AI-generated · cited to primary sources · not investment advice · How we research
SKM Egg Prod.
Our verdict on SKM Egg Prod. isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
The company is expanding its layer bird capacity from 20 lakh birds to 40 lakh birds by 2029 through a 400 crore capex project. — target: 40 lakh birds
“This 48,4400-crore investment where currently we are at 20 lakh birds and by 2029 we will be at 40 lakh birds. ... So, the investment will be completed by 28-29.”
The company expects a saving of at least 20 paise per egg in production costs through the new automated EC sheds. — target: 20 paise saving per egg
“Just to give you there will be at least about 20 Paises saving per egg in terms of production costs without considering the interest and so on in the operation side itself Per egg versus open house conventional system.”
See the full cited Management analysis of SKM Egg Prod.
How durable is the business?
The company continues to invest heavily in expanding its own poultry farms and feed mills to reduce external dependency, with significant capital expenditure in plant and machinery. (3 expanding)
“This 48,4400-crore investment where currently we are at 20 lakh birds and by 2029 we will be at 40 lakh birds... With this Capex we will be able to do away with the additional procurement.”
Domestic revenue grew substantially, primarily driven by the 'Eggs & Poultry Feed' segment, while the domestic egg powder/liquid segment saw a decline. (1 expanding across 1 engine)
“and domestic market is about 40 crores.”
See the full cited Business Model analysis of SKM Egg Prod.
Where does growth come from?
The company is aggressively accelerating its backward integration by doubling its layer bird capacity through a Rs. 403 crore investment in automated environmental control sheds. (1 accelerating across 1 signal, 1 leading indicator)
“Now coming back to current ongoing Capex Easy Sheds phase 2. This is current open sheds in 5 lakhs birds.to New easy 20 sheds with additional 20 lakhs burst. The total cost of the project is 403 crores.”
Management has established a new long-term revenue milestone of Rs. 1,000 crores by 2030, representing a significant leap from the current record turnover of Rs. 767 crores. (1 new trend, 1 steady across 2 signals, 2 leading indicators)
“This is in terms of numbers the thousand crore is not for the next financial year. It is the target of 2030 for which we are gearing up in terms of capacity expansion in powder as well as egg production.”
See the full cited Future Growth analysis of SKM Egg Prod.
What could break the thesis?
Bird flu (Avian Influenza) is the most significant threat to the industry, causing massive supply disruptions and demand collapses. While India has been relatively stable recently, outbreaks in the US and Europe have previously forced those countries out of the international market. [EXECUTION]
“Price trend Bird flu so bird flu is the biggest disruptor in our industry. It the US was out of the international market because of continuous outbreak bird fluid outbreak and generally when bird flu outbreak happens then there is a culling of birds”
Competitive pressure is intensifying in terms of volume, as quantity sold dropped from 10,455 Tons to 9,620 Tons. However, SKM remains the largest exporter of Egg Yolk Powder to Russia. (4 intensifying, 1 easing, 1 high-severity)
“The total cost of the project is 403 crores... project cost is 400 crores and own funds from our existing savings 101 crore bank term loan 302 cr.”
See the full cited Risk analysis of SKM Egg Prod.
Read the full thesis on SKM Egg Prod.
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