Firstcall recommends ADF Foods for a target of Rs82 for the mid- to long-term

1. CMP 71.25
Target Price 82.00
ISIN: INE982B01019
APRIL 14th
2015
ADF FOODS LTD
Result Update (PARENT BASIS): Q3 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Packaged Foods
BSE Code 519183
Face Value 10.00
52wk. High / Low (Rs.) 85.90/43.25
Volume (2wk. Avg.) 19000
Market Cap (Rs. in mn.) 1594.43
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY14A FY15E FY16E
Net Sales 1418.14 1497.20 1661.90
EBITDA 264.58 270.53 301.98
Net Profit 124.48 153.43 158.97
EPS 5.56 6.86 7.10
P/E 12.81 10.39 10.03
Shareholding Pattern (%)
1 Year Comparative Graph
ADF FOODS LTD S&P BSE SENSEX
SYNOPSIS
ADF Foods Ltd manufacturing Ethnic Indian
pickles, chutneys, canned foods frozen foods and
spices under various Brand Names.
The Company revenue for the quarter stood at Rs.
337.71 mn from Rs. 324.97 mn, when compared
with the prior year period, an increase of 3.92%.
Net profit increased by 32.62% to Rs. 26.55 mn
from Rs. 20.02 mn, when compared with the prior
year period.
During the quarter, EBIDTA is Rs. 37.60 mn as
against Rs. 49.15 mn in the corresponding period
of the previous year.
During Q3 FY15, PBT was up by 14.80% to Rs.
34.52 mn from Rs. 30.07 mn in Q3 FY14.
EPS of the company stood at Rs. 1.19 a share
during the quarter as against Rs. 0.89 over
previous year period.
During 9M period of current fiscal 2014-15,
revenue increased by 10% to Rs. 1071.69 mn
from 974.30 mn during the same period of
previous year.
In 9M FY15, PAT rises to Rs. 118.74 mn from Rs.
93.06 mn in 9M FY14, an increase of 27.60%.
Net Sales and Operating Profit of the company are
expected to grow at a CAGR of 9% and 18% over
2013 to 2016E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
ADF Foods Ltd. 71.25 1594.43 5.56 12.81 0.97 15.00
DFM Foods Ltd. 312.80 3128.50 8.77 35.67 8.29 25.00
Vadilal Industries Ltd. 356.00 2558.90 2.00 178.00 4.86 10.00
Tasty Bite Eatables Ltd. 649.00 1665.30 35.36 18.35 4.91 10.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q3 FY15,
Months Dec-14 Dec-13 % Change
Net Sales 337.71 324.97 3.92
PAT 26.55 20.02 32.62
EPS 1.19 0.89 32.62
EBITDA 37.60 49.15 (23.50)
The Company revenue for the quarter stood at Rs. 337.71 million from Rs. 324.97 million, when compared with
the prior year period, an increase of 3.92%. Net profit increased by 32.62% to Rs. 26.55 million from Rs. 20.02
million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.
1.19 a share during the quarter as against Rs. 0.89 over previous year period. Profit before interest, depreciation
and tax is Rs. 37.60 million as against Rs. 49.15 million in the corresponding period of the previous year.
Break up of Expenditure
Particulars
Rs. Million
Q3 FY15 Q3 FY14
%
Change
Cost of Material
Consumed
136.19 116.88 17%
Employee Benefit
Expenses
31.93 30.23 6%
Depreciation &
Amortization
18.12 17.16 6%
Other Expenditure 104.62 107.56 -3%
Purchase of stock in
trade
19.53 14.04 39%

