Investor to mint money through this milk stock? Find out

Well, having milk on a daily basis is healthy but investing in milk stocks can prove to make one wealthy as well. Parag Milk Foods is one such FMCG stock that can make you rich. It had a net sale up 30% YoY at Rs 6.7bn,  led by 71% YoY growth in SMP, 19.4% of sales. Meanwhile, Liquid milk, 16.3% of sales, grew by 9% YoY.

The Parag Milk Foods stocks were trading at Rs 241.90 per piece, up by Rs. 3.25 or 1.36 % late Wednesday. The stock jumped by 2.84% with an intraday high of Rs 245.45 on the Sensex.

Elara Capital states that "  We reiterate Buy with a target price of Rs 366 based on 11.5x FY20 EV/EBITDA."  It further tells you why you should put your money in this FMCG stock now

1.Higher ad-pro spend as it rose from 2.6% to 3.3% of sales. Management has guided for 3.0-3.5% of sales for ad-pro spend in FY20, given it is expanding in North & East India and growing the health & nutritional segment.

2. Provisioning of VAT refunds of Rs 70-80mn as the company would not get refunds on CGST and provisioning for Rs 85mn related to bad debts.

3.  This summer, milk prices could inch above Rs 27 per liter to bring the average milk procurement cost to Rs 26-27 per liter (+12.5% YoY) for FY20. The company plans to initiate some price hikes and has already reduced discounts on VAD in March 2019.

4. As the company reduces SMP salience and increases liquid milk or VAD salience in FY20E, margin should move up to 10%.