Techno-Funda Pick: AVT Natural Products - Jainam Research

Registered Office: Malhar Complex, Dumas Road, Ichchanath, Surat – 395007. Tel (0261) 305 5555,

Email: [email protected] Website : www.jainam.in,

Techno-Funda Pick AVT Natural Products Ltd.

Report Details –

1. AVT Natural Products Ltd. - Fundamental

2. AVT Natural Products Ltd. - Technical

September 12, 2014

Visit us at www.Jainam.in

http://www.jainam.in/



Financials:

CMP(`) – 53 STRATEGY : ACCUMULATION Target Price(`)- 61-64 Stop Loss(`)-46 Holding Horizon: 3 months Sensex – 27005 Nifty – 8085

STOCK MATRIX

Sector Other Agricultural Products

52 Week High/Low 54/17.50

No.of Shares (Cr) 15.23

FV (`) 1.00

Latest BV(`) 11.01

Market Cap (` Cr) 791.12

Beta 0.99

Latest Dividend (`) 0.45

BSE Code 519105

NSE Code AVTNPL

SHAREHOLDING (%)

Price Performance compare to SENSEX

Date: 12/09/2014 CMP – 53 ACCUMULATION Target Price: 61-64

Background:

AVT Natural Products was incorporated in 1986 as AV

Thomas Industrial Product and promoted by Mr. Ajit Thomas.

Company is in business of manufacturing food safe natural

flavor and color production. Products of company include

producing marigold oleoresins, spice oils / oleoresins, Natural

Flavors, Natural Color, Essential oils, Antioxidants, Specialty

products, decaffeination of tea, instant tea.

Company is the largest exporter of Marigold oleoresins in the

world. It has formed strategic alliance with Ball Helix, USA

who is the world's best Marigold seed company; and Kemin

Health, USA, the world's largest customer for nutraceutical

grade marigold oleoresin.

Investment Rationale: Company started marigold cultivation on a land area of

200 acres, which has grown to 35,000 acres and produces

100,000 metric tones of flowers.

The company is also a vendor to a certified unit of Kemin

Foods, the world’s largest producer of Lutein from

marigold. Lutein & Zeaxanthin product use in

pharmaceuticals for eye care which is contributing nearly

65% in revenue of company as per FY14.

Company is planning to expand its Decaffeinated Tea

business capacity to 75% to 80% till 2016-17 from

currently 50% capacity. Also introduce Green Tea and

Instant Black Tea to value added Beverages product

portfolio.

Company posted 35% CAGR in revenue 58% CAGR in PAT

in last 5 years. Average last 5 years ROE (%) & ROCE (%)

of company is 34.30 and 39.07 respectively.

Company is zero debt with total debt/equity is 0.03.

Company planning to do a backward integration in China

to take benefit of low cost feed grade marigold.

AVT Natural Products Ltd.



Balance Sheet (` in Crore) (Consolidated): DESCRIPTION March-10 March-11 March-12 March-13 March-14

SOURCES OF FUNDS:

Share Capital 7.61 7.61 7.61 7.61 15.23

Total Reserves 42.53 48.96 93.81 130.84 152.45

Total Non-Current Liabilities 52.67 9.98 7.80 6.28 5.55

Total Current Liabilities 16.61 72.91 86.47 83.04 63.68

Total Liabilities 119.42 139.46 195.69 227.77 236.91

APPLICATION OF FUNDS :

Net Block 37.94 36.96 38.66 45.04 50.57

Capital Work in Progress 2.59 0.18

Non Current Investments 0.00 0.77

Long Term Loans & Advances 0.47 0.52 0.65 1.05

Total Current Assets 81.48 102.03 156.51 178.72 185.11

Total Assets 119.42 139.46 195.69 227.77 236.91

Profit & Loss account (` in Crore) (Consolidated): DESCRIPTION March-10 March-11 March-12 March-13 March-14

