VALUE PICK - VIDHI DYESTUFFS MANUFACTURING LTD.

About The Company

 Vidhi Dyestuffs Manufacturing Ltd. is a Mumbai based Asia's 2nd Largest food colour manufacturing company, Founded by Maneks the company is listed on BSE.

VDML is ISO 22000:2005, ISO 9001:2008, HACCP, Halal & Kosher certified.

VDML is also FDA registered, It has been audited and found satisfactory by the FDA .

  

About Business

The company is actively manufacturing and exporting wide range of Synthetic Food Colors, Lake Colors, FD&C Colors, FD&C Lake, D&C Colors.

More than 90% of the colors are exported worldwide across all continents, It's products are used obviously in food sector such as Confectioneries, Beverages, Processed Foods, Bakery Products, Dairy Products, Pet Food, Their products also serve recession immune industry like "PHARMA".

The Ace Investor – Value Pick

(BSE:531717) VIDHI DYESTUFFS MANUFACTURING LTD.

This company is in same industry as our earlier pick "DYNEMIC PRODUCTS".

Trading around Rs 15.90 with a market cap of under 80 crores.

Current P/E is around 9 and Promoter Holding is strong at 64.32%.

The company as remarked earlier is Asia's largest food color manufacturer and exporter, Dynemic Products our earlier pick is the only listed competitor that Vidhi has, Vidhi as of now is bigger than Dynemic in terms of size and smaller in terms of Market Cap, i.e. the Market Cap of  Dynemic is 95 crores against 80 crores of Vidhi, While Dynemic's annual sales for FY14 were at 116.97 crores and Vidhi's annual sales for FY14 were at 142.76 crores.

  Being Asia's largest and India's largest food color manufacturer and exporter and trading at P/E of 9 looks extremely cheap given the strong prospects of the sector, with growing demand for food colors and ofcourse the booming pharma space which is immune to recession and provides great opportunity for FDA registered companies like Dynemic & Vidhi.

Looking at financials too this is an excellent value pick, Right from FY10 the company has shown excellent financial performance check out the annual results attached below.

Narration	Mar 10	Mar 11	Mar 12	Mar 13	Mar 14	Trailing
Period	12 months	12 months	12 months	12 months	12 months	12 Months
Sales	70.52	98.62	114.54	119.99	142.76	156.39
Operating Profit	4.78	7.66	9.53	12.31	16.06	19.77
OPM	6.78%	7.77%	8.32%	10.26%	11.25%	12.75
Other Income	0.07	1.56	0.22	0.33	0.38	0.83
EBIDT	4.85	9.22	9.75	12.64	16.44	20.60
Interest	1.16	2.26	3.80	4.55	5.34	5.76
Depreciation	1.00	0.92	0.94	1.73	1.97	1.70
Profit before tax	2.69	6.04	5.00	6.36	9.12	13.14
Tax	1.59	2.35	1.63	2.21	3.15	4.45
Net profit	2.85	3.68	3.37	4.15	5.97	8.73
Adjusted EPS	0.57	0.74	0.67	0.83	1.19	1.75

As you can see right from FY10 to trailing FY15 the performance of the company has been superb.

In FY10 the OPM was at 6.78% and now the OPM has reached 12.75%, Consistent OPM growth from FY10 to trailing FY15 is a wonderful thing for any company.

As our earlier export driven picks SKM EGG, DYNEMIC PRODUCTS,NGL FINE-CHEM are doing wonderful, This company "VIDHI DYE" is another export driven gem.

The whole sector (Food Colors) is going to go through a huge re-rating in the mid-long term, Both Dynemic & VIDHI are wonderful value picks.

I take this opportunity to also repeat DYNEMIC which was blogged at 75 and had rallied to 100+ and now settled around 85-90 again, Still Dynemic with its upcoming Dahej plant expansion is trading no where near its VALUE, Both the stocks Vidhi & Dye are value picks of the extreme level and me and you cannot even imagine at what levels are they going to trade in the long-term.

I remember Avanti Feeds used to trade at the price of 30s in 2011 and now trading at 1800+  a lot of intelligent value investors had bought a good chunk of Avanti Feeds and today we can see their patience and analysis paying off, Same is with Vidhi Dyestuff & Dynemic, Both are multibaggers not to be missed.

Coming back to Vidhi, it is trading around 15.90 with a P/E of of 9 and its Market Cap to Sales ratio is just around 0.50, With a little bit of Debt on the books which is nothing when compared to the prospects, It has fully pledge-free promoter holding of 64.32% and just 1 fellow BSE listed competitor.

Hope above inputs have made it clear that VIDHI is an excellent value pick, Here's requesting all value investors go for VIDHI DYESTUFFS MANUFACTURING LTD.