DFM Foods LTD: Index Details

CMP: 1154.
95 SEP 29th, 2018

DFM FOODS LTD ISIN:
Result Update (PARENT BASIS): Q1 FY19 Overweight
INE456C01012
Index Details SYNOPSIS
Stock Data DFM Foods Limited, the initiator of packaged snack
foods in the Indian market, is engaged in" the business
Sector Packaged Foods of manufacturing, selling, and marketing of packaged
BSE Code 519588 foods and has been a leader in the space for over 30
years.
Face Value 10.00
Revenue for the quarter increased by 5.01% to Rs.
52wk. High / Low (Rs.) 2089.45/1050.00 986.90 mn from Rs. 939.80 mn, when compared with
Volume (2wk. Avg.) 153 the prior year period.
Market Cap (Rs. in mn.) 11572.60 During the quarter, EBIDTA is Rs. 126.90 mn as
against Rs. 87.70 mn in the corresponding period of
Annual Estimated Results(A*: Actual / E*: Estimated) the previous year, up by 44.70%.
Years(Rs. In mn) FY18A FY19E FY20E During Q1 FY19, Profit before tax stood at Rs. 75.80
mn as compared to Rs. 39.00 mn in Q1 FY18.
Net Sales 4253.10 4678.41 5099.47
During Q1 FY19, net profit stood at Rs. 50.10 mn
EBITDA 551.70 609.45 670.32 from Rs. 26.30 mn in the corresponding quarter of
Net Profit 233.10 255.58 277.78 previous year, up by 90.49%.
EPS 23.26 25.51 27.72 EPS of the company stood at Rs. 5.00 during the
quarter, as against Rs. 2.63 per share over previous
P/E 49.65 45.28 41.66 year period.
Shareholding Pattern (%) As part of Company’s effort to expand the customer
franchise of Curls, company launched a new flavour
towards the end of the quarter ,7 ‘Spicy Delight’ which
As on June 2018 As on Mar 2018 was pursuant to its earlier launch of ‘Tomato Treat'
and as a result company now have 3 flavours as part of
Promoter 38.27 38.27 the Curls portfolio.
Public 61.73 61.73 with company’s focus on New Products to drive
growth, the company completed all development work
Others -- -- for a new and innovative snack 7 ‘CRAX FRITTSI
product which is made from the delicious combination
of(‘corn and Potato resembles French flies in its shape
1 Year Comparative Graph and is being test marketed in two flavours 7 ‘Masala
Mix' and ‘Cream & Onion’.
On the capacity front work on the upgradation of its
oldest extrusion line at the Ghaziabad facility
progressed as per plan and company expect the new
line to be commissioned by the end of the second
quarter shall result in an incremental production
capacity of 3800 MT per annum translating into an
additional annual revenue generation potential of Rs.
600 mn.
Net Sales and PAT of the company are expected to
grow at a CAGR of 14% and 15% over 2017 to 2020E,
DFM FOODS LTD S&P BSE SENSEX respectively.
PEER GROUPS CMP MARKET CAP EPS(TTM) P/E (X)(TTM) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. In mn. (Rs.) Ratio Ratio (%)
DFM Foods Ltd 1154.95 11572.60 25.64 45.04 11.30 50.00
Nestle India Ltd 9705.70 935782.00 152.89 63.48 27.36 760.00
ADF Foods Industries 219.00 4643.10 11.09 19.75 2.23 0.00
Vadilal Industries Ltd 432.70 3110.20 28.85 15.00 1.80 12.50
Document code: FOTL_290920184_1 Copyright © 2016 Firstobject Technologies Ltd. All rights reserved
QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q1 FY19,
(Rs. In millions) June-18 June-17 % Change
Revenue 986.90 939.80 5.01%
Net Profit 50.10 26.30 90.49%
EPS 5.00 2.63 90.11%
EBIDTA 126.90 87.70 44.70%
Revenue for the quarter increased by 5.01% to Rs. 986.90 mn from Rs. 939.80 mn, when compared with the prior year
period. During the quarter, EBIDTA is Rs. 126.90 as against Rs. 87.70 mn in the corresponding period of the previous
year, up by 44.70%. During Q1 FY19, net profit stood at Rs. 50.10 mn from Rs. 26.30 mn in the corresponding quarter of
previous year, up by 90.49%. EPS of the company stood at Rs. 5.00 during the quarter, as against Rs. 2.63 per share over
previous year period.
Break up of Expenditure
Value in Rs. Million

