Ambit initiates coverage on Prataap Snacks with buy rating

Mumbai: Ambit Capital has initiated coverage on Prataap Snacks with a target price of Rs 1,349.

The brokerage said Prataap Snacks' stellar growth and market share rise to 6.5% from 4.9% in savoury snacks was led by sound strategy, innovative product launches, keen understanding of consumer tastes and distribution growth fuelled by strategic partnership with Sequoia Capital.

The brokerage expects Prataap Snacks to deliver around 27% compounded growth in EPS over FY19-FY23.

Prataap's short term focus on sales growth led by distribution expansion is a sound strategy to build scale that can be leveraged later through introduction of more premium products and higher same store sales, said Ambit.

The brokerage expects logistics costs to remain high, advertising spends to taper and stable EBITDA margin of 8-9% over FY19-FY23.