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 Recently, Ambuja Cements brought by Gautam Adani grabbed headlines again by becoming India’s second largest cement producer in one stroke. The Adani family acquired the assets of Holcim India, Ambuja Cements and ACC for $6.4 billion.

This begs a question, “What did the Adani family see in Ambuja Cements and ACC?” Let us try to answer this by doing a fundamental analysis of Ambuja Cements.

We’ll start by getting a quick overview of the company. After that, we move forward to understand the scenario of India’s cement industry. Next, we look at how the company has grown over the years, its return ratios, and its profit margin. Future plans and a summary ends the article.

      Table of Contents

• Ambuja Cements – Company Overview
• Industry Overview
• Ambuja Cements – Financials
  • Revenue & Net-Profit Growth
    • Profit Margins
      • Debt & Return Ratios
• Shareholding Pattern & Pledged Shares
• Future Plans Of Ambuja Cements
• Fundamental Analysis Of Ambuja Cements – Key Metrics
• In conclusion

Ambuja Cements – Company Overview

Established in 1983, Ambuja Cements is one of the leading cement producers in India. It owns 6 integrated manufacturing units, 8 grinding units, 5 captive power plants and 5 bulk cement terminals. This gives the Mumbai-based company a cumulative manufacturing capacity of 31.45 MTPA.

The company has a diversified presence in most parts of the country: northern, western, central and eastern markets. Ambuja has a monopoly market share of 89% in the blended cement category.

The figure below shows the diversified manufacturing and sales capabilities of Ambuja Cements Limited.

In 2006, The Holcim Group, headquartered in Switzerland, entered into a partnership with Ambuja Cements. Over time, it acquired a majority stake of 63% in the company. In another move in 2016, Ambuja bought out Holcim’s stake in ACC, which the Swiss major had started acquiring in 2004. This made Ambuja the majority shareholder in ACC Limited with a stake of 54.53%.

However, as recently as May this year, the company saw an ownership change. Adani Group’s Ports Power acquired Holcim’s Indian interests in Ambuja and consequently ACC.

Having learned about the company, let us now move to an overview of the cement industry in India as part of our fundamental analysis of Ambuja Cements Limited.

Fundamental analysis of Patanjali foods

Industry Review

India’s cement industry is the second largest in the world after China. It accounts for 8% of the global cement market with an estimated manufacturing capacity of 550 MTPA. However, at 242 kg, the country’s per capita cement consumption is less than half of the world average of 525 kg. This offers a huge growth opportunity for Indian cement producers.

Cement demand in India grew by 13% year-on-year (y-o-y) in calendar year 2021. It is projected to grow by 7% year-on-year in 2022. The growth of the cement sector follows the GDP growth of the country. , making it a cyclical industry.

Going forward, structural demand from the housing sector, rising rural incomes, national infrastructure pipeline expenditure, and industrial/commercial demand will be the primary growth drivers for the region.

The industry is heavily dependent on electricity, fuel and transportation costs. For example, power and fuel costs and freight and forwarding expenses accounted for about 60% of Ambuja Cements’ costs in FY11.

The huge transportation cost involved in the movement of raw materials and finished cement makes the cement industry a geographical sport.

Thus we can conclude that the Indian cement industry is a slow growing sector with immense potential for growth. Now we can move ahead to know how has been the growth of Ambuja Cements in the last five years.

Ambuja Cements – Financials

Revenue and net profit growth

As mentioned earlier, Ambuja Cements holds 50.05% stake in ACC Limited, making it a subsidiary of the former. For FY21 ended December, ACC reported sales of ₹16,152 crore. Standalone operations of Ambuja Cements generated revenue of ₹ 13,965 crore.

This prompts us to study the consolidated as well as standalone revenue and net profit figures of the company as part of our fundamental analysis of Ambuja Cements.

Over the last 5 years, the consolidated revenue of Ambuja Cements has grown at a CAGR of 4.17% every year. During the same period, standalone revenue saw an annual growth rate of 5.96% every year.

As far as its net profits are concerned, they have grown at the rate of 13.79% and 10.73% respectively in the last 5 years on consolidated and standalone basis.

The table below presents the revenue and net profit figures of Ambuja Cements on a consolidated and standalone basis for the last five years.

