Stock of the week

So this is second post of the day where I want to share stock of the week with this community. Today, I am going to share this idea which seems to be very interesting and I believe this stock is available at very attractive valuations.

However, let me me warn you that this stock belongs to the group which is currently going through lot of turbulence, and not preferred by many due to perceived risk and lot of market rumours about the group in main stream media. I personally believe in the quote that, “Be fearful when others are greedy, and be greedy when others are fearful”. This is time to be greedy and accumulate this Gem. Trust me, this will be one of the multi bagger in making (was already, in fact a multi bagger in the past but beaten down due to bad news, though business remains very strong).

This stock is available at market price of Rs. 352 (52wk H/L - 842/327), and is trading near to its low. When you look at the fundamentals, it is very attractively priced:

• Available to at market cap to sales ratio of 0.81

• EV to market cap - 1.03

• ROCE of 15%

• Cash balance on Balance sheet - 1,328 cr

• Dominant Brand leader across key edible oils - Soybean (#1), Mustard Oil (#1), Ricebran Oil (#1), Palm Oil (#2), Groundnut oil (Top 2), Sunflower Oil (#3)

• Also expanding/vertically growing business in to other FMCG categories, like health focused edible oils and health and convenience foods.

• Oleo chemical business is forward integrated.

  

  Source: Company presentation

• Company is growing its direct reach to customer by focusing on rural reach and B2C outlets.

• Company have manufacturing facilities across India at various strategic locations with forward and backward integration

• Key Financial performance of the company is impressive and I am confident that valuation will catch up once Group will be out of the negative sentiments

So friends, the company I am referring to is none other than “ADANI WILMAR LIMITED” which is part of ADANI GROUP and I feel this is the right time to accumulate this FMCG giant in making.

My favourite summary from Screener is as under:

Some pointers which are not favorable:

• High PE Ratio compared to industry (however better than its MNC FMCG rivals)

• Low ROE and ROIC

• High EVEBITDA (better than MNC rivals)

• Low operating margins and EBITDA margins

With this I like to conclude and looking forward to your constructive comments/feedback.

Update: Keep a Stop Loss of Rs. 338/-

Disclosure: I may directly or indirectly holding/may hold position in this stock.

Note: This is not an investment advice. I am not SEBI registered Investment advisor, please consult your financial advisor before making any investment decisions. Investment in equity is subject to Market and other risks and you may loose your entire CAPITAL.