Heritage Foods advances 16% after stake sale in Future Retail to pare debt

The Company said it has disposed off its entire holdings/investment of 17.85 million equity shares held in Future Retail

Shares of Heritage Foods advanced 16 per cent to Rs 325 on the BSE after the company sold its entire stake in Future Retail for about Rs 132 crore to pare debt.

“The Company has disposed off its entire holdings/investment of 17.85 million equity shares held in Future Retail. These shares were sold through Stock Exchange in Open Market in various tranches and the net amount of Rs 131.94 crore was received by the company,” Heritage Foods said in exchange filing.

The said proceeds shall be mainly utilised for the repayment of term loans of the company, it said. As of September 2020, in Future Retail, Heritage Foods had 17.34 million or 3.2 per cent stake, the shareholding pattern data shows.

Despite today’s rally, the stock of Heritage Foods has underperformed the market by falling 7 per cent, as compared to 20 per cent rally in the S&P BSE Sensex.

For the July-September quarter (Q2FY21), the company had posted 75 per cent year-on-year (YoY) decline in its consolidated net profit at Rs 2.70 crore, while revenue dropped by 10 per cent YoY at Rs 610 crore over the previous year quarter.

The management said the rising disposable incomes; growing consumer preference for branded and value-added milk and milk products, and increased awareness of nutrition is driving the demand for dairy products in India.

The dairy exports are also seen as a huge untapped opportunity for India, which currently has only 0.01 per cent share of the global dairy export market. Initiatives are being taken to improve the productivity of dairy co-operatives along with investments by private domestic players to boost the performance of the dairy sector, the company said in FY19-20 annual report.

At 12:59 pm, the stock was trading higher by 14 per cent at Rs 320 on the BSE on the back of heavy volumes. A combined 860,000 equity shares had changed hands on the counter on the NSE and BSE. In comparison, the S&P BSE Sensex was up 0.68 per cent at 45,916 points.