DSP Small Cap Fund has significantly increased its stake in Heritage Foods Limited through a rights issue, crossing the 5% threshold and triggering disclosure requirements. The fund's strategic move reflects potential shifts in the small-cap segment of the Indian stock market.

Key Highlights of the Acquisition

Impact on Heritage Foods' Capital Structure

The rights issue had a significant impact on Heritage Foods' equity share capital:

This doubling of the equity share capital indicates a major corporate action by Heritage Foods, potentially aimed at raising capital for expansion or other strategic initiatives.

DSP's Investment Structure

It's worth noting the structure behind this investment:

• DSP Trustee Private Limited acts as the trustee for DSP Mutual Fund schemes and DSP Alternative Investment Fund.
• DSP Investment Manager Private Limited serves as the investment manager.

This acquisition by DSP Small Cap Fund could signal confidence in Heritage Foods' future prospects or potential value in the small-cap segment of the market. However, investors should conduct their own research and consider their investment goals before making any decisions based on this development.

The crossing of the 5% ownership threshold is significant from a regulatory perspective, as it triggers disclosure requirements. This transparency allows other market participants to be aware of substantial changes in ownership of publicly traded companies.

As always, market movements and fund acquisitions should be viewed in the broader context of overall market trends, sector performance, and individual company fundamentals.

Heritage Foods Limited, a leading dairy company, demonstrated resilience in the face of challenging market conditions, reporting a 9% year-on-year revenue growth to INR 11,125.00 crore for Q2 FY26. The company navigated through an extended monsoon, lean milk season, and butter shortage to deliver its second consecutive quarter above INR 11,000.00 crore in revenue.

Value-Added Products Drive Growth

The company's value-added products (VAP) portfolio emerged as a key growth driver, expanding by 18% to INR 4,132.00 crore and contributing 38% to total sales. Notably, categories such as curd, paneer, drinkables, and ice cream registered double-digit growth.

Financial Performance

Despite the challenging environment, Heritage Foods maintained profitability:

The EBITDA margin decline was primarily attributed to a 6.3% increase in milk procurement costs against a 4.5% rise in realizations.

Operational Highlights

• Milk procurement averaged 16.1 lakh liters per day, down 2% year-on-year
• Milk sales grew 1.1% to 12.1 lakh liters per day
• Distribution expanded by 60 points with 6,000 new retail outlets added

Subsidiary Performance

Heritage Nutrivet, a subsidiary, delivered strong results with revenue of INR 581.00 crore (34% increase) and PBT of INR 54.00 crore (80% increase).

Future Outlook

Management expects margins to normalize as milk costs ease and supply stabilizes in the flush season. The company continues to focus on expanding its value-added product portfolio and distribution network to drive growth.

Strategic Initiatives

Heritage Foods is implementing several strategies to improve performance:

1. Increased marketing spend, up by approximately 60% year-on-year
2. Launch of new products like Sampurna cow milk
3. Expansion of distribution network
4. Focus on automation and operational efficiencies
5. Investment in renewable energy to manage costs and reduce carbon footprint

As the company enters the festive and flush season, it anticipates improved milk availability, easing costs, and positive consumer sentiment. Heritage Foods remains committed to its Vision 2030 pillars of premiumization, digitalization, sustainability, and farmer-first governance.

The company's ability to navigate through challenging market conditions while maintaining growth in key segments demonstrates its resilience and strategic focus on long-term value creation.