Hatsun Agro shares jump 9% today, 30% in 2 days, surpassing ICICI Securities’ target

Hatsun Agro Product Ltd saw its shares rallying 9 per cent in Tuesday's trade, in addition to 20 per cent in the previous session, taking its two-day rise past 30 per cent. ICICI Securities said Hatsun Agro will likely be key beneficiary of cut in GST rates across dairy products and faster pace of sector formalisation. To factor in reduction in debt, it raised its FY27 profit estimates by 5.6 per cent, as it stayed constructive and maintained 'ADD' rating for the stock.

The stock rose 9.2 per cent to hit a high of Rs 1,178.80 apiece today, breaching ICICI Securities' revised target of  Rs 1,150 (earlier: Rs 1,000).  

ICICI Securities said a reduction in inventory augurs well and could drive value creation for Hatsun Agro Product. " With sharp reduction in inventory, there is reduction in debt too. We believe it will likely result in savings at the interest level. We also model steady improvement in return ratios with reduction in inventory and debt. The company can use the released capital for diving the business growth too," it said.

Considering the difference in standalone Ebitda margin (13.9 per cent) and consolidated margin (13.4 per cent) in the September quarter, ICICI Securities said margins of Milk Mantra are still materially lower than Hatsun Standalone. There is potential to drive this margin upward, it said.

While the consolidated margins are near the top end of its range, expansion in margins of Milk Mantra could potentially provide upside risks to consolidated margins, it said.

For Q2, Hatsun reported strong revenue growth of 17.2 per cent YoY. Organic revenue growth (adjusting for Milk Mantra acquisition) was 14.9 per cent YoY. Ebitda and PAT grew 34.8 per cent and 70.3 per cent, YoY. The standalone Ebitda and PAT grew 37.1 per cent and 89.7 per cent, YoY, respectively.

Hastun Agro Q2 key takeaways:

The company materially reduced the inventory (Rs 400 crore in H1FY26) and it has released resources for growth. It has also repaid debt and it should result in lower interest cost ahead. While its margins are near the top end of the range, the difference in standalone and consolidated margins indicates potential for margin expansion in Milk Mantra. The Q2 revenues were affected in Q2FY26 due to difference in dates for announcement and implementation of GST rate cuts. ICICI Securities said trade/consumers might had postponed the purchases. Intense monsoon also affected offtake of VAP.