3. COMPANY PROFILE
ADF Foods Limited manufactures, markets, and distributes ethnic Indian food products. Its products include
ready to eat curries, Indian pickles, chutneys, instant mixes, canned food, mango pulp, condiment pastes,
vegetables in brine, frozen parathas and naans, frozen vegetables, snacks, frozen paste cubes and paneer, frozen
rolls and entrees, curry powder, poppadums, cooking sauces and pastes, flavored water, and frozen breads. The
company offers its products under the Ashoka, Camel, Aeroplane, Truly Indian, Khansaama, and ADF Soul brands
through distribution networks in Europe, the United States, the Middle East, Australia, Canada, and Asia. It also
offers contract manufacturing services. ADF Foods Limited was founded in 1932 and is based in Mumbai, India.
Products
Ashoka
Truly Indian
Camel
Aeroplane
Khansaama
ADF Soul

4. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance sheet as at March 31, 2013A-2016E
FY13A FY14A FY15E FY16E
EQUITY AND LIABILITIES:
Shareholders’ Funds:
Share Capital 223.78 223.78 223.78 223.78
Reserves and Surplus 1332.58 1421.13 1574.56 1733.54
1) Sub Total - Net worth 1556.36 1644.91 1798.34 1957.32
Non-Current Liabilities:
Long-term borrowings 1.52 0.30 0.21 0.19
Deferred Tax Liabilities [Net] 62.20 70.84 63.76 66.94
Other Long Term Liabilities 2.50 2.50 2.65 2.78
Long Term Provisions 9.92 10.50 14.49 16.23
2) Sub Total - Non-Current Liabilities 76.14 84.14 81.11 86.14
Current Liabilities:
Short-term borrowings 252.90 150.70 167.28 180.66
Trade Payables 49.75 87.90 70.32 75.24
Other Current Liabilities 27.44 34.85 40.77 45.67
Short Term Provisions 53.25 46.03 49.71 52.70
3) Sub Total - Current Liabilities 383.34 319.48 328.08 354.26
Total Liabilities (1+2+3) 2015.84 2048.53 2207.53 2397.72
ASSETS:
Non-Current Assets:
Fixed Assets
Tangible Assets 390.78 383.11 398.43 418.36
Intangible Assets 326.10 285.30 299.57 311.55
Capital work-in-progress 0.99 85.05 99.69 112.65
a) Sub Total - Fixed Assets 717.87 753.46 797.69 842.55
b) Non Current Investments 67.89 169.61 189.96 208.96
c) Long Term Loans and Advances 31.22 21.10 27.64 32.62
d) Other non-current assets 45.00 0.62 0.91 1.00
4. Sub Total - Non-Current Assets 861.98 944.79 1016.20 1085.13
Current Assets:
Current Investments 295.00 210.00 140.70 158.99
Inventories 203.48 222.94 267.53 307.66
Trade Receivables 333.44 281.75 259.21 274.76
Cash and Bank Balances 78.34 120.60 150.75 174.87
Short Term Loans and Advances 243.60 268.45 373.15 396.31
5. Sub Total - Current Assets 1153.86 1103.74 1191.33 1312.59
Total Assets (4+5) 2015.84 2048.53 2207.53 2397.72

5. Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs. mn) FY13A FY14A FY15E FY16E
Description 12m 12m 12m 12m
Net Sales 1296.92 1418.14 1497.20 1661.90
Other Income 34.04 39.92 60.41 67.66
Total Income 1330.96 1458.06 1557.61 1729.55
Expenditure -1147.85 -1193.48 -1287.08 -1427.57
Operating Profit 183.11 264.58 270.53 301.98
Interest -16.26 -11.37 -9.94 -10.34
Gross profit 166.85 253.21 260.59 291.64
Depreciation -41.46 -73.27 -75.35 -79.12
Exceptional Items 71.98 0.00 17.46 0.00
Profit Before Tax 197.36 179.94 202.70 212.53
Tax -41.50 -55.46 -49.27 -53.56
Net Profit 155.86 124.48 153.43 158.97
Equity capital 223.78 223.78 223.78 223.78
Reserves 1332.58 1421.13 1574.56 1733.54
Face value 10.00 10.00 10.00 10.00
EPS 6.96 5.56 6.86 7.10
Quarterly Profit & Loss Statement for the period of 30th June, 2014 to 31st Mar, 2015E
Value(Rs. mn) 30-Jun-14 30-Sep-14 31-Dec-14 31-Mar-15E
Description 3m 3m 3m 3m
Net Sales 385.55 348.43 337.71 425.51
Other income 19.89 19.72 9.81 10.99
Total Income 405.44 368.15 347.52 436.50
Expenditure -310.69 -299.25 -309.92 -367.22
Operating profit 94.75 68.90 37.60 69.28
Interest -2.41 -2.57 -2.42 -2.54
Gross profit 92.34 66.33 35.18 66.74
Depreciation -17.48 -18.73 -18.12 -21.02
Exceptional Items 0.00 0.00 17.46 0.00
Profit Before Tax 74.86 47.60 34.52 45.72
Tax -18.72 -11.55 -7.97 -11.03
Net Profit 56.14 36.05 26.55 34.69
Equity capital 223.78 223.78 223.78 223.78
Face value 10.00 10.00 10.00 10.00
EPS 2.51 1.61 1.19 1.55

6. Ratio Analysis
Particulars FY13A FY14A FY15E FY16E
EPS (Rs.) 6.96 5.56 6.86 7.10
EBITDA Margin (%) 14.12% 18.66% 18.07% 18.17%
PBT Margin (%) 15.22% 12.69% 13.54% 12.79%
PAT Margin (%) 12.02% 8.78% 10.25% 9.57%
P/E Ratio (x) 10.23 12.81 10.39 10.03
ROE (%) 10.01% 7.57% 8.53% 8.12%
ROCE (%) 12.40% 18.81% 17.59% 17.82%
EV/EBITDA (x) 8.06 5.35 5.44 4.77
Book Value (Rs.) 69.55 73.51 80.36 87.47
P/BV 1.02 0.97 0.89 0.81
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs. 71.25, the stock P/E ratio is at 10.39 x FY15E and 10.03 x FY16E
respectively.
Earnings per share (EPS) of the company for the earnings for FY15E and FY16E are seen at Rs. 6.86 and Rs.
7.10 respectively.
Net Sales and Operating Profit of the company are expected to grow at a CAGR of 9% and 18% over 2013 to
2016E respectively.
On the basis of EV/EBITDA, the stock trades at 5.44 x for FY15E and 4.77 x for FY16E.
Price to Book Value of the stock is expected to be at 0.89 x and 0.81 x respectively for FY15E and FY16E.
We recommend ‘BUY’ in this particular scrip with a target price of Rs. 82.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
India holds the second-largest arable land resources in the world and also possesses 46 of the 60 soil types in the
world. The country is the largest producer of pulses, milk, tea, cashew, mangoes, and buffalo meat; and the
second-largest producer of tea, wheat, sugarcane, and rice.
The domestic food processing industry in India is expected to reach US$ 200 billion in 2015 from US$ 135 billion
in 2012. This industry ranks fifth in India in terms of production, consumption and exports. The sector is
expected to contribute 6.5 per cent to the country's gross domestic product (GDP) by FY15. The unorganised
sector accounts for 42 per cent of India's food processing industry, followed by small-scale industries at 33 per
cent and the organised sector at 25 per cent.
The Government of India's strong policy support gives a boost to this sector. Some of these policies, such as
encouraging the private sector by exempting the export earnings from corporate taxes, has helped in this sector's
growth. The government has also allowed 100 per cent foreign direct investment (FDI) under automatic route,
opened up mega food parks, assigned Agri Export Zones and provided incentives for development of storage
facilities.
There is enough scope for growth in the food industry in supply chain infrastructure and contract farming. Also,
the government's policies are expected to help turn the Indian food processing industry into a global outsourcing
hub.

8. Disclaimer:
This document is prepared by our research analysts and it does not constitute an offer or solicitation for the
purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients’ investment decision based on this document.

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