PREMA: Steering a progressive course

February 17, 2022 (MLN): In the absence of government enough support to the dairy sector coupled with fiscal tightening measures and soaring inflation, the companies are struggling to keep their earnings intact. Given the scenario, At-Tahur (PSX: PREMA), a pioneer in the pasteurized dairy sector is steering a progressive course to offer attractive financial numbers to further improvise its scrip valuation.

The strong business growth of PREMA is supported by the expansion of processing facilities and improving efficiencies for delivering the best nutrition and positive impact on the lives of its consumers.

Recently, the company has imported 375 Holstein Friesian cows will add approximately 2.3 million litres per year to the company’s current production of milk.

“This addition of new herd will increase the topline growth of the company to a notable extend,” Hamza Chaudhary, Chief Financial Officer (CFO), PREMA said while speaking to Mettis Global.

The company’s current revenue mix comprises 70% from pasteurized milk and the rest being value-added products like laban, chunkies, and butter to improve its scale of business in terms of value-added products, the company is in the process to explore other avenues as there is huge potential for expansion to fulfil the nutritional need of growing population base, he added.

He also noted that the company is working to enter the non-dairy segment along with untapped market regions to mark its presence on the global forefront.

Despite uncertain economic conditions, the company is focusing to meet customer needs through portfolio innovation and optimization of the supply chain to ensure sustainable profitable growth.

As of September 2021, the company held 2,489 mature assets, which are able to produce milk and 1,959 immature assets that are being raised to produce milk in the future.

On the financial side, PREMA’s topline grew at a CAGR of 29% mainly due to a rise in volumetric growth on the back of organic and inorganic growth in herd size. It is expected that company revenue will grow at a 3-year CAGR of 26.5%, a report by Insight Securities noted.

This goal can be achieved by phase-wise expansion in herd size, a shift in revenue mix, expected implementation of minimum pasteurization law in Lahore as pilot project and introduction of new products and non-dairy items.

To note, PREMA has been conferred with 'Brand of the Year Award” for two consecutive years i.e. 2019 & 2020 in the Milk & Yogurt category, by the brand foundation FPCCI for setting high benchmarks for quality and customer care, by producing fresh, pure and nourishing products to ensure the well-being of its customers.

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