Break up of
Expenditure
%
Q1 FY19 Q1 FY18
Change
Cost of Materials
575.20 592.00 -3%
Consumed
Employee Benefit
105.40 96.90 9%
Expenses
Depreciation &
25.40 24.50 4%
Amortization Expenses
Other Expenses 180.10 185.50 -3%
Result Highlights:
 As part of Company’s effort to expand the customer franchise of Curls, Company launched a new flavour towards the
end of the quarter ,7 ‘Spicy Delight’ which was pursuant to its earlier launch of ‘Tomato Treat' and as a result
company now have 3 flavours as part of the Curls portfolio.
 with company’s focus on New Products to drive growth, the company completed all development work for a new and
innovative snack 7 ‘CRAX FRITTSI product which is made from the delicious combination of(‘orn and Potato
resembles French flies in its shape and is being lest marketed in two flavours 7 ‘Masala Mix' and ‘Cream & Onion’.
 On the capacity front work on the upgradation of its oldest extrusion line at the Ghaziabad facility progressed as per
plan and company expect the new line to be commissioned by the end of the second quarter shall result in an
incremental production capacity of 3800 MT per annum translating into an additional annual revenue generation
potential of Rs. 600 mn.
COMPANY PROFILE
DFM Foods Limited, the initiator of packaged snack foods in the Indian market, is engaged in" the business of
manufacturing, selling, and marketing of packaged foods and has been a leader in the space for over 30 years. The
company markets its product under the "CRAX" ,"CURLS" and "NATKHAT" brand names. The product portfolio
comprises of Com Rings, Corn Puffs, Wheat Puffs, Cheese Balls and traditional Namkeens in 13 distinct product variants,
sold through an extensive distribution network; with processing units at Ghaziabad and Greater Noida respectively. With a
strong focus on Sales and Distribution and commitment to innovative marketing, the company has grown rapidly in the
recent past.
FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as of March 31, 2017 -2020E
FY17A FY18A FY19E FY20E

ASSETS
1) Non-Current Assets
a) Property, plant and equipment 1585.00 1553.00 1630.65 1695.88
b) Capital Work in Progress 4.40 38.30 47.88 56.49
c) Other Intangible Assets 0.70 0.60 0.66 0.71
d) Intangible Assets under Development 0.00 0.60 0.63 0.66
e) Other Financial Assets 94.10 99.50 107.46 114.98
f) Current Tax Assets 3.90 0.00 0.00 0.00
g) Other Non Current Tax Assets 196.40 205.70 213.93 224.62
Sub Total Non- Current assets 1884.50 1897.70 2001.20 2093.34
2) Current Assets
a) Inventories 191.30 235.50 284.96 341.95
b) Financial assets
i) Investments 485.30 518.60 565.27 604.84
ii) Trade Receivables 0.20 0.30 0.38 0.48
iii) Cash and Cash equivalents 12.80 14.40 15.84 17.11
iv) Other Bank Balances 4.80 9.00 11.52 14.40
v) Other Financial Assets 2.10 2.50 2.93 3.36
c) Other current assets 11.50 16.20 19.12 21.98
Sub Total – current assets 708.00 796.50 900.01 1004.12
Total Assets (1+2) 2592.50 2694.20 2901.22 3097.47
EQUITY AND LIABILITIES
1) EQUITY
a) Equity Share Capital 100.00 100.20 100.20 100.20
b) Other equity 745.90 924.10 1179.68 1457.46
Total Equity 845.90 1024.30 1279.88 1557.66
2) Non Current Liabilities
a) Financial Liabilities
i) Long Term Borrowings 737.10 808.50 776.31 676.64
b) Long Term Provisions 20.80 27.20 34.82 43.52
c) Deferred Tax Liabilities 117.80 158.60 187.15 226.45
d) Other Non-Current Liabilities 25.20 39.60 49.50 58.41
Sub Total – Non Current liabilities 900.90 1033.90 1047.77 1005.02
3) Current Liabilities
a) Financial liabilities
i) Short Term Borrowings 103.90 56.80 42.60 34.93
ii) Trade Payables 408.60 347.40 312.66 287.65
iii) Other financial liabilities 273.60 164.80 148.32 139.42
b) Short Term Provisions 1.90 1.20 0.90 0.77
c) Current Tax Liabilities (Net) 0.00 8.30 8.72 9.24
d) Other Current Liabilities 57.70 57.50 60.38 62.79
Sub Total - current liabilities 845.70 636.00 573.57 534.79
Total Equity and Liabilities (1+2+3) 2592.50 2694.20 2901.22 3097.47
Annual Profit & Loss Statement for the period of 2017 to 2020E
Value(Rs.in.mn) FY17A FY18A FY19E FY20E

