Axtel Ind CMP 330:
Axtel Industries is engaged in the business of Manufacturing of food processing plant & machinery.
AIL offers complete process plants as well as individual equipment covering requirements in the food processing value chain from raw material reception to the final stages of processing. Its products find use in various food processing industries such as confectionery, malted drinks, aqua feed, ready to eat foods, bakery & biscuits, dairy products, beverages, instant mixes, snack foods, spices, condiments & seasoning.
Financial
- ROE and ROCE is around 20% and 26% respectively.
- P/BV - 7.8x, Face Value: INR 10
- Forward PE - 24 which is fair as per Industry benchmark.
- Q3FY21 topline was around INR 44.4 Cr Vs. 27.5 Cr in Q3FY20 Vs. 40.1 Cr in Q2FY21 therefore up by 61.4% in YoY and 10.7% in QoQ.
- Q3FY21 bottomline was around INR 7 Cr Vs. 4.4 Cr in Q3FY20 Vs. 5.4 Cr in Q2FY21 therefore up by 59% in YoY and 29.6% in QoQ.
- Operating profit margin is around 20% which is stable for past two quarters.
- Small equity capital - 16 Cr which is hold by Promoter 50% strong and stable, No FIIs and DIIs hold due to Small micro cap.
Opportunities
- AIL is operational in this industry since 1991, while the promoters hold more than three decades of experience into same lineof business. Over the period, AIL has developed strong business presence and established well known customer base including reputed Multinational Corporations (MNCs) in its portfolio, largely across Fast Moving Consumer Goods (FMCG) segment; both in domestic as well as overseas markets.
- Liquidity is also sound. Debtors days has been significantly inproved in 4 months to 1.5 months within two years time frame.
- Operating cash flow is also improved.
- Company is virtually debt free.
- Regular dividend paying company and its increasing trend also.
Concern
- AIL’s customer portfolio consists of very large organized players in food processing value chain; hence the company has limited bargaining power in terms of ability to pass on any adverse movement in raw material prices. Also the company has
no fixed price contracts with its suppliers for supply of raw materials; thus faces uncertainty with respect to volatility in price of raw materials.
- Small Micro cap company and market cap is around INR 534 Crs.
View: Share high 355 and now 330. Share is listed at only BSE. Share is currently in bullish zone. Keep eye on this. More updates after this quarter and consolidated yearly result.