Prataap Snacks Q2 Results Review


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Systematix Research Report

Prataap Snacks Ltd.’s Q2 FY23 consolidated revenue grew 23% YoY to Rs 4.6 billion, led by strong volume traction across product categories and geographies, boosted by increased distribution efforts.

Gross margin recovered by 530 basis points QoQ to touch Q2 FY22 level of 28.1%, supported by softening palm oil and other key input prices. Ebitda margin too reverted to positive trajectory at 4.8%, versus a loss in Q1 FY23.

Solid 8.7% margin at its subsidiary, Avadh Snacks, and shift towards direct distribution model led to margins turning positive.

We expect Prataap Snacks’ margins to gradually inch towards double-digits over the next couple of years, enabled by-

  1. sharp correction in palm oil prices,

  2. production linked incentive incentives providing 1.5-2% boost, and

  3. potential for further cost optimisation.

Revenue growth should sustain at 13-15%, as demand trends normalise amid upcoming capacity and ongoing distribution expansions.

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