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Ajanta Soya Ltd

Ajanta Soya Ltd.

ASL was incorporated on 13th January 1992 under companies Act, 1956. The Company is engaged in the primary business of manufacturing of Vanaspati and various kinds of refined oil with shortening products for bakery like biscuits, puffs, pastries and other applications. Company is selling it’s products under three brands DHRUV, ANCHAL and PARV. Company has Vanaspati plant and refinery located in Alwar, Rajasthan.
Listed on Bombay Stock Exchange Ltd., the company went Public with the Initial Public Offering in the year 1993 with 162% shares fully subscribed. The company also issued Preferential equity shares in year 2012.

Market Cap = Rs. 56 cr.
For F.Y. 2016, Sales = Rs. 579.12 cr., PAT = Rs. 5.09 cr.
5 year CAGR in
PAT = 61.73 % (From Rs. 0.46 cr in FY2011 to Rs. 5.09 cr in FY2016)
Sales = 13.93 % (From Rs. 301.74 cr in FY2011 to Rs. 579.12 cr in FY2016)

Company has a very strong balance sheet, cash and short term investment as on 30.09.2016 are Rs. 50 cr. and short term borrowings of Rs. 2 cr.
Company has seen steady volume growth of it’s product in past three years.

          2014    2015     2016

Prod.(Mt) 75441.978 89472.406 106271.921``

Sale (MT) 75411.978 89472.406 106725.205


  1. Very low ebitda margins. Though it looks like a norm across the industry, edible oil industry works on thin margins (Overcapacity and Competition).
  2. No dividend payment in spite of cash rich balance sheet.
  3. Corporate guarantee given of Rs. 70 cr. to bank for a non-listed promoter group company.
  4. Promoters have various other business interests in reality, textiles and construction.
  5. Contingent Liabilities totaling Rs. 130 cr.
  6. Oil is extracted from Oil Seeds, MSP of seeds is decided by government. Slightly government regulated which may have effect on cost front.

Investing Rationale
It is a balance sheet play as the market cap is equal to the free cash in the company, negative working capital seems to be the source of cash. Core business is doing reasonably well and has shown good growth in the past 3 years and is likely to do well in the future as the company works in an import substitute sector (As per Annual Report 2016, India imports nearly 67% of its edible oil requirements). Will be interesting to see how the cash is utilised in the future. Will it be used for growth or will it be siphoned off from the company, remains to be seen.

Disclosure: Invested, less than 1%.



From my quick scan Ajanta seems to one of the few companies which has at least has some returns on its capital to show ( which in this industry are not too great ). While the company seems to be terribly undervalued the economics of this industry ensures that you will not earn a decent return over a longish period of time because the underlying business itself will not earn that kind of return.

My personal preference is to avoid any packet that has the word “hydrogenated” printed on it so i would give this a miss. Passing hydrogen through palm oil at superheated temperatures and then trying to sell it is not a very profitable business


Ajanta soya is a mis-priced stock in the lower side. It sells edible oils in the name of its own brands…Terribly under priced in a country when branded edible oils penetration is very very low…Markets have to re-rate this stock up, sooner than later…It has marquee customers like ITC…

how is the promoter quality? seems to be not good.

To my reading of the AR, things look OK in the management side…The co
has increased profits by 60% in last 5 yrs, has very strong cash flow…stk
languishes at 7 PE…

I had tge shares from ipo. Once i trird speaking to MD he just slamned the phone down saying he doesnt wNt to speak to minority shareholders.

Sorry to hear that Vivek…That was not good manners…But it does not mean
the stock will not do well in the markets…Like HDFC Bank is so attrocious
to its customers by charging for every little thing…But great for

Maybe this chor is becoming mor. But sector also gets poor discounting. I am thankful for Ajanta owner in helping me identify chor run of the mill management

Ajanta Soya’s new state of the art factory inauguration is happening tomorrow in Bhiwadi. This factory replaces the one which burnt down and had been built at a cost of approx 25 crores. Out of which Rs. 20 crores is being reimbursed by the insurance company. Full production will start by first week of February. The share price was 94 in May when it crashed to 43 on the news of the factory burbing down. Apart from the temporary setback and bad last quarter, this has worked out very well for Ajanta Soya as it adds tremendous capabilities which were not possible in the earlier factory at zero investment . The new factory is completely financed by insurance + the depreciation benefits. The state of the art factory can now make many variants which are sold at much higher prices. These variants are used in all kinds of FMCG food products and Britannia, Haldiram and most big food FMCG companies there key clients. The OPM is generally low as the factory is mostly used for mixing the oils to get the right temperature profile. Oil and raw material is bought and the profits are normally shown in other income. However, this other income is possible only because of the factories mixing capabilities. Expecting a re-rating in the coming weeks as the market gets to know.

Source : Skuttlbutt with company employee

Disc: Invested

1 Like

Hi Anuj , you have good insight. Do you have any insight in promoters & corporate governance ? Promoters holding has increase slightly in march 2018 Q. One of promoters - Angry goyal has increase his holding by 8000 shares but their is no SAST announcement in bse in this regards in entre Q. Also any insight on how new plant and state of business will be highly appreciated. Thnx

Anybody has any idea what’s cooking in this stock ??
Beaten down to 22 Rs !

Results declared for Q2 are excellent!

PBT came at 5.73 Cr, which one of the best is ever declared by company. EPS for the Q2 is at 2.83. Overall EPS for H1 is 3.66.

With excellent pedigree of institutional clients, good reputation of brands (Anchal, Dhruv) hopefully, this run would continue.

The improvement in balance sheet is also fabulous:

  • Inventory reduced from 53 cr to 21 cr ( ~ 55% drop)
  • Receivables reduced from 28 Cr to 23 cr ( ~20% drop)
  • Cash/Bank bal/current investments) increased from 19 Cr to 33 Cr ( ~ 60% increase)
  • Borrowings reduced from 17 Cr to 10 Cr (~ 60% drop)