Hindustan Foods: ₹638.40 Cr Block Deal Transacts Shares

Hindustan Foods shares surged by 15% on June 26 after a block deal worth ₹638.40 crore. Approximately 1.27 crore Hindustan Foods shares were traded on the exchanges at a floor price of ₹502 per share. This floor price represented a discount of around one% from the stock's previous closing price. 

The identities of the buyers and sellers involved in the transaction could not be immediately determined. The deal also triggered a significant surge in trading volumes, with 21 lakh shares changing hands on the exchanges so far. This volume is multiple times higher than the one-month daily traded average of one lakh shares.

Hindustan Foods, the FMCG firm recently ventured into sports shoe manufacturing by acquiring SSIPL Retail through its subsidiary for ₹77 crore. The acquisition includes SSIPL's manufacturing facilities in Bangran and Bhagani in Himachal Pradesh, as well as Kundli in Haryana.

The stock has increased by 13.8% in the past month and 5% over the past 12 months. The sole analyst covering the company has issued a 'buy' recommendation, with a target price of ₹686 per share, indicating a potential upside of 22%.

Earlier this year, B&K Securities commented, "Hindustan Foods Limited (HFL), the largest consumer contract manufacturer in India, has established durable competitive advantages by expanding its manufacturing base, building a strong clientele, diversifying its product portfolio, and creating operational efficiencies. Over the last four years (FY19-23), HFL has increased its sales and EBITDA five-fold and its profitability six-fold. Additionally, 80-85% of the current business model operates on a steady-state Return on Equity (RoE) of 18-22%."

Hindustan Foods, a key supplier of packaged consumer items to major brands like Hindustan Unilever, Marico, and Danone, has been working to diversify its presence into new categories. The India-based company manufactures nutritional food products, including cereal-based foods, instant mixes, baby foods, instant porridges, breakfast cereals, and health drinks. 

Hindustan Foods operates in segments including contract manufacturing and the sale of products under its own brand name. The company generates the majority of its revenue from the contract manufacturing segment. Geographically, most of its revenue comes from India.