Dairy Sector Check - Higher Freight Cost And Increase In Global SMP Prices: ICICI Securities

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

The freight cost (approximately 400 basis points of net sales) has increased sharply post increase in diesel prices and global skim milk powder (SMP) prices increased almost 10% in February 2021 versus December 2020.

We believe higher global SMP prices will result in higher exports of SMP from India and the milk procurement prices in India may also move upwards.

Reopening of the economy has led to higher demand for value added products. The demand from hotel-restaurant-cafe is also rising.

Our channel checks also suggest minor increase in milk procurement prices in December 2020-February 2021.

Dairy companies have not raised prices post February 2020 and we do not model them to raise prices till Q1 FY22.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.