Engro Foods Limited: Growing competition; rising SMP price to put pressure on margins - By Alfalah Research

<p style="color:#333333;margin-top:15px;margin-bottom:15px;font-family:'Helvetica Neue', Helvetica, Arial, sans-serif;font-size:13px;line-height:20.8px;">We initiate coverage on Engro Foods Limited (Efoods) with a HOLD call and Dec&rsquo;16 Target Price of PKR160/share, which offers an upside of 2% to the last close. Profitability of the company increased in 9MCY15 to PKR2,601mn as against PKR252mn during the same period last year. Earnings for 3QCY15 clocked in at PKR624mn versus a loss of PKR77mn in same quarter last year. Gross margins clocked in at 22.6%, up 7.5pp YoY owing to low milk prices internationally. The company managed to capture 56% of the dairy and beverages market as of Aug-15. Moreover, it also launched new high margin premium variants in ice-cream segment.</p><p style="color:#333333;margin-top:15px;margin-bottom:15px;fo...