HDFC Securities Recommends Buying Heritage Foods Stock Amid Promising Growth in India’s Dairy Sector

Heritage Foods, a prominent player in the Indian dairy industry, boasts a well-diversified product portfolio, robust distribution network, and strong relationships with farmers. The company's focus on premium quality products positions it well to capitalize on the growing demand for dairy in India.

Despite slightly lower EBITDA margins compared to competitors, HDFC Securities expects stability in milk procurement prices and an increasing share of higher-margin value-added products to drive future growth. The brokerage highlights the company's strategic push towards achieving ₹6,000 crore in revenue over the next three years, particularly through expanding its value-added product segment, including ice cream.

Heritage Foods has made significant strides in the ice cream market, which remains underpenetrated in India. With per capita income rising, the company expects a boost in discretionary spending, particularly in impulse purchase categories like ice cream and other premium dairy products.

After a period of stagnation, Heritage Foods has seen its stock rebound impressively, delivering a 325% return since April 2023. HDFC Securities views this as a strong buy opportunity given the company’s growth prospects, particularly in value-added dairy products.