Stocks of dairy companies like Kwality Ltd, Prabhat Dairy and Parag Milk Foods were hogging limelight in Thursday’s trade as they surged following increase in milk prices. At 11.28 am, shares of the Kwality Ltd were trading 3.23 per cent up at Rs 137.30, while Prabhat Dairy Ltd was trading 3.85 per cent at Rs 122.75 and Parag Milk Foods Ltd were trading 0.20 per cent up at Rs 325.60. Sensex was trading 229.84 points up at 28,737.26 during the same time.
Prabhat Dairy told CNBC-TV18 said that the company witnessed blended price increase of 3-4 per cent. Even Kwality said that milk prices globally have increased, which will benefit third and fourth quarter of the company.
Prabhat Dairy further added that consumer business seeing higher growth and improvement and its B2C Margin will be higher in the long term. However, short-term B2C margin is limited due to increase in investments.
Kwality Ltd said that is shifting its focus from B2B to B2C. Brokerage houses have given a thumbs up to this move. The consumer business of Kwality Ltd grew 31 per cent in Q1FY17, while its B2C contributes 40 per cent to business. KR Choksey Shares & Securities, which has has recommended ‘Buy’ rating on the stock with the target price of Rs 263 feels shift from B2B to B2C player would help expand margins.
The company further added that its is not focusing on exports and is looking at developing domestic consumer business. According to KR Choksey, “It has emerged as largest exporter of dairy products from India and currently it is exporting to continents like Asia, Africa, Australia and more than 28 countries like Japan, UAE, Seychelles, etc.”
The brokerage house is also bullish on organised dairy sector and expects it to grow at a fast pace.