Naidu-linked firm Heritage Foods that raked in moolah on D-Street

Dairy firm with ties to TDP chief aiming for national brand status with Rs 6K cr revenue

On March 15, before the Election Commission of India released the dates for the general elections, the shares of Heritage Foods were trading at around Rs 327.75.

Shares of the relatively unknown Telugu Desam Party-related firm reached a historic high on Thursday, surging 83 per cent to Rs 601.6, with Nara Chandrababu Naidu poised to assume office as the next chief minister of Andhra Pradesh and gearing up to play a crucial role at the Centre as a National Democratic Alliance ally.

With Naidu’s return to power, the fortunes of this Hyderabad-based company, with a market capitalisation of Rs 5,582 crore, are expected to soar in the coming days, with analysts predicting it could even surpass the Rs 800 mark.

Interestingly, it was Naidu himself who founded Heritage Foods way back in 1992, and it has since become one of the fastest-growing integrated dairy companies, with a presence in renewable energy as well.

Of the total promoter stake of 41.3 per cent in the company, Naidu’s wife Bhuvaneswari holds 24.37 per cent, his son Lokesh around 10.82 per cent, daughter-in-law Brahmani around 0.46 per cent, and his 10-year-old grandson Devansh another 0.06 per cent, among others.

The company has seen a consolidated revenue increase of 53 per cent in the past four years, from Rs 2,473.1 crore in 2020–21 to Rs 3,793.9 crore in 2023–24.

According to the company, its near-term goal is to become a nationally recognised brand for healthy and fresh products with a revenue of Rs 6,000 crore.

“The stock has seen buying interest following the election results. It has surpassed its previous high of Rs 450, and since then, the trend has remained positive. In the past two trading sessions, the stock has hit an upper circuit. The volumes were considerably high compared to their average before the elections. Technically, the stock has the potential to reach Rs 650, which will be the first resistance level, followed by the Rs 800 level in one to two quarters,” said Ruchit Jain, lead research analyst at 5Paisa.

Business and reach

Over three decades, Heritage Foods has built a diversified product portfolio that includes milk and various milk-based value-added products.

It has a network of 300,000 dairy farmers for milk procurement across nine states and sells milk and milk products in 12 states. Its primary presence is in Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharashtra, Odisha, Delhi-National Capital Region, Haryana, Rajasthan, Uttarakhand, and Uttar Pradesh.

According to an investor presentation, the company operates 18 state-of-the-art milk processing facilities with a total processing capacity of 2.78 million litres per day (mlpd) and 203 chilling units with a 2.36 mlpd milk chilling capacity.

The company’s distribution network comprises over 6,000 milk and fresh product distributors, 237 happiness points, over 300 value-added product distributors, and more than 850 parlours, reaching nearly 180,000 retail outlets in the general trade and enjoying a strong presence across all national modern trade and e-commerce retail.

“The overall potential for the company is promising, but in the short term, I believe the company is being influenced by the election results. The stock would continue to react based on political developments. In the long term, much will depend on how this company performs in its quarterly reports,” Jain added.

The road ahead

The company’s fourth-quarter investor presentation indicates increasing milk procurement as one of its goals through prudent investments in village-level milk collection infrastructure, bulk coolers, and chilling centres.

The company’s product portfolio includes milk, dairy food, dairy fat, sweets, drinkables, and ice creams, among others.

Its future strategy also involves increasing the share of value-added products, expanding into new geographies, diversifying its product portfolio, and enhancing its manufacturing capability, the presentation stated.