CMP Rs 620 (FV 10)
Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 450 crs
Date: 10th Feb 2017
Target within 6 months : Rs 750
About the Company:
The company was promoted by Mr Ramchandra Gandhi in 1926 and later was passed on to Mr Rajesh Gandhi, Mr Devanshu Gandhi and Mr Virendra Gandhi. From a very humble beginning , Vadilal Industries is now the top 3 brands in India. Vadilal boast of a 109 year history of existence.
The company has Icecream as the main product and the other one is frozen and processed foods. The company has discontinued the unprofitable food lines. Major expansions were carried out in the ice cream division. Parinitee Chopra is the brand ambassador for Vadilal Icecream. The company has opened Melt in , a speciality ice cream shop. 250 parlours of HAPPINESS have been opened. The company has presence in 16 states, 61 CNF’s , 800 distributors, 250 vehicles and 55000 retail outlet. It has presence in 45 countries and 4 continents. The company plans to add 100 distributors in FY 17. Vadilal has the largest fleet of refrigerated vehicles in India.
For the year ended March 2014, the sales were at 363 crores and net profit was at Rs 1.43 crores. March 2015 saw sales of 403 crores and net profit of 1.93 crores. The year 2016 saw sales of 444 crores and net profit of 14.36 crores and the year 2017 will see a net profit in excess of 20 crores. This coming year that is 2017-18 will be a much better year due to the huge debt reduction. The equity is as low as 7.19 crores. Despite the demonitisation impact , the company has managed to reduce the loss of 6.9 crores to Rs 4.02 crores. H1 2016-17 saw a debt reduction of 50 crores. If this trend continues, the company might be a debt free company in next 3 years.
Promoters hold about 65.16 % while the , public holding is 34.84
Comparisions to Peers:
There is no listed peer who has presence in the pure ice cream segment.
Vadilal has a one of its kind presence. It has been constantly expanding the capacities of its ice cream range. Party Packs are being increased to 270000 pieces per hour. The Pundra plant has capacity of 175000 litres. Bareilly has capacity of 230000 litres per day. Processed food capacity is at 33000 kg per day. The main aspect of the company is that the debt has reducted from 205 crores in 2014 to just Rs 96 crores presently.
The share which is quoting at Rs 620 has the potential to cross the 750 mark in the medium term of 6 months. The company can also become a multibagger if one keeps in mind a long term investing perspective.
( Disclosure: The analysthasholdings in the company as on date of issue being published)
Analyst ( Janak Shah ) is a sebi certified research analyst Registration No: INH000001717