Review
In this edition, we have reviewed Sanwaria Consumer and IFB Industries. We suggest our reader-investors to HOLD Sanwaria Consumer and IFB Industries.
Sanwariya Consumer Ltd (SCL) was recommended in volume 33, No. 10, dated April 16-29, 2018, under the ‘Low Priced Scrip’ when the stock was trading at Rs 21.25. The recommendation was backed by the company’s product diversification, robust financials and its tie-up with Patanjali.
Sanwaria Consumer Limited is an India-based fast-moving consumer goods (FMCG) food processing company. The company manufactures and sells rice, edible oil and staple food products, such as pulses, sugar, soya chunks, wheat flour, rice flour, salt, suji, maida, besan, daliya, and soya meal etc.
On the financial front, the company posted 4 per cent growth in net sales to Rs 1,200 crore in Q1FY19 as against Rs 1,152 crore in Q1FY18. The PBDT of the company for Q1FY19 has grown significantly by 78 per cent to Rs 41 crore versus Rs 23 crore in Q1FY18. The net profit of the company has jumped 77 per cent to Rs 32 crore in Q1FY19 as against Rs 18 crore in Q1FY18.
On an annual basis, the company’s revenue has grown by 43 per cent to Rs 5054 crore in FY 2018 as against Rs 3,512 crore in FY17. The PBDT of the company has shown a steep growth as well, increasing by 117 per cent to Rs 124 crore in FY18 from Rs 57 crore in FY17. The company posted net profit of Rs 84 crore in FY18 as against Rs 43 crore in FY17, a growth of 95 per cent.
We recommend a HOLD considering the good performance of the company.
We had recommended IFB Industries in volume 33, issue no 4 dated Jan 22 – Feb 4, 2018 under Choice Scrip section when the stock was trading at Rs 1460.10. Our recommendation was based on strong fundamentals (virtually debt-free company), new product launches and IFB Industries’ focus on domestic production.
IFB Industries’ operates in engineering and home appliances business. It has two divisions: fine blanking and home appliances. The home appliances division includes washing machines, clothes dryers, dishwashers, microwave ovens, air-conditioners, chimneys, refrigerators, modular kitchens, built-in ovens and built-in hobs. The fine blanking division’s products range from fine blanked components and tools to related machines, such as straighteners, decoilers and strip loaders.
On the financial front, looking at the recently concluded quarter Q1FY19, the sales increased by 22.2 per cent YoY to Rs 614.6 crore as against Rs 503.1 crore in the corresponding quarter previous year.
The EBITDA grew by 56.2 per cent YoY to Rs 32 crore during the quarter from Rs 20.5 crore in the corresponding quarter last year. The EBITDA margin improved by ~113 bps to 5.2 per cent in the quarter. The net profit during the quarter increased by 104.6 per cent YoY to Rs 14.2 crore as against Rs 7 crore in the corresponding quarter last year.
Currently, the company has 422 IFB exclusive stores and targets to achieve 475 to 500 over the next three months. Notably, with recent cut in GST rate from 28 per cent to 18 per cent, the company is planning to cut the price of the appliances by 8-9 per cent. This would result in further boost in demand for the electronic appliances. Considering all the aspects, we recommend our readerinvestors to HOLD this stock.