Description 12m 12m 12m 12m
Net Sales 3419.10 4253.10 4678.41 5099.47
Other Income 49.90 43.40 49.91 58.89
Total Income 3469.00 4296.50 4728.32 5158.36
Expenditure -3100.80 -3744.80 -4118.87 -4488.04
Operating Profit 368.20 551.70 609.45 670.32
Interest -44.90 -100.20 -117.23 -134.82
Gross profit 323.30 451.50 492.21 535.50
Depreciation -72.30 -99.70 -109.67 -119.54
Profit Before Tax 251.00 351.80 382.54 415.96
Tax -66.40 -118.70 -126.97 -138.18
Net Profit 184.60 233.10 255.58 277.78
Equity capital 100.00 100.20 100.20 100.20
Reserves 745.90 924.10 1179.68 1457.46
Face value 10.00 10.00 10.00 10.00
EPS 18.46 23.26 25.51 27.72
Quarterly Profit & Loss Statement for the period of 31st Dec, 2017 to 30th Sep, 2018E
Value(Rs.in.mn) 31-Dec-17 31-Mar-18 30-June-18 30-Sep-18E

Description 3m 3m 3m 3m
Net sales 1236.70 1010.80 986.90 1134.94
Other income 1.80 12.30 6.40 7.36
Total Income 1238.50 1023.10 993.30 1142.30
Expenditure -1064.00 -882.40 -866.40 -987.85
Operating profit 174.50 140.70 126.90 154.45
Interest -20.90 -31.60 -25.70 -27.76
Gross profit 153.60 109.10 101.20 126.69
Depreciation -25.30 -25.10 -25.40 -26.92
Profit Before Tax 128.30 84.00 75.80 99.77
Tax -44.30 -26.70 -25.70 -33.68
Net Profit 84.00 57.30 50.10 66.09
Equity capital 100.10 100.20 100.20 100.20
Face value 10.00 10.00 10.00 10.00
EPS 8.39 5.72 5.00 6.60
Ratio Analysis
Particulars FY17A FY18A FY19E FY20E
EPS (Rs.) 18.46 23.26 25.51 27.72

