Jackey’s Column     

Published: Feb 28, 2023
Updated: Feb 28, 2023

ADF FOODS

Tasty prospects for investors

ADF Foods was started in 1932 as a small retail store selling dry fruits and nuts under the name ‘American Dry Fruit Stores’ in Mumbai, from where it gets its current name, ADF Foods Ltd.

OPTIMISTIC CHIEF

As Chairman and MD Bimal Thakkar put it in the Annual report, “During the year under review, your company reported revenues of Rs 421.20 crore and a profit after tax of Rs 48.52 crore on a consolidated basis. This is but a fraction of the existing market and its potential is vast and likely to be achieved across the years to come. We are optimistic that the vast operating headroom and the platform that the company is creating shall empower it to double revenues every three years across the next six years.”

The company has grown over a period from one generation to another under the controlling ownership of Bimal Thakkar and Sons. It has grown from 2018 sales of Rs 202 crore to Rs 421 crore. It is now expanding its reach in India through e-commerce with the brand ‘Soul’.

If we look at the technical charts, the stock price is in a long-term uptrend and has broken out of the channel and is currently moving between the important support and resistance band of Rs 700- 832. This move is confirming ‘accumulation’ and once the stock gives final confirmation, the price may zoom to over Rs 1,050-1,400 in the next 2 years. We recommend investing in and accumulating the stock, considering the potential for future growth.

STEADY DIVIDENDS

On an equity capital of Rs 21 crore, the company clocked a FY22 net profit of Rs 48 crore with reserves of Rs 321 crore and debt:equity of 0.05, with RoE of 14% plus. The company has been rewarding shareholders with consistent dividends from 2004, except for 2018. The company is now back on the growth trajectory. We expect it to register growth of at least 20-24% for the next 3 years. We recommend investing and accumulating on every decline for the next 2-3 years, for a medium-term target of Rs 1,050 (1 year) and a long-term target of Rs 1,400.