Profit Margins

So far we have covered company description, industry overview and company developments as part of our fundamental analysis of Ambuja Cements Limited. In this section, we talk about the profit margin of a cement manufacturer.

The operating and net profit margins of Ambuja Cements have increased over the years due to better capacity utilization. The table below shows the profit margin for the last five years.

Debt and Return Ratio

Ambuja Cements is almost debt free company with very low debt. 47 crores and a negligible debt-to-equity ratio of 0.02.

With respect to the consolidated return ratios of Ambuja Cements, we can see in the table below that they have consistently improved over the last five financial years. In FY21, the return on equity and return on capital employed stood at an impressive level of 10.96% and 15.92% respectively.

Shareholding pattern and pledged shares

Currently, Adani Group holds 63.22% stake in Ambuja Cements through Holderend Investments Limited and Endeavor Trade & Investment Limited. For large scale purchase of cement companies, the group pledged its entire stake in Ambuja Cements and ACC. immediately after acquisition.

According to separate filings given to the exchanges, the group said that around 57% of ACC and 63% of Ambuja Cements are encumbered “for the benefit of certain lenders and other financial parties”.

Additionally, FII and DII hold 11.05% and 26.26% stake in the company, respectively.

Future plans of Ambuja Cements

1. In FY21, the company spent Rs. 1,160 crore towards capex. Rs 310 crore will be earmarked for brownfield expansion of 1.5 MTPA at its Ropar unit.

2. In addition, it increased the clinker capacity to 3.2 MTPA (brownfield) and cement grinding capacity to 7 MTPA.

3. Ambuja Cements has also acquired limestone reserves to support its long term growth plans.

4. The cement maker has an audacious target of achieving 50 MTPA production capacity in the near future, a growth of 59% from current levels.

5. For the long term goals of both the companies, Gautam Adani has announced a long term goal of 140 MPTA by 2030. This points towards doubling the production capacity from 70 MTPA at present.

Conclusion

In this article, we have done the fundamental analysis of Ambuja Cements. From what we have learned, we can say that Ambuja Cements was a company that settled comfortably in a cyclical, slow-moving industry. This was reflected in its share price which rose 77% in the last five years.

However, ever since Adani announced the acquisition of the two companies in mid-May this year, the value of Ambuja Cements has appreciated by over 46%. This comes after Gautam Adani announced big plans for cement companies. It will be interesting to track the company’s growth story from this point.

In your opinion, should investors climb the wall of Ambuja’s rising stock? Or should they wait for material growth in the company? How do you tell us in the comments below?

Now you can get latest updates in share market on Trade Brain News and you can also use our Trade Brain portal for fundamental analysis of your favorite stocks.

Every morning thousands of people thronged to practice yoga which is related to Patanjali foods. It started in the late 90s. By 2002, Baba Ramdev was popularizing yoga among Indians through television and through his mass yoga camps. Soon, Patanjali became a household name in India.

There was a time when social media was flooded with memes about the next product to be launched by Patanjali. Well there are many. However, you must have heard of Ruchi Soya. It is not a product but a company acquired by Patanjali Group.

Ruchi Soya Industries Limited, now renamed as Patanjali Foods Limited, was in the news for some time. There was a huge jump in the share price and no one knows why! In this article, we will do a fundamental analysis of Patanjali Foods and know more about its story

Fundamental Analysis of Patanjali Foods

Patanjali Foods is also known as Ruchi Soya Industries. Today we take an in-depth fundamental analysis of Patanjali Foods and know more about the company, verticals, MOT and more.

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Industry review

The Indian edible oil market is the fourth largest in the world after the United States, China and Brazil. It is witnessing a major shift towards branded and packaged food items due to the increased focus on health, wellness and immunity amid the pandemic.

Convenience and digitization are the key factors driving demand and growth in this segment. In addition, increasing population and per capita income has accelerated the demand for edible oils.

Experts say that the market is expected to grow 10.82% annually (CAGR 2022-2027). He says that the edible oil segment is expected to grow by a volume of 18.8% in 2023 and the average per capita volume is expected to be 3.80 liters in 2022.

About the company

Patanjali Food Limited has grown into an integrated player in the edible oil business, with a farm to fork presence. It is among the top Fast Moving Consumer Goods (FMCG) and Fast Moving Health Goods (FMHG) players in the edible oil segment in India. The company is a leader and market leader in the branded textures soy protein space.

