The Hindu Business Line : Poultry stocks get hammered after bird flu

While the key BSE-30 Sensex gained by over 8.8 per cent from February 17 to March 17, the poultry stocks have gone down by 17-24 per cent ever since bird flu was officially confirmed on February 18.

Venky's India, the leading poultry company, saw its share prices falling by 17.71 per cent since the bird flu was first reported. The stock, which ruled at Rs 155 before the bird flu, closed at Rs 127.55 on Friday.

Similarly, the Hyderabad-based poultry company Srinivasa Hatcheries fell sharply by 24.64 per cent over the last one-month period from Rs 83 to Rs 62.55 on the BSE. And the shares of Hind Industries fell by over seven per cent in the last one-month period to Rs 23.55.

Godrej Foods, which has a division for poultry-related business, saw little change in its share prices at around Rs 12..

In sharp contrast, the share prices of SKM Egg Products, which fell immediately after the bird flu, made a complete reversal, gaining 28.89 per cent at Rs 29 over the last one month. "The bird flu will negatively impact poultry companies, but SKM Egg Products will gain immensely. The company is procuring egg at 50 paise now as against Rs 1.50 earlier," said Mr Amitabh Chakraborty, Head of Research of BRICS PCG.

"Since the end use of egg powder (a major product of SKM) lies in confectionary, pasta, noodles etc, the demand trend for egg powder would remain unchanged," said a BRICS research report. "However, increasing egg prices in the world market would help seek better realisations for its egg powder."

Analysts said the revenues of `plain vanilla' poultry companies would be affected in the January-March and April-June quarters. "This will obviously be reflected in the stock markets too," said Mr Chakraborty.

"As of now, bird flu is highly localised," said a dealer with a local brokerage outfit. Shares of hotels and airlines, which went down following the outbreak of bird flu, have recovered after the immediate panic, he said.

Meanwhile, Srinivasa Hatcheries informed the BSE that it expects its performance in this quarter and next to be affected following a fall in the prices of chicken and eggs after the outbreak of bird flu in India. However, the company said: "The bird flu scare was largely unfounded and consumption of poultry products had picked up, with the situation expected to improve gradually."