The heroic performance of Chandrababu Naidu-led TDP in the Lok Sabha election has suddenly become the talk of the town. It also has a direct impact on the share market and stocks like Heritage Foods and Amara Raja Battery saw a sudden spike in the price. We are going to discuss the heritage foods in this article.
The company was founded by Chandrababu Naidu in 1992 and his wife Nara Bhuvneshwari is the promoter of the company. With a market cap of ₹6,136 Cr, the company belongs to the small-cap segment.
The company falls under the FMCG sector which is a hot sector at the current moment. All the stocks in this sector are performing well, but Heritage Foods is on the next level. The week in which the election results were declared, Heritage Foods was opened at ₹435 and in one week’s time, it has shot up to ₹661.25. The stock saw a 64.12% rise (from the previous close) in a week.
Now, let us have a look at the financial performance of the company. Some fundamental data of the company are as follows:
ROE and ROCE are not very impressive for a stock that is trading at a multiple of 57. The operating profit margin is also on the lower side which indicates that the company does not have pricing power. 3-years profit growth is negative and 3-years revenue growth is 17%.
It is clear that the stock is not performing based on the financial performance. The fact that Chandrababu Naidu’s family is directly associated with the company, and he is the major ally of the NDA plays an important part in the bull phase of the stock price.
What I would do as an investor (Not an advice or recommendation)
Source: tradingview.com
If we look at the price behavior of the stock, we can see that the stock has already moved so much, and I would hesitate a little to enter at this level. However, had I invested in this stock earlier at the ₹450 level, I would have liked to stay invested for a little more time and tried to ride the bull phase.
Disclaimer: the information provided in this article is only for educational purposes and it should not be considered as advice or recommendation to purchase or sell this stock. Please consult your financial advisor before making any type of investment. The data presented in this blog is for informational purposes only and has been obtained from sources believed to be reliable. While every effort has been made to ensure the accuracy of the data, we do not guarantee its completeness or accuracy.
