Direct Procurement Focus Takes Hatsun Agro Well Past Its Peers

Hatsun Agro Product Ltd. has advanced over 18 percent in the last three months, outperforming its largest listed peers Parag Milk Foods, Prabhat Dairy, Heritage Foods and Kwality, all of which have seen their shares fall by 1.6-11.6 percent during the period.

Shares of Hatsun Agro have also given substantially higher returns compared to peers over the last six months and one year.

Why do investors prefer Hatsun Agro over its peers?

According to broking firm Ambit Capital, the company has the largest direct milk procurement network in India which provides considerable cost advantages over its competitors. Its focus on pouch milk helps the company attain higher volumes and, therefore, better revenues.

Ambit Capital estimates a compounded annual growth of 17 percent for revenue and 35 percent for profit over financial year 2015-16 through 2020-21.

Hatsun Agro will announce its third-quarter earnings on Wednesday. Will we see some of these advantages play out in the earnings?

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