Manorama Industries Ltd PAT surges by 70.69% YoY
Company Overview:
Manorama Industries Ltd specializes in the production of specialty fats and butter derived from exotic seeds and nuts. The company is a prominent supplier of these specialty fats and butter, catering to the demands of the chocolate, confectionery, and cosmetics sectors. Moreover, they produce sal, shea, and mango-based cocoa butter equivalents (CBE), as well as shea-based specialty fats and butter.
Diverse Products Portfolio:
Manorama Industries boasts a diverse product portfolio, including Cocoa Butter Equivalent (CBE), Shea Stearin, Sal Butter, Sal Stearin, Mango Butter, Mowrah Butter, Kokum Butter, and De Oiled Cake (DoC). These products find applications in the chocolate manufacturing, confectionery, bakery, and cosmetics industries. The company serves various sectors, including food, chocolates, confectionery, cosmetics, and the HoReCa market.
Manufacturing Sites and Capacity Utilization:
The company’s primary manufacturing site is situated in Birkoni near Raipur, Chhattisgarh. This facility encompasses key processes such as expelling, extraction, refining, and fractionation. It has a substantial production capacity with 45,000 MT for refinery, 30,000 MT for interesterification, 25,000 MT for deodorization, 40,000 MT for fractionation, and 30,000 MT for blending and packing. The strategic location of the plant, at a mere 550 Km from the Visakhapatnam port and the anticipated Raipur-Visakhapatnam expressway, promises reduced transportation times, cost savings, and enhanced operational efficiency. As of June 2023, the company has invested 1,099.5 million in capital expansion.
Valuation and Key Ratios:
The company’s stock is presently trading at a multiple of 80.2x earnings per share (EPS) of 29, with a current market price of 2,325 Rs, while the industry’s price-to-earnings (PE) ratio stands at 43.9x. Furthermore, the stock is trading at 9.29 times its book value, which is 250 Rs per share. Manorama Industries exhibits robust return ratios, with a return on equity (ROE) of 10.5% and a return on capital employed (ROCE) of 13.2%. The interest coverage ratio stands at 6.43, indicating that the company’s earnings are 6.43 times its interest costs, underscoring its strong financial position. The enterprise value to EBITDA (EV/EBITDA) ratio stands at 39.7x.
Q1FY24 Results Updates (Standalone):
In Q1FY24, the company experienced substantial growth, with revenue increasing by 52.89% year-on-year (YoY) and 9.65% quarter-on-quarter (QoQ) to reach 111.56 Cr. This growth was driven by improving realizations and growing demand in the chocolates, confectionery, and cosmetic industries. EBITDA increased by 47.86% YoY and 13.05% QoQ to 18.64 Cr, although EBITDA margins dropped by 60 basis points YoY but increased by 50 basis points QoQ due to operational efficiency. Profit after tax (PAT) surged by an impressive 70.69% YoY and 15.57% QoQ, reaching 11.55 Cr, with PAT margins improving by 100 basis points YoY and 50 basis points QoQ to 10.36%. Earnings per share (EPS) stood at 9.71 Rs, a growth of 15.62% QoQ.
Conclusion:
Manorama Industries Ltd appears to be on a growth trajectory, as evidenced by its impressive Q1FY24 results, strong financial ratios, and a diverse product portfolio that caters to multiple industries. The company’s strategic manufacturing site location and ongoing capital expansion also bode well for its future prospects. However, investors should keep an eye on industry trends and competition as they assess the company’s long-term potential.
