Accumulate Apex Frozen Foods; target of Rs 255: Geojit

About this update from Apex Frozen Foods Ltd.

Geojit's research report on Apex Frozen FoodsApex Frozen Foods Ltd. (Apex) is a South India (Andhra Pradesh) based exporter of processed shrimps with a capacity of 34,240MT. We downgrade our rating to Accumulate with a revised target price of Rs. 255, factoring in the subdued demand in the major markets like USA. In Q3FY24, revenue dropped by 34% YoY due to decreased total volumes (-26% YoY) and realisation (-11% YoY) despite the EU market showing a volume growth of ~50%YoY. Drop in global shrimp prices along with deterioration in the product mix due to lower share of USA impacted realisation. Operating profit declined by 33%YoY. Inventory surplus situation in the key export markets is expected to ease, which will support demand. Apex is currently waiting for the approval of the RTE (ready-to-eat) products for the EU market. We reduce our volume assumptions, factoring in the current demand slowdown. We expect revenue/PAT to grow at 17%/58% respectively over FY24-26E. We roll forward to FY26E EPS and value Apex at 14X FY26E EPS.OutlookWe expect the current excess inventory situation in the major markets to ease going forward and improve demand. Also, the GoI has a strong focus to support the industry and targets to double exports to Rs. 1 lakh crore. We roll forward to FY26E EPS and value Apex at a P/E of 14x to arrive at a target price of Rs. 255, and downgrade to Accumulate rating.For all recommendations report, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Apex Frozen Foods - 2822024 - geo

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