Vidhi Specialty Food Ingredients Ltd: Interesting ingredient!
(BSE Code: 531717) (CMP: Rs.73.90) (FV: Re.1)
Incorporated in 1994 as Vidhi Dyestuffs Manufacturing Ltd, Mumbai-based Vidhi Specialty Food Ingredients Ltd (VSFIL) is a manufacturer, wholesaler and exporter of Basic Food Color, Food Ingredients, Lake Food Color and D&C Food Color. It is a key global manufacturer of food colors with an installed capacity of 4,200 TPA. Exports constitute 53% of sales. Food color finds application in categories like confectionery, bakery products, desserts, dairy products, seasonings, beverages, pet foods, etc. Its products are developed using premium grade inputs and sophisticated tools and are made in compliance with the industry standards.
Around 55% of the ~$2.4 billion global food and beverages color market is constituted by natural food colors and the rest by synthetic. It is a small segment compared to the ~$35-40 billion global dyes and pigment market and is yet underpinned by secular growth trends. Market researchers forecast ~7-8% CAGR growth in the next seven years driven by regulatory requirements, urbanization and structural demand scenario for the food and beverage industry. Given the robust demand, VSFIL aims to double its capacity to 8,400 TPA by 2020 to capture a market share of ~20%. Given the high promoter holding, comfortable D/E ratio, steady business with double-digit margins and rising demand, we recommend this stock on every decline for up to 50% returns within two years.