ADF final analysis ADF Foods Limited engages in the manufacture, marketing, and distribution of food products in India and internationally. Its products include Indian pickles, chutneys, canned foods, frozen foods, spices, ready to eat curries, snacks, parathas and naans, curry powders, and cooking pastes and sauces. The company offers its products under the Ashoka, Camel, Aeroplane, Khansaama, Truly Indian, and ADF Soul brands through distribution networks in Europe, the United States, the Middle East, Australia, Canada, and Asia. It also offers contract manufacturing services. The company was founded in 1932 and is based in Mumbai, India. Apart from marketing and distributing its own Brands, ADF Foods Ltd are also contract manufacturers for leading multinationals and Main stream Retailers worldwide. Technical Analysis BSE NSE Open 50.25 51.20 Day High 51.50 51.85 Day Low 49.90 49.50 Previous Close 50.25 50.35 52-Week high 86.35 86.40 52-Week low 42.30 43.75 P/E 7.31 7.31
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ADF final analysis
ADF Foods Limited engages in the manufacture, marketing, and distribution of food products in
India and internationally. Its products include Indian pickles, chutneys, canned foods, frozen
foods, spices, ready to eat curries, snacks, parathas and naans, curry powders, and cooking pastes
and sauces. The company offers its products under the Ashoka, Camel, Aeroplane, Khansaama,
Truly Indian, and ADF Soul brands through distribution networks in Europe, the United States,
the Middle East, Australia, Canada, and Asia. It also offers contract manufacturing services. The
company was founded in 1932 and is based in Mumbai, India.
Apart from marketing and distributing its own Brands, ADF Foods Ltd are also contract
manufacturers for leading multinationals and Main stream Retailers worldwide.
Technical Analysis
BSE NSE
Open 50.25 51.20
Day High 51.50 51.85
Day Low 49.90 49.50
Previous Close 50.25 50.35
52-Week high 86.35 86.40
52-Week low 42.30 43.75
P/E 7.31 7.31
Market Cap (Rs cr) 102.9 102.8
Volume 7423.00 3160
Simple Moving Average
According to simple moving average analysis, adffoods is in a strong downtrend. Major resistance levels are 51.4975, 55.595, 57.97825.
Exponential Moving Average
According to exponential moving average analysis, adffoods is in a strong downtrend. Major resistance levels are 51.80391, 53.761, 57.022.
Relative Strength Index (RSI)
RSI is 40.5. According to RSI analysis, adffoods is technically weak.
Moving Average Convergence-Divergence (MACD)
As it name implies the MACD is all about convergence and divergence of two moving averages.
Convergence occurs when the moving averages move towards each other. Divergence occurs when the
moving averages move away from each other. The shorter moving average (12-day) is faster and
responsible for most MACD movements. The longer moving average (26-day) is slower and less reactive
to price changes in the underlying security.
The MACD Line oscillates above and below the zero line, which is also known as the centerline. These
crossovers signal that the 12-day EMA has crossed the 26-day EMA. The direction, of course, depends on
direction of the moving average cross. Positive MACD indicates that the 12-day EMA is above the 26-
day EMA. Positive values increase as the shorter EMA diverges further from the longer EMA. This
means upside momentum is increasing. Negative MACD values indicate that the 12-day EMA is below
the 26-day EMA. Negative values increase as the shorter EMA diverges further below the longer EMA.
This means downside momentum is increasing.
MACD: -1.53 and Signal Line: -1.55. No trend identified using macd analysis.
Fundamental Analysis
Economic Analysis
Over 90% of fruits, vegetables and milk are still consumed fresh. But there
is disparity in the quality and prices of food items available across regions.
Also, a lot of these items are seasonally available, hence no uniformity in
quality and prices.
Supply Abundant supply of vital foods. The industry faces over
supply in certain segments . However, more than half of
this is available in unpacked or loose form, thus benefiting
only the unorganized sector. segment enjoys high
penetration even in rural areas. Supply is higher because of
unorganized sector (bidis).
