DFM foods - poor man's FMCG play


(Mahesh Shah) #122

@chintans

Business is good but valuations look very stretched now. There might be some corporate development which we are unaware of and which might unfold over future that might justify valuations but as it is as per current scenario IO doesn’t look appealing.

Rgds.

Discl. - No holding


(Metrans09) #123

DFM is on a cusp of a major expansion and likely resumption of topline and PAT growth:

  1. DFM’s expansion of Rs60cr which would likely add topline by Rs200cr would complete by the month end which would lead to 1. new product launches 2. entry into newer segments 3. greater earnings visibility
  2. DFM is a pioneer with a differentiated offering through corn based snacks
  3. It has a toy in its Crax corn rings product which is very much sought after by children in the age group of 4-14 years.
  4. It sells about 20lakh packets per day
  5. Its working capital cycle is mind blowing - it has zero debts and hardly any inventory and it get suppliers credit. So its cash from operations are more than 2.5x is profit after tax
  6. With the new product launches and better earnings visibility, you could see a big re-rating after the last few quarters of subdued topline growth…

(ishandutta2007) #124

VIdeos like this may create fear aong consumers and avoid them completely.
These kinds of plastic claim attack is going on many consumer products like egg, cabbage. This may damage the snacks industry as a whole.


(Ayush Mittal) #126

No, i’m not tracking. Got out very early :((


(nitinver) #127

With Ashish Kacholia jumping in, it seems naysayers will have some pause. Another classic example of irrational exhuberance- both in upside and downside. Today any company trading above 25 PE looks untouchable. Of late CRISIL has been following many cos,with no revert. Is there a shift happening to other rating agencies??