Indian Buffalo Meat Commands Lower Price

• HMA Agro competes in the international market with companies from the United States, Australia, and emerging nations like Argentina and Brazil. However, due to quality concerns, Indian buffalo meat does not attract the same price as rival countries. This inhibits both the industry's and HMA Agro's value and volume growth.

Group Companies' Guarantee​

• HMA Agro has provided a Rs 545 crore guarantee for group companies. This could be one of the factors working against the company. Investors may be uneasy about such a high-value guarantee granted to group companies, which could influence HMA Agro's financials.

Low Margins ​

• The industry has a low margin -- operating margin of about 6%, which fluctuates. Besides, the company has low volume growth and erratic realization that may not attract the interest of investors. Based on FY2022 net profit, the company is seeking a PE of 25x, leaving little room for capital appreciation. There are no publicly traded companies in the same industry, hence there is no benchmark to compare. In FY22, the company recorded a negative cash flow from operations. This is yet another issue that could impact its valuation.