Stock Pick From Edible Oil And Solvent Extraction Sector

REAP A RICH HARVEST WITH GAEL HERE IS WHY

Strong product portfolio
Greenfield expansion 
Robust financials coupled with attractive 
valuations

Gujarat Ambuja Exports (GAEL) offers raw and refined soya oil, maize starch, soya de-oiled cakes and liquid glucose. The company's segments include cotton yarn, maize processing, agro processing, power and others. It has an installed seed - crushing capacity of 4,600 metric tonnes per day and installed edible oil refining capacity of 1,200 metric tonnes per day. The maize processing division has an installed capacity of 2,000 metric tonnes per day and the cotton yarn division has an installed capacity of 65,520 spindles per day. GAEL’s power division has an installed capacity of 42.85 megawatts. GAEL has plans to set up a 'corn wet milling' project with an installed capacity of 1,000 tonnes per day in Dhule district of Maharashtra. The Maharashtra Industrial Development Corporation (MIDC) has allotted land and the lease deed has been executed.
 
On the financial front, GAEL’s revenue increased 7.42 per cent to Rs.1,400 crore in H1FY17 as compared to the same period in the previous financial year. The company’s EBITDA increased 43.76 per cent to Rs.131 crore in H1FY17 on a yearly basis. Its EBITDA margin expanded by 235 basis points to 9.32 per cent in H1FY17 as compared to the same period in the previous fiscal. GAEL’s net profit almost doubled to Rs.78.09 crore in H1FY17 on year- on-year basis.

The company’s net profit margin expanded by 244 basis points to 5.58 per cent in H1FY17 on a yearly basis. GAEL’s net sales increased 8.11 per cent to Rs.2,737 crore in FY16 as compared to the previous financial year.

The company’s EBITDA too rose 13.92 per cent to Rs.188 crore in FY16 on a yearly basis. Its net profit also increased 23.27 per cent to Rs.104 crore in FY16 as compared to the previous financial year. On the segmental revenue front, GAEL has earned 49.9 per cent from agroprocessed products, 40.54 per cent from maize processing division, 6.1 per cent from cotton yarn and the remaining 3.46 per cent from power in FY16. 

GAEL’s topline rose by a CAGR of 5.22 per cent in FY12-FY16. The company’s EBITDA too rose by 12.07 per cent CAGR in last five fiscal years. Its bottomline also rose 15.74 per cent CAGR in FY12-FY16 period. 

On the valuation front, GAEL’s share price is trading at a trailing 12-month (TTM) PE multiple of 11.89x as compared to the industry PE multiple of 32.28x which is quite attractive. The company’s share price is also trading at discounted levels as compared to peers such as Gokul Agro Resources (27.62x) and Gokul Refoils Solvnt (26.31x). The company has given dividend yield of 0.9 per cent.