AVT Natural Products: A Small-Cap Poised for Natural Growth!

  • Stock Market Analysis

The world is rapidly moving towards preferring natural products over artificial ones due to obvious long-term health concerns. This trend also includes the growing importance of nutraceuticals which are used for both nutritional and medical benefits. 

AVT Natural Products Ltd (NS: AVTN ) is one such company that caters to this demand. The company manufactures plant-based extracts and natural ingredients solutions for the food and beverage industry. It is engaged in the production of nutraceutical-grade products and its principal products/services are Marigold Oleoresins, Spice Oleoresins, and De-caffeinated Tea. To sum it all up, it is a family-owned business that has been in existence for more than 25 years and aims to improve people’s lives through innovation-driven natural ingredients.

On the financial front, FY22 has been the best year for the company so far as it clocked a 15.39% YoY growth in net revenue to INR 569.59 crores, which is the highest ever. The net income also rose by a noticeable 60.82% to INR 72.85 crores. In fact, in the June 2022 quarter, the company posted a net profit of INR 24.85 crores which is almost 34% of the entire FY22 profit. Over the last 5 years, the profit has grown at a CAGR of 26.15%. There has also been a massive increase in the free cash flow, from INR 2.43 crores in FY21 to INR 64.91 crores in FY22. It is almost a debt-free company with a debt-to-equity ratio of 0.16.

Currently, the stock is trading at a P/E ratio of 23.35, which is significantly lower than the industry’s average of 48.88. The company also pays a dividend which is generally not seen in a small-cap player as they require profits for the business growth and therefore the management steers clear from distributing it among shareholders. In FY22, the dividend payout ratio stood at 0.21 and the current dividend yield is 0.9%.

In its quest to diversify further, the company is now venturing into the business of agrochemical products, organic and inorganic chemicals, oils, food and food by-products. The shareholders have also approved this proposal and the management also maintains a very healthy and positive outlook. The business has done quite well in the previous financial year and the growth rate at which that company has been increasing is also worth noting.

In the last one year, the stock has delivered a return of around 30%, outperforming the NIFTY Smallcap 100 index return of a negative 7.09%. Being a small cap, the stock is roughly 2.73 times more volatile than the broader market  Nifty 50 index. 

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  • Govind Reddy @Govind Reddy
    Good information..I heard that it's nice stock ...
    Like 1
  • dipangshu kundu @dipangshu kundu
    Love your analytical write ups, very informative and well explained.
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Thanks Dipangshu.
      Like 0
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      100
  • dipangshu kundu @dipangshu kundu
    Love your analytical write ups, very informative and well explained.
    Like 0
  • Rohit Thakur @Rohit Thakur
    Nice Analysis
    Like 0
  • Rohit Thakur @Rohit Thakur
    👍🏼👍🏼Nice Analysis
    Like 0
  • Rohit Thakur @Rohit Thakur
    👍🏼👍🏼Nice Analysis
    Like 0

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