Ajanta Soya Limited

 

CMP = 29

Ajanta Soya Ltd (ASL) is primarily engaged in the business of manufacturing of Vanaspati and various kinds of cooking oil with shortening products for bakery like biscuits, puffs, pastries and other applications. The manufacturing facility is located at Bhiwadi (Rajasthan) with a total installed capacity of 1,65,000 mtph. Since inception, the company is focused on continuous expansion, across all business verticals to consolidate its industry leadership.

The company has a strong portfolio of brands viz. Dhruv, Anchal, Parv, Nutri ,  Pure & Fine Fingers. The brands have a reputable market share particularly in northern Indian market i.e. Rajasthan, Delhi, Haryana, UP, MP Bihar, Bengal, Assam etc

Product Portfolio

The company's product portfolio includes Vanaspati oil and various kinds of cooking oils made of soya bean, mustard,  palm, rice bran, cotton seed, sunflower and groundnut in various packaging sizes. It also manufactures various kinds of shortening products for bakery like biscuits, puffs, pastries and other applications. 

Vanaspati & refined cooking oils accounted for ~98% of revenue and other by-products and bakery applications accounted for the rest ~2% revenue.

Contract Manufacturing

The company also manufactures refined oils for third party / contract manufacturing for various renowned brands. In total, it caters to over 100 different packing sizes for more than 10 brands. However, it also sells directly to customers through its own brands. 

The company's clients include Godrej, Britannia, Bikano, Anmol, United Biscuits, Sungold, Harvest Gold, Parle, PriyaGold, PepsiCo, ITC, Haldirams, Cremica etc.

Manufacturing and Sales

Since inception ASL has never let go of an opportunity to expand and modernise to keep up with the changing technologies & market trends. ASL has the state-of-the-art manufacturing plant with latest technology. The plant has the facility to manufacture Vanaspati, cooking oil & bakery shortening for puffs, biscuits, pastries and table margarines. The plant is strategically located 100 kms from Delhi in industrial town of Bhiwadi, Rajasthan. 

ASL takes pride in its boastful market share in northern India. The brands of ASL are backed by an extensive distribution network as the company operates though its strategically located dense populated area in north India. ASL has penetrated deeply in the market with its emphasis on providing value goods to consumers through its CnF agents and dealers  who are operative in major cities and rural areas of India.

Quality

Superior procurement and trading skills, continuous innovation, an endeavour to meet consumer needs and stringent quality control standards have enabled ASL to emerge as a highly-respected and admired edible oil company. ASL witnessed significant progress in terms of market penetration and brand recognition in the past years. 

Its commitment to quality and continuous improvement has helped it to gain customer trust and loyalty. Looking ahead, company aim to expand its distribution network, explore new product categories, and invest in technology to enhance productivity and sustainability.

Investment Rationale 

India is the largest importer and consumer of edible oils globally, around 50 - 60% of domestic consumption demand is met through imports.

In Feb - March 2022, there was disturbance in supply due to Russia-Ukraine conflict as edible oil prices jumped following huge rally in global edible oil market. 

From April 2022 there was continuous correction in edible oil prices for next 5 quarters. All major edible oil manufacturing and marketing companies have posted losses in India due to high cost inventory. In recent months edible oil prices are bottomed out and started stabilising.  Edible oil consumption will also pick-up in coming festive season and winter, it will bring the growth back on track.  Edible oil consumption is expected to grow at 6-7 % and is likely to continue this trend in future as well.

In consumer packs, ASL leads the Rajasthan market with an established credibility in other states. The most popular brand of Vanaspati / cooking oil are 'Dhruv' and 'Anchal' & they enjoy a reputed market share particularly in northern India market i.e. Rajasthan, Delhi, Haryana, U.P, Bihar and some parts of eastern India like Guwahati. ASL also offers its quality products as food ingredients to serve food manufacturers and food service industry. The bakery products are preferred by all range of customers and are popular till the region of J&K

By way of periodical expansion, ASL has increased its production capacity from time & again to cater to changing business environment & varied customer needs. The company’s turnover has increased manifold over the decades and is expected to maintain its growth in coming  years. ASL also focuses on in-house research and innovation to be a low cost manufacturer with high-quality products and innovative customer offerings.

The company has completed the expansion in its refining capacity is now focusing on increasing the capacity utilisation by market expansion for its different products and their variants for growing market demands.

ASL is catering to third party/contract manufacturing for various renowned brands exemplifying the units capability to produce all kind of varieties.  ASL is catering with over 100 different packing sizes for more than 10 brands.

ASL has a diversified product portfolio of refined oil (palm oil,  soybean oil, cottonseed oil, groundnut oil, mustard oil etc.), Vanaspati, and bakery products. Around 40% of revenue is generated from sales under own brands. 

ASL corporate customers boast names of the biggest manufacturers in food industry with the most stringent norms for products, including but not limited to, biscuits, cookies, indian snacks/ namkeen, bakery items & other customers with different applications of  products.

The company is promoted by well established group having and proven track record in the fields of cooking oils. The three-decade long experience of the promoters in the edible oil industry, their understanding of local market dynamics and healthy relationships with suppliers and customers is very positive for ASL future business growth.

 

Conclusion

Ajanta Soya is a leading manufacturer and marketer of vanaspati, cooking oils and bakery products since three decades.  ASL has strong portfolio of brands viz. Dhruv,  Parv, Anchal, Pure and Nutri and enjoys reputed market share.  The company has focused on continuous expansion, across business verticals to consolidate, and its industry leadership over the years. 

Indian edible oil industry has numerous potential as deficit between production and consumption of edible oils is increasing rapidly. India will continue to import edible oils to bridge the gap between demand / supply. There is good opportunity for the Ajanta Soya to address the growing the demand and supply gap imbalance.

Ajanta Soya stock is corrected more than 50% since April 2022 due to above mentioned temporary reason.  Ajanta Soya stock at  cmp Rs 29 is giving excellent investment opportunity for both short term and long term. It can be bought within 20% from cmp with 10 %  allocation.