Food processor National Foods Holdings Limited will record a partial volume performance rebound over the second half of the year, according to local equities group IH Securities (IH).
This comes as monetary authorities have been progressively reducing contractionary policies as inflationary pressures subside.
“Interest rates have since been reviewed downwards twice since the beginning of the year going into alleviating liquidity challenges in the market,” IH stated.
“Civil servants have also been granted a 100% salary increment going into the second quarter of the year whilst the summer crop marketing season has also kicked off increasing liquidity in consumer hands. It is on this backdrop that we expect partial recovery in volume performance for National Foods within its second half.”
IH, however, expects sales volumes of maize and stock feeds to be sluggish.
“Volumes sold in maize and stockfeeds are however likely to be weak in the last quarter of the FY23 due to projected over-supply of the harvest on the domestic market.
“In the same vein, the raw material pipeline for National foods from the domestic market is looking promising as the company has invested US$12mn into the summer crop contract scheme lessening its import bill,” it said.
IH estimates that National Foods’s topline will grow 17% year on year to US$302.48 million at FY23.
“Revenue in FY24 in our view will then slowdown as pricing pressure from wheat inputs subsides. We forecast an EBITDA of US$25.71 million to FY23 representing a margin of 8.5%.” –Harare