Riyadh-based brokerage Al Rajhi Capital has raised the target price on Savola Group shares to 40 Saudi riyals ($10.66) per share from SAR 34; a 22% upside on the current share price of SAR 32.8.

Savola posted a Q1 net profit of SAR 393 million, up 45% year-on year (YoY). Al Rajhi Capital said in a note on Monday that Savola’s top-line grew by 4.3% "mainly driven by the retail (Panda) and frozen food segments, while we were expecting lower growth of around 1.7%".

The brokerage said the strong bottom-line growth came mainly from the food processing segment, which has shown a growth of around 81% YoY to reach SAR 257 million in Q1. Also, the frozen food segment recorded decent growth of around 13%.

Meanwhile, the improved outlook for the food processing segment is set to continue for the rest of the year, the note added. "We are expecting earnings from the food processing segment to be in the range of SAR 650 million to SAR 700 million, up from 2022 earnings of SAR 405 million."

(Writing by Brinda Darasha; editing by Imogen Lillywhite)