Heritage Foods Limited

Consumer Defensive — Packaged Foods · NSE

₹406.15+₹8.50 (+2.14%)

DalalBaazaar Score

57 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

High

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, falling profits.

In simple words: Reasonable but unspectacular business quality, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

The 60-second version of Heritage Foods Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Heritage Foods Limited procures and processes milk and milk products in India. The company operates through Dairy, Renewable Energy, and Feed segments.

IndustryPackaged Foods

SectorConsumer Defensive

Employees3,317

Annual revenue₹4,523 Cr

How does it make money?

Turns over ₹4,523 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 3,317 employees supports ₹1.36 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.36 Cr

Who are its competitors?

The closest listed comparisons in its industry are NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES LTD, TATA CONSUMER PRODUCT LTD, DABUR INDIA LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 14.9% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE51.0%

What is the outlook?

3 analysts covering the stock expect revenue to grow about 9.9% and earnings to grow about 62.7% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+9.9%

Est. earnings growth+62.7%

Analysts3

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +40% while net margin moved +85% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+40%

Margin effect+85%

DalalBaazaar Score

57/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

62/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

70/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

32.7x

3Y Median

35.4x

40 monthly readings · mean 36.7x · range 14.5x–91.3x

Sector Median

51.7x

median of 4 sector peers

🟡Currently trading close to its 3y median of 35.4x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 37% below the peer median of 51.7x.

vs. its own history

Fair

35.4x median over 40 months · -8%

vs. sector peers

Cheap

51.7x median of 4 peers · -37%

vs. generic bands

Fair

15x–35x

EV/EBITDA

14.8x

PEG

0.88

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 4.2% to 6.1% over 3 years.
Return on equity is rising
ROE has improved from 8.0% to 13.6%.
Return on capital is rising
ROCE has improved from 10.5% to 14.9%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 115% over 3 years, from ₹168 Cr to ₹361 Cr.
🔴Receivables growing faster than salesFinancial
Receivables up 154% against revenue up 40% — sales are being booked faster than they are collected.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹145 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 4.2% to 6.1%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 37% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 154% against revenue up 40%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 11.8% CAGR
Latest reported year was 18.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 4%✓ 6.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹145 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 12%✓ 14.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 6 neutral · 2 weak

Market Cap

₹3,769 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

32.7x

Fair

Fairly valued against the generic band

P/B Ratio

3.32x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹12.43

Profitable

Profitable on a per-share basis

ROE

10.5%

Moderate

Moderate capital efficiency

ROCE

14.9%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.34x

Low

Conservative leverage

Revenue Growth (YoY)

18.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-38.5%

Falling

Profits are shrinking

Dividend Yield

0.62%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹252 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

19.0x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

5.5%

Average

Average asset productivity

Operating Margin

3.8%

Weak

Thin margins leave little room for error

Net Margin

2.3%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.41

Comfortable

Healthy short-term liquidity

52W Range Position

54%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

404.3 / 387.5

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

49.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹3,239 Cr	₹3,792 Cr	₹4,132 Cr	₹4,523 Cr	+11.8%
EBITDA	₹137 Cr	₹210 Cr	₹333 Cr	₹274 Cr	+26.1%
EBITDA Margin	4.2%	5.5%	8.1%	6.1%	—
PAT (Net Profit)	₹58 Cr	₹107 Cr	₹188 Cr	₹150 Cr	+37.3%
EPS	₹6.33	₹11.48	₹20.29	₹16.22	+36.8%
ROE	8.0%	13.2%	19.4%	13.6%	—
ROCE	10.5%	15.8%	23.1%	14.9%	—
Total Debt	₹168 Cr	₹132 Cr	₹174 Cr	₹361 Cr	+29.1%
Free Cash Flow	-₹144 Cr	₹263 Cr	₹37 Cr	-₹145 Cr	—

🟢 Revenue has grown at 11.8% a year over 3 years.

🟢 EBITDA has grown at 26.1% a year over 3 years.

🟢 EBITDA Margin has risen from 4.2% to 6.1% over 3 years (+1.8 pts).

🟢 PAT (Net Profit) has grown at 37.3% a year over 3 years.

🟢 EPS has grown at 36.8% a year over 3 years.

🟢 ROE has risen from 8.0% to 13.6% over 3 years (+5.6 pts).

🟢 ROCE has risen from 10.5% to 14.9% over 3 years (+4.5 pts).

🔴 Total Debt has grown at 29.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,950 Cr

Total Liabilities

₹842 Cr

Cash & Equivalents

₹65 Cr

Operating Cash Flow

₹237 Cr

Capex

-₹382 Cr

Shareholding (proxy)

Institutional Holding

7.6%

Insider Holding

54.2%

Corporate Actions

Dividend Rate

₹2.5

Ex-Dividend Date

15 Jul 2026

Analyst Consensus

Recommendations

2 Buy · 1 Hold · 0 Sell

Target Price (Mean)

₹389.33

-4.1% vs CMP

Target Range

₹346 – ₹447

Peer Comparison

Company	P/E	ROE
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%
TATA CONSUMER PRODUCT LTD	59.3x	7.5%
DABUR INDIA LTD	34.7x	17.2%

Recent News

4 mixed1 negative1 general

Heritage Foods (NSEI:HERITGFOOD) Stock Forecast & Analyst Predictions

Simply Wall Street, 13 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Heritage Foods Q2 Profit Down 39% to Rs 31 Cr

HDFC Sky, 15 OctResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Heritage Foods completes acquisition of Novandie, stake rises to 100%

scanx.trade, 16 OctM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Is Heritage Foods the Best Stock in Its Sector? A Look at the Numbers

Univest, 14 Oct

Heritage Foods To Meet Analysts And Investors On August 19

Sahi, 17 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Heritage Foods - Sunil Singhania’s Abakkus Portfolio: 6 stocks rally up to 75% in CY26; 5 new buys added in Q4

The Economic Times, 30 MayResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongGrowth

MiddlingBusiness Quality · Financial Health · Profitability · Valuation

WeakRisk

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