DFM foods stock is a good investment

DFM foods stock is a good investment

By Rajiv Kapoor | 5 March, 2016
DFM Foods Ltd is in the branded snacks food space promoted by Delhi Flour Mills. The company is engaged in the business of manufacturing, selling and marketing of snack foods and pioneered the entry of packaged snacks in the Indian market with the introduction of CRAX Corn Rings product. CRAX Corn Rings is the flagship brand and the company’s main product contributing over 75% to its revenues. The balance is contributed by Natkhat and other items. DFM Foods has been quite smart in pricing its product CRAX at Rs 5-10 per packet to compete with other large multinational companies. Generally, the company is selling its products across northern and central India but expanding now in the western and eastern parts of India as well. Since there is a huge scope for expansion and to leverage the brand equity of CRAX, the company is penetrating and expanding in different territories in a big way. DFM Foods has reported a total sales income of Rs 101 crore and a net profit of Rs 6.59 crore for the third quarter ended December 2015. Higher top line was due to the successful commissioning of its brand new brownfield facility at Greater Noida during the quarter. While the total cost of the project has only been Rs 25 crore, the incremental revenue generation potential is around Rs 100 crore per annum. To sustain the growth momentum, DFM Foods is further embarking in a second round of brownfield expansion at its Greater Noida factory with an estimated cost of Rs 55 crore to be funded by a mix of bank debt and internal accruals. The revenue potential from this added expansion by next year will be at least Rs 200 crore per annum. DFM Foods Ltd stock is currently quoting on the Bombay Stock Exchange at Rs 1,300 and it can easily double in 12-18 months time frame. The Budget brought in a cheer to the stock market community. The equity benchmark indices closed the week up 7%. NSE Nifty closed the week at 7,485 while the BSE Sensex hit 24,646 levels on an optimistic note. Most market men are now looking forward to an expected rate cut by the RBI in the immediate term.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

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