Let’s dig deeper into the Advanced Enzymes fundamental analysis.
Advanced Enzymes Business: Manufacturing of Enzymes and Probiotics
Enzyme: Biocatalyst that increases reaction rate (Like in various ads we have seen –“with Added Enzyme)
- Human Nutrition, Animal Nutrition, Food Processing & Non-Food Processing
- Enzymes are used in Human Health Care and nutrition, Animal nutrition, Fruit and vegetable processing, dairy processing, textile processing, leather processing, paper, and pulp processing, etc.
- Nutrition linked product importance have more important Due to Covid19
- Incorporated as Advanced Biochemicals Pvt Ltd in 1989.
- 400+ self-owned products developed from 68+ indigenous enzymes.
- Largest Indian Enzyme Company
- Amongst Top 15 Global Enzyme Companies, Customers worldwide 700+
- Presence in 45+ countries (although Revenue 80% from USA and India)
Management: (Experienced and management has been with the company since long)
– Chairman and Promoter – VL Rathi (37 years of experience in the enzyme industry)
– CFO-Beni Prasad Rauka ( CA and CS) with the company for 24 years
-R&D head- Dr. Anil Kumar Gupta Ph.D. in Microbiology with 18 years experience in Industrial biology
(Joined Advanced Enzyme in 1996 as junior research associate)
- Revenue share 57% international and 43% India (42% for USA, India 43%, Rest 15%)
- 76% from Human Nutrition ( Act as trigger after Covid19),12% Animal Nutrition and 12% Industrial Bio-Processing.
- Subsidiary companies – Advanced Enzyme USA Inc, Advanced Enzytech solution, Advanced Bio-Agro Tech Ltd., JC Biotech Pvt Ltd, Advanced Enzymes Malaysia & Advanced Enzyme Europe
- 7 Manufacturing plants– 5 in India and 2 in the USA.
- Promoter holding: 57.9%, Mutual Funds 8.78%(HDFC Small cap 6.84%), FPI 11.1%
FPI+Mutual Funds stake rose from just 6.81% on 31 March 2018 to 19.9% on 31st March 2020.
FPI and Mutual funds have a heavy stake in it (Very positive)
- Revenue has grown in 5 years with CAGR of 15% while profit at 21%.
- Debt during 5 years has reduced from 115 cr in FY15 to just 25cr in FY20 i.e. have become virtually debt-free, against the reserve of 817cr( DE ratio just 0.03).
- During the same time companies, Fixed assets increased by 281cr that shows the company is generating good cash flows.
- EBITDA Margin is good at 46% in FY20 which rose from 42% in FY18.
- Net working capital cycle also has been in the range from around 115 days.
- R&D expenditure as % of Net sales stands at 3.24% which is also a good sign.
- CFO rose from 53cr to 141 cr at the same time.
- ROCE 23%, ROE 18%, Trading at PE of 14.4, and PB of 2.2.