What happened to Ruchi Soya Industries?

Patanjali Group acquired Ruchi Soya Industries Limited for Rs 4350 crore in 2019 under the Corporate Insolvency Resolution Process (CIRP). In less than three years, the company crossed Rs 24,000 crore revenue and turned profitable in the first full year of operations.

However, the company’s journey over the past decade has been full of ups and downs.

Indian companies get most of their crude palm oil requirement from Indonesia. In October 2011, Indonesia raised export duties on crude palm oil and cut export duties on refined edible oil.

As a result, the cost of purchase of Ruchi Soya went up and this had to impact margins. Its business failed and its debt burden spiraled out of control.

Entered Patanjali Group

Banks dragged Ruchi Soya Industries to court Lenders agreed to resolve bankruptcy proceedings by selling Ruchi Soya to another FMCG company. Patanjali acquired 99% of the total ₹9,000 crore and cleared dues worth ₹4,000 crore. The existing shareholders lost most of their investment and the company was delisted from the stock exchanges.

Relief and Fantastic Benefits

After the acquisition, the company got re-listed on January 27, 2020 and started trading at ₹ 16.5. After a while, within five months, its share price increased by 9100% to Rs.1500. However, then only 1% of its shares were trading in the market. It was possible for investors to buy or sell shares at higher prices.

As a result, Patanjali had to reduce its stake to 90% in twelve months and 75% in three years.

Patanjali Foods – FPO

In March 2022, the company came up with a follow-on public offer (FPO) of ₹4,300 crore. This included allotment of 6,61,53,846 equity shares of face value of ₹ 2 at a premium of ₹ 648 per share. The company achieved a market capitalization of ₹ 33,479 crore after listing its shares under FPO on April 8, 2022. This amount was used for:

• Redeem Debentures and Preference Shares.

• Repay term loans and working capital loans to attain debt-free status.

Patanjali Foods – Manufacturing Capacity & Distribution

Patanjali Foods has 22 manufacturing units. They can crush 11000 tonnes of seeds and pack 10000 tonnes per day. Its manufacturing facilities are strategically located. In fact, they strike the right balance between raw materials and proximity to markets.

The company has a wide distribution network and adequate manpower. It aims to increase penetration in metros, semi-urban and rural markets. In fact, the company has 7602 Distributors, 95 Sales Depots, 305 Mega Stores, 104 Super Distributors and 9,82,131 Retail Outlets.

It has started using digital platforms to meet the changing consumer preferences and personalize the user experience. In addition, it exports products like soya meal, lecithin and other food ingredients to 31 countries.

Patanjali Foods – Moat

• Farmer friendly company with rural integration.

• Balanced mix of inland and port based refineries has helped in reducing logistics cost. In fact, this has given it a significant transportation cost advantage related to road travel.

• A healthy mix of upstream and downstream business with presence across the entire value chain.

• The company has contract manufacturing facilities which enable it to effectively meet the market demand of its products without significant capital expenditure.

Fundamental Analysis of Patanjali Foods – Scope

Patanjali Foods has six business verticals:

Edible Oils, By-Products, and Derivatives

It is one of the largest oilseeds solvent extraction and edible oil companies in India. The company has a strong portfolio of brands like Ruchi Gold, Mahakosh, Nutrella, Sunlight, Sunrich and Ruchi Star. It sells a variety of edible oils, vegetable and bakery products.

palm oil plantation

Palm oil yield and per hectare income is better than other oilseed crops. It is a leading player in palm oil processing in India with a capacity of 0.90 million metric tonnes per annum. In addition, it has access to more than 2.50 lakh hectares of potential oil palm cultivation in various states of India.

It has signed MoUs with ten state governments under the public-private partnership model promoted by the government.

FMCG

Patanjali Foods aims to increase its share in the food business volume and product offering. In addition, they are a leader in edible soy flour and textured soy protein.

It acquired the biscuit cookies and rusk business from Patanjali Natural Biscuits Private Limited and Patanjali Ayurved’s food retail business venture for ₹690 crore.

Oleochemicals

Oleochemicals are chemicals derived from natural sources, including plants, fats, and oils. They become raw materials or intermediaries for various industries.