Demand Processed food demand is growing at 10%-15% per annum.
Growth of dual income households has given rise to
demand for instant foods, especially in urban areas.
Tobacco demand is largely inelastic. Demand growth is
pegged at 4%-6% for cigarettes.
Barriers to
entry
Huge investments in promoting brands and setting up
distribution networks. Punitive taxation policies of
government in case of tobacco.
Bargaining
power of
suppliers
Many established players have a slight edge in bargaining
power. However, for commodities , companies are
dependent on the
integrated backwards and have their own supply chains.
Therefore, the bargaining power of suppliers is not high.
Bargaining
power of
customers
High as a result of intense competition both among branded
and unbranded products. As consumption is more or less a
habit, the bargaining power of consumers is only to the
extent of choice of brand.
Competition The competition takes place mainly on basis of product
quality. However, in a bid to increase penetration of new
products, companies often compete on pricing and by
offering discounts and freebies.
Company Analysis
Financial Analysis
Beta0.954
Confidence in Beta13.6%
Market CapitalRs. 100.0 Cr
Diluted Trailing Twelve Months
(TTM) Earnings Per Share (EPS)
Rs. 6.89
TTM Price-to-Earnings (P/E) Ratio
7.28
Beta: Beta of a stock is defined as sensitivity of a stock with respect to market or index. Here
beta of a stock is calculated with respect to NIFTY. Beta of ADF is 0.954 which means 1% rise
or fall in nifty would result in 0.954 % rise or fall in ADF on average.
Beta indicates the stock's correlation with the market index and cautions on the risk associated
with it. Stocks with beta more than 1 will outperform markets (on average) if market goes up but
at the same time they have huge potential for losses if market goes down. Investors with less risk
appetite should stick with low-beta stocks.
Confidence in Beta: Since beta calculation is a statistical process, we associate a confidence
with beta which tells us about the relevance of beta of calculated. According to the statistical
processes involved, beta with a confidence of 13.6 % or more can be trusted. Here CIB is less
than 13.5% so; it is not much trusted stock.
ADF Foods Industries- ratio
------------------- in Rs. Cr. -------------------
Adjusted Net Profit Margin(%) 10.89 12.59 7.56 6.28 7.99
Return On Capital
Employed(%)11.57 13.93 21.53 13.77 23.07
Return On Net Worth(%) 12.74 13.25 9.16 7.43 18.42
Adjusted Return on Net
Worth(%)10.74 8.54 15.93 7.64 18.37
Return on Assets Excluding
Revaluations55.78 50.39 46.49 44.02 35.42
Return on Assets Including
Revaluations55.78 50.39 46.49 44.02 35.42
Return on Long Term
Funds(%)12.15 14.01 22.14 13.95 23.07
Liquidity And Solvency Ratios
Current Ratio 2.19 4.33 2.32 2.54 1.97
Quick Ratio 2.63 3.90 1.96 1.82 1.12
Debt Equity Ratio 0.21 0.01 0.02 0.05 0.26
Long Term Debt Equity Ratio 0.16 0.01 0.01 0.05 0.26
Debt Coverage Ratios
Interest Cover 11.44 11.25 11.01 5.98 3.98
Total Debt to Owners Fund 0.21 0.01 0.02 0.05 0.26
Financial Charges Coverage
Ratio12.25 11.29 11.04 7.01 5.54
Financial Charges Coverage
Ratio Post Tax12.44 11.80 7.13 5.70 5.08
Management Efficiency Ratios
Inventory Turnover Ratio 11.40 17.62 10.34 13.16 8.61
Debtors Turnover Ratio 7.88 11.94 13.65 14.67 13.84
Investments Turnover Ratio 11.40 17.62 10.34 13.16 8.61
Fixed Assets Turnover Ratio 1.99 1.91 2.03 1.09 1.76
Total Assets Turnover Ratio 1.47 1.46 1.79 1.03 1.79
Asset Turnover Ratio 1.99 1.91 2.03 1.09 1.76
Average Raw Material Holding 11.86 15.57 15.00 19.86 --
Average Finished Goods Held 10.80 5.24 6.27 5.65 --
Number of Days In Working
Capital142.46 163.30 107.16 93.92 47.96
Profit & Loss Account Ratios
