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Heritage Foods: Will margins make a comeback for this dairy company?

The stock price gained over 9 percent on September 30. The company announced 1:1 Rights Issue through a regulatory filing. “The Board of Directors of the Company at the meeting approved to issue equity shares in the ratio of 1:1 by way of Rights Issue basis at the face value of Rs 5 each per shares to the existing shareholders,” the company said in an exchange filing.


  • Aspiring for higher growth rate, compared to the industry
  • Higher contribution from value-added products
  • Margins likely to stabilise and improve in the near term
  • Investors with a higher risk appetite can accumulate and add stock on declines

In our discovery series, we had evaluated Heritage Foods (HFL; CMP: Rs 343; Market capitalisation: Rs 1,591 crore), a southern India-based dairy company, with a legacy of 30 years.

HFL is a fully backward-integrated dairy business and has a wide presence across 11 states and serves nearly more than 1.5 million households daily.

Milk procurement: HFL has created a strong, long-lasting relationship with 3 lakh-plus dairy farmers for milk procurement across 8 states in India.

Infrastructure: Eighteen state-of-the-art milk processing facilities, with a total processing capacity of 2.65 million litres per day (mlpd), 198 bulk coolers, mini chilling and chilling units with 2.08 mlpd capacity.

Distribution network: HFL has adopted a technology integrated network, enabled by 11,300-plus milk procurement representatives and 1900-plus distribution vehicles across 11 states on the back of 6,500-plus distributors delivering products daily at customers’ doorsteps.

HFL’s products are sold across 11 states and have a strong presence across 16 e-commerce websites.

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