performance due to improved realizations in day-old chicks and grown-up broilers, expected to continue.
- The processed food sector is targeted to grow at a minimum of 25% annually excluding QSR, driven by consumer demand and retail presence.
- Profit run rate of Rs. 100 Crores achieved in recent quarters is expected to sustain or improve, barring short-term volume fluctuations.
- Capital expenditure planned at Rs. 40-50 Crores per year over next 2-3 years to maintain existing operations and moderate capacity expansion.
- Growth in poultry volumes expected around 10% quarter-on-quarter going forward based on current Q3 trends.
- Market growth anticipated at 8-10% annually, supported by rising per capita consumption from 4.5 kg towards global averages.
- Bird flu impact is temporary and recovery is underway, supporting positive earnings momentum.
Order book
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What Venky's (India)'s management said in earlier quarters
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