Material Cost Composition 53.09 48.40 47.13 48.30 --
Imported Composition of Raw
Materials Consumed1.20 5.81 0.60 1.97 --
Selling Distribution Cost
Composition12.90 12.80 14.59 14.99 --
Expenses as Composition of
Total Sales76.97 84.62 87.38 85.42 --
Cash Flow Indicator Ratios
Dividend Payout Ratio Net
Profit24.59 26.28 41.17 66.12 35.40
Dividend Payout Ratio Cash
Profit16.62 17.91 22.94 33.46 21.87
Earning Retention Ratio 70.83 59.25 76.32 35.66 64.51
Cash Earning Retention Ratio 81.41 76.36 83.75 67.01 78.09
AdjustedCash Flow Times 1.27 0.09 0.10 0.33 0.87
ADF Foods Industries
Liquidity and Solvency Ratios
Current ratio
2006-07 2007-08 2008-09 2009-10 2010-2011
0
1
2
3
current ratio
A comparatively higher current ratio indicate a good liquidity and satisfactory debt repayment
capacity of the firm .It also an indicator of safety of investment made by creditors.
In the last 2 year the constantly the current ratio of the company is increasing which shows the
liquidity position of the company and also the satisfactory repayment of capacity of the
company. It also shows that the investment made by the creditor is also safe and in safe position.
Highest in 2010-11 then down in 2011-12 from 4.33 to 2.19 which indicated tough situation for
company
Quick ratio
2006-07
2007-08
2008-09
2009-10
2010-2011
00.5
11.5
22.5
33.5
quick ratio
Even if the current ratio is high, a low quick ratio does not indicate a good debt repayment
capacity of the firm.
The authenticity of decision taken on the basis of current ratio can verify through quick ratio.
Here the company has the high liquidity ratio than the standard liquidity ratio. The company has
3.9 in the year 2010-11 which indicate that the company has good financial position and also
indicate a good short term solvency or debt repayment capacity of the firm.
The company has decreased the liquidity ratio in comparison to 2012 last year ratio of liquidity
which indicates the company has less repayment capacity than the last year.
Debt equity ratio
2006-07 2007-08 2008-09 2009-10 2010-110
5
10
15
20
Debt Equity Ratio
Significant:
A high debt-equity ratio levels more investment of load capital than equity capital in meeting
the requirement of finance of the firm
This situation is highly risk because of a higher claim of the outsiders to the firm.
Here the company has the higher debt equity ratio than the standard ratio of debt-equity.
Year b year the risk went to down. But the last year 2012 the risk was up.
This shows that the company has the decreasing the debt in comparison to last year
Long Term Debt Equity Ratio
2006-07 2007-08 2008-09 2009-10 2010-110
5
10
15
20
Long Term Debt Equity
Long term debt ration indicated that long term debt again the equity. If the ratio is high it means
that company make more debt for long term planning which is danger situation for the company.
Above the chart ratio was went down by year which good for company that they have less debt.
Management Efficiency Ratios
Inventory turnover ratio
2006-07 2007-08 2008-09 2009-10 2010-110
5
10
15
20
Inventory Turnover Ratio
This ratio indicated that in a year how many times the inventory convert in to the final good that
mean how many time company generated sales. More ration indicated low storage low inventory
which is good and above the chart the was going up except the last year 2012 down to 17 to 11.
Debtors turn over ratio
2006-07 2007-08 2008-09 2009-10 2010-1105
101520
Debtors Turnover Ratio
This ratio indicated that how many time the debtor’s payment in the year. More ratio indicated that more times payment by debtors. But above the chart it indicated that company customer snot payment in the times. Which create long term cash scarcity or fund.