This is their downstream business. They efficiently utilize the by-products produced under this vertical mainly in their edible oil refineries. They manufacture products such as soap noodles, glycerin and distilled fatty acids.

Nutraceuticals

Fast Moving Health Goods (FMHG) has received excellent response in the market, apart from opening up a new revenue stream for the company. This vertical includes various brands under categories like general nutrition, sports nutrition and medical nutrition.

In addition, they are co-branded under Patanjali and Nutrela and certified by FSSAI and Ministry of AYUSH. The preventive healthcare segment witnessed a huge boom and the company is poised to capitalize on this as the industry deepens its presence in India.

Renewable Energy- Wind Energy

Patanjali Foods Limited has windmill establishments in Madhya Pradesh, Tamil Nadu, Maharashtra, Gujarat and Rajasthan. It has a total wind power generation capacity of 84.6 MW. It is used for captive use as well as for sale. In addition, it is focusing on sourcing power for its business operations at 11 locations in 6 states.

Patanjali Foods – Financial

Revenue and net profit growth

On a standalone basis, the company’s revenue shows an increasing trend over a period of five years. The company suffered huge losses in 2018 but recovered after that.

Hence the chart shows an increasing trend in profit. However, profits have come down in the last two years. Its sales grew at a 3-year CAGR of 37.90% and its net profit grew at a 3-year CAGR of 224.19%.

those days. Hence, the above table represents the numbers from its standalone statement.

• The Company’s Return on Equity (ROE) is 16.51% and Return on Capital Employed (ROCE) is 15.49%. In general, an ROE of 15% to 20% and an ROCE of at least 20% is considered good. The company has a return on assets of 7.02% which is good.

• Patanjali Foods has a debt-to-equity ratio of 0.72. Its interest coverage ratio (ICR) is 4.41. Ideally, an ICR of more than 3 is good.

• Its promoters currently hold 80.82% stake in it. It reduced its promoters’ pledge from 99.97% to 0% in the September quarter of 2021. This is a positive sign.

• The company’s shares are trading at a price-to-equity ratio of 55.72, which is lower than the sector PE of 62.29. This indicates that the stock is currently available at a low price and may increase in price in the future.

• Patanjali Foods is a large-cap company with a market capitalization of ₹48,688 crore.

About Company

Tarson products is an Indian labware company in the design, development, construction, and marketing of plastic lab equipment Company was established in 1983 in Kolkata, West Bengal.

 This tarsons product is used for laboratories in research organizations, educational institutions, and pharmaceutical companies, Its products are divided into 3 categories

 Contract Research Organization (“CRO”), clinical companies and hospitals.

 The company has a huge portfolio of more than 1,700 SKU in 300 products.

Consumer consumption: Centrifuse wear, cryogenic wear, liquid handling, PCR consumables, Petri dishes, transfer pipettes, etc.

Reusables: Bottles, Carboy, Becar, Cylinder measuring, and tube racks.

Others: benchtop instruments such as vortex shakers, centrifuge pipettes, and others.

The company has many reputed organizations as customers  educational institutions like the Indian Institute of Chemical Technology and the National Center for Biological Sciences

 Doctor. Reddy’s laboratories and Annezer  Biosyinses Cross like Sinnene International and Vida Clinical Research

Diagnostic companies with Molibio Diagnostics, Egappa Diagnostic, Metropolis Healthcare, Dr. Lal Path Labs, Mylab Life Solutions.

The company has 5 manufacturing facilities in West Bengal.

Tarsons products revenue distribution across its major segments for FY 2011:

It also has a wide distribution network of 130 plus distributors in India.

The top 9 plus distributors were responsible for more than 54% of sales for Tarson in FY2011.

In FY21, around 33% of revenue was from exports.

The company supplies its products to more than 40 countries.

Consumer Content: 62% Reusable: 34% Others: 4%

Tarson is the largest player in the Lab Equipment Industry in India.

Tarson had geographic revenue and distributor breakup in FY1 21

The company has performed well in the recent past with a Roe of 31% and a net profit margin of 29.4% in FY21.

