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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.”
The company is acquiring SKM Universal for 37 crores to integrate the windmill division and branded egg division. — target: 37 crores valuation (27.75 crores outpay)
“I think the valuation number that is about 37 crores for the entire company. Since our company already holds 26%, the 74% is 27.75 crores is the out pay that will go. The main reason for this takeover of this company is one the windmill division will give substantial savings to the company.”
The company plans to launch a reformulated Egg Pro drink in the market in June 2026. — target: Product Launch
“In fact, we will re. We have already reformulated our Egg Pro drink which will be put into market this week from June.”
The company aims to reach a revenue target of 1,000 crore by the year 2030. — target: 1000 crore
“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 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.”
The company is shifting from open sheds to environmentally controlled (EC) sheds, which is driving substantial operational savings and better productivity. (1 expanding)
“We switched over from open sheds to environmental control for better productivity Low consumption of feeds thereby 4 lakh layer birds have been started from 2024. And from 2024 to this 2026 we found a phenomenal substantial savings in our operational cost”
The company is deepening its backward integration by producing biogas from poultry litter to fuel boilers, reducing coal consumption and primary treatment chemical costs. (3 expanding)
“We started producing bio gas by using our own poultry farm litter. This in turn is used in our coal Boiler as an alternative fuel which has resulted in reduction of coal consumption.”
Revenue from egg exports (table eggs) grew exponentially, driven by high demand in international markets and a new contract with a Sri Lankan buyer. (2 expanding)
“Sale of Eggs - Export: 11,466.40 (2023-24) vs 2,431.80 (2022-23). Further, our table egg exports share shot up due to the demand in the market and we entered in to a contract with Sri Lanka buyer.”
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.”
The company is relaunching and reformulating its 'Egg Pro' protein drink and other value-added products to capture the growing health and nutrition market. (+1 more signal)
“The main reason for this takeover of this company is one the windmill division will give substantial savings to the company... And the second is the branded egg division... Now we are bringing back into the listed entity so that we can focus on further growth in the branded segment.”
The shift from manual open sheds to automated 'Environmental Control' (EC) sheds is expected to save 20 paise per egg in production costs, significantly boosting profit margins.
“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”
Bird flu remains the most significant risk to the industry, as outbreaks in other countries can disrupt supply and cause extreme price volatility.
“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”
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.”
The risk is stable. While the company notes feed cost pressures, it has successfully implemented backward integration by leasing poultry farms and feed mills to manufacture feed in-house, reducing external dependency. (1 stable, 1 intensifying, 1 easing)
“manpower dependency with lot of manpower and the feed prices are continuously increasing and without automated feeding and collection systems the efficiency of the production is going down.”
The risk is currently intensifying as high international prices caused by bird flu in Japan, Europe, and the USA led to a demand shock. Customers switched to alternate proteins, resulting in a drastic reduction in egg albumen consumption and high inventory levels at customer sites. (1 intensifying, 2 easing)
“Egg albumin price shot up exponentially during this year... caused by the bird flu in Japan, Europe, & USA... end customers started to replace the protein source from Egg albumen to alternate proteins... Hence, the consumption of Egg albumen powder has drastically reduced in the market resulting in huge inventory of Albumen powder at our customers’ end.”
The acquisition is proceeding at a valuation of ₹37 crores (₹27.75 Cr for the remaining 74% stake). Management justifies this by citing savings from the windmill division and regaining control of the branded egg division. (1 stable)
“The valuation number that is about 37 crores for the entire company. Since our company already holds 26%, the 74% is 27.75 crores is the out pay that will go.”
See the full cited Risk analysis of SKM Egg Prod.
Read the full thesis on SKM Egg Prod.
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