Assets Turnover Ratio
2006-07 2007-08 2008-09 2009-10 2010-110
5
10
15
20
Total Assets Turnover Ratio
Interpretation
This ratio signifies the company‘s ability to make the sales with compare to the total assets. It
shows whether the total assets of bank it is utilized properly or not .This firm’s ratio is in year
2011-10 is 1.32, in year 2011-12 is 2 and in year 2010-11 is 1.91 it was indicated that company
is able to utilize their assets in good manner.
FIXED ASSETS TURNOVER RATIO
2006-07 2007-08 2008-09 2009-10 2010-1105
101520
Fixed Assets Turnover Ratio
Significance
A high fixed assets turnover ratio is an indicator efficient utilization of fixed assets in generating
sales.It levels that use of less fixed assets made possible higher generation of sales.The
comparison of a firm ‘s fixed assets turnover ratio with that of past year and with the industry
standard may be a helpful tool to evaluate the activity level.
Debt Coverage Ratios
Interest Cover
2007-08 2008-09 2009-10 2010-11 2011-120
0.51
1.52
2.5
Interest Cover
Series1
The EBIT and the operating profit are same. So the interest coverage ratio measures as to how
many times the interest burden of the firm is covered by the operating profit of the firm. A
higher coverage ratio indicate better debt servicing capacity. It is beneficial from the viewpoint
of both the firm and the lenders.
Here in the year 2011-12the company achieved the higher ratio than the last fiancial year 2010-
09. It is increased 11.33 from 11.57which gives the benefit to the company on measuring the
long term solvency.
Fixed-Charge Coverage Ratio
2006-07 2007-08 2008-09 2009-10 2010-1105
101520
Financial Charges Coverage Ratio
A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and
leases. It is calculated as the following: the company year by year capable to pay expenses for
fixed which good indication for company.
Profitability Ratios
Net Profit Margin
A ratio of profitability calculated as net income divided by revenues, or net profits divided by
sales. It measures how much out of every dollar of sales a company actually keeps in earnings.
2006-07 2007-08 2008-09 2009-10 2010-1105
101520
Net Profit Margin(%)
From the above chart it come out that the net profit is not consistence but at last year there was
down word trend and profit down in 2011 10% from 2010 to 12
Return On Capital Employed - ROCE
2006-07 2007-08 2008-09 2009-10 2010-110
5
10
15
20
Return On Capital Employed(%)
ROCE should always be higher than the rate at which the company borrows, otherwise any
increase in borrowing will reduce shareholders' earnings.
A variation of this ratio is return on average capital employed (ROACE), which takes the
average of opening and closing capital employed for the time period.
Return On net worth
2006-07 2007-08 2008-09 2009-10 2010-110
5
10
15
20
Return On Net Worth
The amount of net income returned as a percentage of shareholders equity. Return on
equity measures a corporation's profitability by revealing how much profit a company
generates with the money shareholders have invested.
From the above chart it is indicated that there is there is too much floatation in roe but in 2011 it
was down 12.74 to 12.25.
Industry analysis
Rising income levels: The average real per capita income growth in India rose from 3.3% during
the Ninth Plan (1997-2002) to 6.1% during the Tenth Plan (2002-2007). Growing affluence and
higher spending capacity provides a huge opportunity for the food services sector.
Growth of middle class: India has the presence of a strong 300 m middle class population. This
is roughly equal to the population of US, the country with the third largest population in the
world. The middle class has been the largest patron of the food services industry and the increase
in the middle class is expected to lead to its growth.
Younger population: Over 65% of India's population is below 35 years of age. A majority of
this age group eats out. An increase in this population segment provides opportunity for the
growth of the foods segment industry.
Rising urbanization: On an average, the spending on eating out in Tier 1 and Tier 2 towns is
double that of Tier 3 towns. With 29% of India’s population residing in urban centers and
growing fast, higher spending on eating out is expected to benefit the industry.
SWOT Analysis
Strengths
The company engaged in the business of marketing food and food ingredients to
Consumers and institutional customers.
The company is affiliated to ConAgra Foods Inc. of USA, which is one the world’s
largest food companies.
Sundrop is the largest brand in the premium segment of the refined oil consumer