ADF Foods

A Perfect Pickle - ADF Food

Dated: Oct 13,2011

Mumbai-based ADF Foods is a small-sized fast moving consumer goods company engaged into the production of ethnic Indian food. The Company which started as a humble venture back in 1932 of a small retail store selling Dry Fruits & Nuts, soon diversified into a Major Food Processing Company manufacturing Ethnic Indian pickles, chutneys, canned foods frozen foods and spices under various Brand Names which are today leaders in their segments and categories. Some of the brand that company owns are Ashoka, Camel, Aeroplane, Truly Indian, Khansaama, ADF Soul. Apart from marketing and distributing its own Brands, we also are contract manufacturers for leading Multinationals and Mainstream Retailers worldwide.

ADF Foods revenue comprises of 90% export and 10% domestically. The BSE-listed firm has two factories, one each in Maharashtra and Gujarat, manufacturing products like pickles, pastes, chutneys, ready-to-eat curries, frozen parathas, frozen snacks, frozen vegetables among others. Last year, the company acquired US-based Elena Food Specialties for an undisclosed amount. Elena's is a US-based manufacturer and marketer of organic and natural products and a leading provider of protein-based Mexican foods in the natural and organic category. It clocked a turnover of USD nine million in 2009.

The look at the financial angle displays that the company has been going considerably in last five year. The top line of the company has increased from 62 Cr to 125 Cr in FY 11 showing a CAGR of 15%. The bottom line on the other hand has shown a 42% CAGR in last five year growing from 2.5 Cr to 15.5 Cr in FY 11. The Company has been continuously improving their margin which has increased from 13.26% to 19.37% in last five years. The Company is nearly debt free company having a loan of 7 Cr against a reserve of 100 Cr. The Company maintains ROE of 14.67% which is really good considering the size of the company.

The Company is expanding its business in India and going forward they are expecting to post a top line of 500 Cr in next five years out of which they expect domestically to contribute 40% and export to be at 60%. The Company has planned a Capex of 45 Cr in next three year for expanding its presence in India.

The Company if closely viewed is fairly valued currently as its trading at just 1 time mcap/sales ratio. The price is quoting at 6 times the earning which is again a fairly valued for small size company. The company can be seen as a good defensive bet for long term citing the present turbulent market and the industry which it belong.