Venkys (India) LtdQ4 FY22Food Products

Venkys (India) Ltd

Q4 FY22 Earnings Call Analysis

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 analysis

Revenue 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.

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.

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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.

Order book

The transcript does not explicitly mention current or expected order book or pending orders for Venky's India Limited. However, the following related insights can be noted: - The company is experiencing growth in volume and turnover, indicating healthy demand and order flow. - Broiler chicks placed: approx. 11 Crores in 2021, expected to reach 13-14 Crores depending on marketing and production. - Layer chicks volume likely to grow from 4.4 Crores to 4.8 Crores in 2021-22. - New soya plant expected to add ~500 Crores in business volume next year. - Capacity utilization levels across segments are moderate (50%-95%), with room to meet increased demand without immediate large Capex. - Marketing requirements and production capacity are aligned to support order fulfillment for next 2-3 years. No explicit number of pending orders was shared in the call.

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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