Contract manufacturing listed companies India

[sameernics]

Few names that come to my mind as CMs in Food/FMCG are:

1. ADF foods
2. Mrs. Bector
3. JHS Svendgaard Laboratories Ltd

There may be more…

[shwetukk]

Thanks Sameer…that should help

[sahil_vi]

@shwetukk

Why is Hfoods one of the only CM(contract manufacturer) in food and FMCG space? Is it because entry barrier is very high and front ended costs.

It is not, as sameer has pointed out.

@shwetukk

Why are all these companies like Dixon and now Hfoods commanding such high valuations( ~150)

Due to the opportunity size being very large. Look at Foxconn that Dixon will compete with. Government is providing PLI and policy support. So future looks bright for Dixon. People want to manufacture in India. Expectations will always be front loaded and fundamentals would tend to catch up (or expectations/valuations would crash).

@shwetukk

Any other players that are in the FMCG contract manufacturing space or planning to enter?

I would suggest looking at bio/pharma CRAMS instead which has regulatory compliance, quality requirements, innovators trust serve as a high barrier to entry.

[shwetukk]

Hi sahil,

Thanks for the pointers…Yes, I am invested in Syngene too…was just wondering about Hfoods as it has shot up a lot recently and was wondering at what point, if at all, one should book profits. I would ideally not like to exit a play if something has not changed fundamentally, but in this case felt the stock had got way too expensive in a short time…Thank you.

[Aniesh7]

@shwetukk

was just wondering about Hfoods as it has shot up a lot recently and was wondering at what point, if at all, one should book profits. I would ideally not like to exit a play if something has not changed fundamentally,

Growth, good results , capex plan And positive future outlook of contract manufacturing are taking this stock price higher.

Irrespective of sectors i have noticed Market gives High valuations to Growth stocks.
Astral, varun, berger, infoedge , Asian paints, Jubilant n so on .
Till growth is intact n continuous increase in profit, quality management it will keep commanding high valuations.
At present Growth investment is the theme .

Wen growth gets muted valuations fall n stock laggers Eg. VIP Industries, Quess

Yur bet on Hindustan food If it’s for short term then no issues in booking profit .
But wen fundamentally no change And stock keeps making new 52 week high I personally Hold .

Btw Acrysil LTD is another contract Manufacturer .
It makes kitchen sink for IKEA

[Chins]

@shwetukk

Why are all these companies like Dixon and now Hfoods commanding such high valuations( ~150)The valuation bit i find very tricky as they are in different sectors, and for Hfoods i don’t find any peers that i can draw comparisons with?

I’d also like to add that HindustanFoods’ management commentary is incredibly bullish. They’ve set a target revenue of 2000 Cr. by FY22, which is almost double the current TTM revenue of 1152 Cr. You’d have to calculate how this affects forward multiples, which would be a lot more reasonable. While they’ve invested in doubling their net block through new plants, it’s worth noting that most of the new CapEx won’t contribute to the target, as only the new Silvassa plant will be operational before this deadline.

The management also believes that it will have opportunities as a global outsourcing hub, I’m intently watching to see how this story unfolds.

Disclosure: HindFoods is my favourite stock.

[mahenoswal]

Ador Multiproducts Ltd.
FMCG, contract Mfg company. D2C brand.
100 yr. old company. Recently tied up with cricketer Ravi Shastri.
Visit co’s Website.