Operating Income 87.64 147.87 248.97 269.08 292.82

Less: Excise Duty 0.07 0.36 0.06 0.20 0.09

Net Sales 87.57 147.51 248.91 268.88 292.73

Other Income 0.20 0.13 0.61 0.10 0.94

Total Revenue 87.77 147.64 249.52 268.98 293.67

Total Expenditure 70.43 122.21 159.30 185.65 219.24

EBIDTA 17.34 25.43 90.22 83.33 74.43

Interest 3.87 5.24 6.50 6.43 2.28

PBDT 13.47 20.19 83.72 76.90 72.15

Depreciation 3.14 3.46 3.57 3.98 4.96

PBT 10.33 16.73 80.15 72.92 67.19

Provision for Tax 3.6 5.63 25.37 25.14 25.11

Profit After Tax 6.73 11.10 54.78 47.78 42.08

Consolidated Net Profit 6.73 11.10 54.78 47.78 42.08



Key Ratios: DESCRIPTION March-10 March-11 March-12 March-13 March-14

Performance Ratios

ROA (%) 6.05 8.58 32.69 22.57 18.11

ROE (%) 14.00 20.82 69.34 39.85 27.49

ROCE (%) 15.35 20.84 68.6 50.52 40.03

Efficiency Ratios

Fixed Capital/Sales(x) 0.68 0.44 0.28 0.28 0.28

Receivable days 132.38 117.62 80.83 65.1 51

Inventory Days 136.93 77.36 70.31 106.06 109.13

Payable days 32.84 26.42 22.94 24.49 26.89

Growth Ratio

Net Sales Growth (%) -8.92 68.47 68.73 8.02 8.87

Core EBITDA Growth (%) -4.99 46.75 254.56 -7.64 -10.67

EBIT Growth (%) -8.71 54.83 294.18 -8.42 -12.45

PAT Growth (%) -5.51 65.25 393.01 -12.75 -11.95

Financial Stability Ratios

Total Debt/Equity(x) 0.96 0.99 0.38 0.26 0.03

Current Ratio(x) 4.91 1.40 1.81 2.15 2.91

Quick Ratio(x) 2.92 0.99 1.04 1.07 1.57

Interest Cover(x) 3.66 4.20 13.33 12.35 30.39

Recent Financial Performance:

The June 2014 quarter revenue stood at Rs. 90.26 Cr, up 38.48% as compared to Rs. 65.18 Cr during the corresponding quarter last year. A fall of 1.84% was recorded in the Net profit for the quarter ended June 2014 to Rs. 12.81 Cr from Rs. 13.05 Cr. The company reported a 1.77% fall in operating profit for the quarter ended June 2014 to Rs.20.50 Cr compared to Rs.20.87 Cr of corresponding previous quarter. A fall of 52.38% in Interest cost the quarter ended June 2014 to Rs. 0.10 Cr from Rs. 0.21 Cr.



Outlook & Valuation:

The stock is currently trading at TTM PE of 19.69x and TTM EPS of Rs.2.76 along with P/BV of 4.94x. Company is in niche products portfolio, strong financial performance, zero debt status, planning for capacity expansion and backward integration in china. We recommend our Investors / Positional traders to “ACCUMULATE” the AVT Natural Products Limited for the Target of Rs. 61-64 with keeping strict Stop Loss of Rs.46 on closing basis. Investment horizon would be 3 months.



Technical Outlook

Daily Chart:

AVT Natrual Products Ltd. (CMP- 53) Daily

Chart:

Analysis:

Stock has made 52 week high of 55 (12th Sept. 2014) & 52 week low of 17.50 (17th Dec. 2013)

Stock is in strong up trend by making higher top and higher bottom on daily chart.

Stock is tagging the upper Bollinger band suggest bullish strength in this counter.

Stock has given a trendline breakout which suggests the upward momentum may continue

further.

Stock is above its 20 day SMA, 50 days EMA, 100 days EMA & 200 days EMA suggests strong

uptrend.

Considering above all factors, Buy AVT Natrual Products Ltd. CMP-53 for the possible target 61- 64 with the stop loss of 46 on

closing basis for 3 month time horizon.

Note:*Maintain Stop Loss on Closing Basis.



Research Team

Reports Published By Research Department:

Reports Published By Research Department:

Disclaimer

This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions.

This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It is for the general information of clients of Jainam Share Consultants Pvt. Ltd. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients.

We have reviewed the report, and in so far as it includes current or historical information, it is believed to be reliable though its accuracy or completeness cannot be guaranteed. Neither Jainam Share Consultant Pvt. Ltd., nor any person connected with it nor any author of the reports accepts any liability arising from the use of this document. The recipients of this material should rely on their own investigations and take their own professional advice. Price and value of the investments referred to in this material may go up or down. Reports based on technical analysis centers on studying charts of a stock’s price movement and trading volume, as opposed to focusing on a company’s fundamentals and as such, may not match with a report on a company’s fundamentals. No part of this material may be duplicated in any form and/or redistributed without Jainam Share Consultants Pvt. Ltd.’ prior written consent. Abbreviation: Sup= support, Res= resistance, DMA= daily moving average, OI= open interest. Some figures are squared up to the nearest.

Tejas Jariwala Research Analyst 0261- 3087016 [email protected] Yagnesh Patel Research Executive 0261- 3087014 [email protected] Nirav Kasariwala Research Executive 0261- 3087015 [email protected] Hetal Bhasali Research Executive 0261- 3087015 [email protected]

Jinal.mandavawala Jr. Research Executive 0261- 3087014 [email protected]

Jimit Zaveri Jr. Research Executive 0261- 3087016 [email protected]

Daily Market Mirror

Daily Derivative Mirror

Weekly Equity Mirror

Weekly Commodity Mirror

Event Analysis Report

IPO/FPO Analysis

Fundamental Analysis Report

Techno- Funda Report

mailto:[email protected]

mailto:[email protected]

Techno-Funda Pick: AVT Natural Products - Jainam Research

Economy & Finance

Transcript of Techno-Funda Pick: AVT Natural Products - Jainam Research