TDP-Linked Stock: Why Smallcap Dairy Stock Jumps 49% In 4-Days As Chandrababu Naidu Wins Andhra Pradesh Poll?

With the Telugu Desam Party (TDP) leader Nara Chandrababu Naidu winning the assembly election of Andhra Pradesh, investors turned to add a smallcap stock in the dairy products sector. This smallcap stock has given double-digit returns by 32% in just 2 days after assembly poll results. But overall this week, the stock almost jumped 50%. On June 6, the stock extended its rally to froze at 10% upper circuit and new all-time high. Why did Heritage stock recorded such strong bull-run and what is its connection with TDP?

On June 6, Heritage Foods share price ended at Rs 601.60 apiece, at 10% upper circuit with market cap of Rs 5,582.61 crore. Upper circuit in a stock means that there were several buyers but no sellers in them. The current price level is the latest new 52-week high of Heritage Foods.

In the previous day, Heritage Foods clocked 20% upper circuit to Rs 546.95 apiece. But the stock was already on the winning streak since the start of the trading week. On June 4th and 3rd, the stock had gained by 7% and 6% respectively after market hours.

That being said, Heritage Foods share price surged by 49.35% so far in the four consecutive trading sessions this week. Last week, on May 31, the stock was at Rs 402.80 apiece.

As per the shareholding pattern of Heritage Foods, as of March 31, 2024, N. Chandrababu Naidu's wife Nara Bhuvaneshwari is the largest promoter of the dairy company with stake to the tune of 2,26,11,525 equity shares or 24.37%. While his son Nara Lokesh holds about 1,00,37,453 equity shares or 10.82%. Together the wife and son are also directors of another promoter Megabid Finance and Investment who holds 5.59% stake or 51,90,937 equity shares in Heritage.

Together, the mother-and-son duo holds over 41% stake in the company.

As per the website, the Heritage Foods Limited was founded by Nara Chandrababu Naidu in the year 1992, which is one of the fastest growing Public Listed Companies in India, with two business divisions - Dairy and Renewable Energy.

At present, Heritage's milk and milk products have a market presence in Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharastra, Odisha, NCR Delhi, Haryana, Rajasthan, Uttarakhand & Uttar Pradesh.

In the year 1994, HFL went public and was oversubscribed 54 times. HFL shares are listed on BSE and NSE.

Heritage's FY24 net profit was at Rs 106.5 crore, registering growth of 83.6%, while EBITDA jumped by 51.5% YoY to Rs 209.5 crore. EBITDA margins were at 5.52%, expanding by 125 bps. Also, revenue climbed by 17.1% YoY to Rs 3,793.9 crore.

Among corporate actions, Heritage Foods is set to pay final dividend of Rs 2.50 per share or 50% of the face value of Rs.5/- each for the FY 2023-24 subject to the approval of the shareholders at the 32nd Annual General Meeting scheduled to be held on August 21, 2024.

Looking ahead, Brahmani Nara - Executive Director, said, ". The strategies we
laid out few years ago of becoming more consumer centric, strengthening our portfolio with the launching of a
dozen innovative products, expanding our availability with an omni-channel route to market approach, intense marketing programs step changing our brand preference, have all started bearing fruit. After a few years of headwinds, the dairy sector is finally seeing green shoots and we are confident that Heritage Foods will
outperform in the coming financial year."

On its website, Heritage also revealed that it aims to be nationally recognized brand for Healthy and Fresh products with a revenue of Rs 6000 Crores.