Markets

Venky's and SKM Egg stocks fall due to coronavirus fear

Poultry industry is seeing a drastic fall in demand; even the big players have not been spared

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When pandemic strikes, rumours are what go viral the most. One such casualty of Covid-19 is the domestic poultry industry. The over Rs.1 trillion industry, expected to grow at a CAGR of 16% over 2019-2024, has suddenly found itself in a vortex of falling sales. For one of the most successful sub-categories of our agri-driven economy with 25 million dependent on it for their income, the pandemic has come as a bolt from the blue.

Union minister for animal husbandry, dairying and fisheries, Giriraj Singh, mentioned that the poultry industry is losing around Rs.15-20 billion every day since. From February, the sales of broiler chickens and eggs have fallen by 80%. At the farm level, the price for eggs has dipped from Rs.3.60 a piece to Rs.1.5 a piece, while that for chicken has dropped from Rs.75-80 to Rs.10-20 per bird.

Incidentally, the situation is in stark contrast globally wherein citizens in the US and Europe are stocking upon eggs and chicken before the supply dries up, according to KG Anand, industry veteran and general manager of Venkateshwara Hatcheries (VH), an unlisted entity of Venky’s India. Brazil has been sending multiple consignments to China, since its domestic production has reduced over the past few months, he adds. 

Anirudh Mohta, Director, Kalpvriksh Capital In India, the virus has not just impacted production at small poultry farms, but also big players such as Venky’s, the country's largest organised poultry player with 91% market share. With all aflutter, we analyse the prospects of two prominent brands in the industry. The stock of Venky’s has more than halved since January 2020, while that of SKM Egg has fallen 18%.

Venky’s India 
The Pune-based company makes everything from feed and eggs (even pathogen-free ones for vaccines) to broiler chicken and chicken products. The company has incurred losses of Rs.1.5-2 billion between February and March, as broiler chicken and egg sales halved, according to Anirudh Mohta, director at Kalpvriksh Capital. The stock has crashed 60% from to Rs.1,580 on February 1 to Rs.830

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