TDP chief Chandrababu Naidu’s poll win spurs stock rally: Heritage Foods up 20%, Amara Raja rises 13%. Should you buy?

TDP chief Chandrababu Naidu's poll win spurs stock rally: Heritage Foods up 20%, Amara Raja rises 13%. Should you buy?
TDP chief Chandrababu Naidu's poll win spurs stock rally: Heritage Foods up 20%, Amara Raja rises 13%. Should you buy?
TDP chief Chandrababu Naidu's poll win spurs stock rally: Heritage Foods up 20%, Amara Raja rises 13%. Should you buy?
TDP chief Chandrababu Naidu's poll win spurs stock rally: Heritage Foods up 20%, Amara Raja rises 13%. Should you buy?

TDP chief Chandrababu Naidu’s poll win spurs stock rally: Heritage Foods up 20%, Amara Raja rises 13%. Should you buy?

TDP chief Chandrababu Naidu’s poll win spurs stock rally: Heritage Foods up 20%, Amara Raja rises 13%. Should you buy?

TDP chief Chandrababu Naidu’s poll win spurs stock rally: Heritage Foods up 20%, Amara Raja rises 13%. Should you buy?

The Indian equity market on Wednesday witnessed robust rallies in two stocks — Heritage Foods and Amara Raja Energy — which are linked to Telugu Desam Party (TDP) chief Chandrababu Naidu. 

A day after the Lok Sabha election result announcement, Heritage Foods stocks were trading in the green, up 20 per cent at ₹546.95 at 2:37 pm on BSE. Amara Raja stocks were also up 13.04 per cent at ₹1224.40, at 2:38 pm on BSE.

Heritage Food has hit the upper circuit on exchanges.

The stock has surged 38 per cent in three sessions amid speculation that Naidu might become Andhra Pradesh’s chief minister for the fourth time. Founded by Naidu in 1992, Heritage Foods operates in dairy, retail, and agriculture sectors. Nara Lokesh, Naidu’s son, is one of its promoters.

Amara Raja Energy MD Galla Jayadev, a former TDP Parliamentary Party Leader, has opted not to contest the Lok Sabha elections this year. According to various media reports, he decided in February not to be in the election race. Emphasising his commitment to contributing to the nation’s development through entrepreneurship, he pointed out that it was tough to sail on two boats.

How did Chandrababu Naidu’s win impact Heritage Foods?

TDP chief Chandrababu Naidu had a landslide victory in the state elections, securing 16 out of 25 seats. The TDP is expected to form a coalition government with the Bharatiya Janata Party (BJP), which won three seats, and the Janasena Party, which won two seats.

“I have seen so many political changes in the country. I am in NDA. I am going to the NDA meeting. If there is anything else, we will report to you,” Naidu said, extending his support to the National Democratic Alliance (NDA) while addressing a press conference in Vijayawada.

Naidu has grown Heritage Foods into one of India’s fastest-growing publicly listed companies. With divisions in dairy and renewable energy, the company’s products have a significant market presence across multiple states in India.

According to his affidavit, Naidu’s wife, Bhuvaneswari Nara, holds 2,26,11,525 shares in the company, equivalent to a 24.37 per cent stake as of March 2024.

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The company’s stock has been on the rise, gaining approximately 33 per cent in three sessions and around 73 per cent over the last six months, trading 58 per cent higher than its closing price 30 days ago.

Should you invest in Heritage Foods and Amara Raja Stocks?

Equity market expert Ravi Singh, founder of DRS Finvest, opined that the market could witness further rallies in the two stocks. Based on fundamental and technical strength, the stocks are showing an uptrend. Singh gave a target price of ₹650 for Heritage Foods and ₹1,350 for Amara Raja Energy stocks.

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How did the two companies fare in their fourth-quarter results?

Heritage Foods reported a robust 83.6 per cent year-on-year growth in its consolidated profit after tax for the financial year 2023-24 (FY24), reaching ₹106.50 crore. The company’s revenue increased by 17.1 per cent YoY, amounting to ₹3,793.9 crore. Earnings before interest, tax, depreciation, and amortization (EBITDA) surged 51.5 per cent to ₹209.50 crore, with the margin expanding by 125 basis points to 5.52 per cent in FY24. This impressive performance underscores Heritage Foods’ strong market presence and operational efficiency.

In the fourth quarter of FY24, Amara Raja posted a 61.4 per cent year-on-year increase in net profit, reaching ₹230 crore. Revenue from operations rose 19.5 per cent to ₹2,908 crore, up from ₹2,433.2 crore in the same period last year. The company’s EBITDA grew by 16.2 per cent to ₹410.4 crore, compared to ₹353.2 crore in Q4 FY23. However, EBITDA margins saw a slight contraction, dipping to 14.1 per cent from 14.5 per cent during the quarter.

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