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fundamental analysis of tarsons products

The fundamental analysis of Tarsons Products Limited is as follows:

Tarsans product industry observation

The global healthcare market is expected to grow at a steady CAGR of 8.9% from 2025 to $15 trillion.

There will be a healthcare services market of approximately $12.3 trillion that will dwarf all other segments of the industry.

There is a lot of potential for the expansion of the healthcare sector in India.

Health care spending as a % of GDP in India was only 3.5% in 2018.

We can say that the healthcare sector in India has huge potential for growth.

The Indian healthcare market is expected to undergo a boom with a CAGR of 23% to reach a market size of $557 billion by 2025.

While the global laboratory equipment market is expected to grow at a steady CAGR of 4.9% till 2025.

The plastic lab equipment market is expected to grow at a rate of 10.5%, more than twice the market rate.

This will be due to the widespread acceptance and replacement of traditional glass appliances with plastic ones.

The overall market for plastic products is expected to grow from 46% to 67% in 2015 and 52% of the overall market at present.

This transition from glass to plastic is expected to reach 75% in India by 2025 from the current 52%.

The fastest CAGR for Plastics Lab Equipment is expected to be witnessed in India by 2025 with an estimated CAGR of 16%.

The key growth driver for the worldwide plastics lab equipment industry is:

The factors are–

The rise in lifestyle diseases and conditions has led to increased research and development.

Increase in outsourcing in replacement of glass pharma industry with plastics.

Covid-19 brought attention to healthcare due to its longer shelf life and recyclability.

This was an overview of this industry.

Competitors to Tarsan Products

Now let’s talk about the competitors of Tarson products.

On the above data, you can see that Tarson Products is one of the oldest companies among its competitors.

It is one of only a few companies that deal in consumable, reusable, PCR/cell culture.

It has its own manufacturing plant in India.

Company Financial

Now let’s talk about the financial position of the company.

In the chart above you can see that all the figures are in crores.

First, look at net worth. This figure increased from 248.71 crores in FY 2010 to 295.95 crore in FY21.

In total revenue, this figure increased from 180 crores to 234.29 crores.

This figure in profit after tax increased from 40.53 crores to 68.87 crores at the end of FY 2011.

Comparing Quarter 1 with FY 2011 and FY 2012, we can see an improvement here as well.

In total assets, this figure increased from 235.66 crores to 364.77 crores.

In total revenue, this figure increased from 43.57 crores to 71.13 crores.

This figure increased from 6.97 crores to 24.84 crores in profit after tax.

Significant Proportion of Tarson Products Compan

Important Ratios of Tarsan Products Company are as follows:

The net profit margin is 29.40%.

The operating profit margin is 40.58%.

13.43% per share.

The PE is 49.29.

Debt to equity is 0.356.

The current ratio is 1.86.

The 2-year sales CAGR is 12.62%.

2-year-old profit CAGR is 32.96%.

Pros and Cons of Tarsons products

Now we will talk about the pros and cons of investing in Tarson products.

Pros

Invest now in the pros first.

There are major opportunities for the rise of the healthcare industry, especially the diagnostics space and crams space.

The diagnostics space in India is untapped, while the CRAMS industry has a low-cost and highly skilled workforce in India.

Tarsons Products has been in this industry of manufacturing laboratory equipment for more than 3 decades and is the largest player in India with a manufacturing plant.

Thus, it has a brand advantage in India in this area.

The company has good export potential considering the low-cost manufacturing advantages.

The company will focus on ODM sales in mature markets such as the United States and the European Union.

The company will expand using branded sales in emerging markets such as South America and the Asia Pacific.

The largest share of sales falls on more than 60% of consumable products.

This is a category that demands constant demand for the industry as most of them are single or limited use.

So these were the advantages.

Cons

Now let’s talk about some negative things as well.

The company imports more than 75% of its raw materials and over 44% of its imports are from the European Union.

Its top 10 suppliers accounted for 76.8% of raw material requirements in Q1fy22.

Hence the company depends on its suppliers for its raw materials.

The loss of any major supplier would be very damaging to the company.

Raw material cost is a significant part of the overall cost at 31.6% of the total expenditure in FY2011.

Most raw materials are exported, so the price of a company’s raw materials can be negatively affected by inflation and foreign exchange volatility.

The company is threatened by environmental regulations that may limit the use or sale of plastic products in the future.