EBITDA Margin (%) 10.77% 12.97% 13.03% 13.14%
PBT Margin (%) 7.34% 8.27% 8.18% 8.16%
PAT Margin (%) 5.40% 5.48% 5.46% 5.45%
P/E Ratio (x) 62.57 49.65 45.28 41.66
ROE (%) 21.82% 22.76% 19.97% 17.83%
ROCE (%) 17.54% 23.92% 23.81% 24.27%
Debt Equity Ratio 0.99 0.84 0.64 0.46
EV/EBITDA (x) 33.60 22.50 20.29 18.28
Book Value (Rs.) 84.59 102.23 127.73 155.45
P/BV 13.65 11.30 9.04 7.43
Charts:
OUTLOOK AND CONCLUSION
 At the current market price of Rs. 1154.95, the stock P/E ratio is at 45.28 x FY19E and 41.66 x FY20E respectively.
 Earnings per share (EPS) of the company for the earnings for FY19E and FY20E are seen at Rs. 25.51 and Rs. 27.72
respectively.
 Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 15% over 2017 to 2020E
respectively.
 On the basis of EV/EBITDA, the stock trades at 20.29 x for FY19E and 18.28 x for FY20E.
 Price to Book Value of the stock is expected to be at 9.04 x and 7.43 x for FY19E and FY20E respectively.
Going forward with its commitment to innovative marketing, the introduction of new flavours in Curls, the launch of
FRITTS, and the distribution expansion efforts, company feel confident of continuing the growth momentum seen last
year into the current financial year. Hence, we say that, we are Overweight in this particular scrip for Medium to Long
term investment.
INDUSTRY OVERVIEW
The snack food industry consists of two principal segments – the traditional ethnic snacks which have been around for
generations and the “modern” snacks which have emerged over the last couple of decades.
The traditional ethnic snacks segment consists largely of the unorganized sector alongwith few organized players. Of late
there has been a shift in this market from the unorganized to the organized sector.
The modern snacks segment consists largely of organized players who employ automated production systems, mass
marketing and organized sales and distribution systems across various geographical markets. The products manufactured
by this segment have been well accepted by the market resulting in its rapid growth. Barring a few, most players in this
segment have only a regional presence and the more successful are continuously attempting to expand their national
footprint. The level of competition in the modern snack segment is increasing continuously.
Opportunities:
The continued growth of the economy, increasing disposable income, rapid urbanization and rising aspiration offers an
immense opportunity for the healthy growth of the business.
In order to capture this growth efforts are being made through innovation in marketing, expanding the distribution
footprint and introducing new products.
Outlook:
The continued efforts to develop the business should stand it in good stead. However the economic conditions prevailing
within the country have a significant role to play in the actual performance.
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analyst qualifications, sectors covered and their exposure if any are tabulated hereunder:
Exposure/Interest to
Sectorscompany/sector Under
Name of the Analyst Qualifications
CoveredCoverage in the Current
Report
Dr.C.V.S.L. Kameswari M.Sc, PGDCA, Pharma & No Interest/ Exposure
M.B.A, Diversified
Ph.D (Finance)
U. Janaki Rao M.B.A Capital No Interest/ Exposure
Goods
B. Anil Kumar M.B.A Auto, IT & No Interest/ Exposure
FMCG
M. Vijay M.B.A Diversified No Interest/ Exposure
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B. Srikanth M.B.A Diversified No Interest/ Exposure
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CMP: 1154.

95 SEP 29th, 2018

Results updates- Q1 FY19,

(Rs. In millions) June-18 June-17 % Change

Revenue 986.90 939.80 5.01%

Net Profit 50.10 26.30 90.49%

EPS 5.00 2.63 90.11%

EBIDTA 126.90 87.70 44.70%

Value in Rs. Million

Other Expenses 180.10 185.50 -3%

Balance Sheet as of March 31, 2017 -2020E

FY17A FY18A FY19E FY20E

Value(Rs.in.mn) FY17A FY18A FY19E FY20E

Value(Rs.in.mn) 31-Dec-17 31-Mar-18 30-June-18 30-Sep-18E

Particulars FY17A FY18A FY19E FY20E

EPS (Rs.) 18.46 23.26 25.51 27.72

Important Disclosures on Subject Companies

Analyst Stock Weights

Firstcall Research - Overall Statement

Firstcall Research Provides

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