Buy Vimal Oils; target of Rs 213: Firstcall Research

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Firstcall Research report on Vimal Oils

“Vimal Oil & Foods Ltd. (VOFL), the flagship company of Vimal Group, was started in 1993 with the holy hand of Param Punjay Pramukh Swami Maharaj (Head BAPS), in Mehsana, Gujarat, with a small 50-ton refinery, and today it has evolved into a fully integrated and automatic oil-processing unit with an annual turnover or Rs. 2200 crores, listed with National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Vimal Oil & Foods Limited produces and sells edible oils primarily in India. It operates through four segments: Integrated Oil Division, Powder Plant, Wind Mill, and Dairy. The company offers oils of cottonseed, groundnut, soyabean, sunflower, mustard, palm kernel, rapseed, rice bran, and corn; and table margarine and rapeseed cake. It is also engaged in powder and wind power businesses. The company sells its products through depots, distributors, and retail outlets. The Manufacturing facility comprises an integrated, continuous plant, set up by Alfa Laval. All the packaging is done in-house. In fact the Company has gone in for backward integration, by manufacturing its own packs. Be it Tins, HDPE jars, PET bottles or corrugated boxes. This works out to be very cost-effective, and also retains the quality of the product. The products are lab-tested at every stage, staring with the raw material, and ending with final packaging.” “At the current market price of Rs.185.00, the stock P/E ratio is at 12.25 x FY15E and 10.87 x FY16E respectively. Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.15.11 and Rs.17.02 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 19% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 4.68 x for FY15E and 4.21 x for FY16E. Price to Book Value of the stock is expected to be at 1.78 x and 1.53 x respectively for FY15E and FY16E. We expect that the company surplus scenario is likely to continue for the next two to three years, will keep its growth story in the coming quarters also. Hence, we recommend ‘BUY’ in this particular scrip with a target price of Rs.213.00 for Medium to Long term investment,” says Firstcall Research report. 

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