Major breakout in the Edible oil industry [AVTNPL Technofunda Analysis]

Disclaimer- This blog is written to spread awareness and education on analysis part and opportunities in the market, It is not a recommendation or advice for any investment or trade. This blog can be biased because the author is personally invested in the stock for time being.

Industry process & outlook

The production process of vegetable oil involves the removal of oil from plant components, typically seeds. This can be done via mechanical extraction using an oil mill or chemical extraction using a solvent. The extracted oil can then be purified and, if required, refined or chemically altered.

Fig. 1


In India the Highest import of agricultural products is vegetable oil, the reason is simple here consumption is highest than production.

Fig. 2.

Fig. 3. India's Edible oil Import data



As it is visible in the above picture that from the last few years imports are stabilized and now it is in a reducing trend from 2019-2020, growth in domestic production is visible which is very good for the industry.

Opportunity in the Industry: Technofunda Analysis-

Midterm investment opportunity in a small but strong company- AVT Natural Products.
Market Capitalization as of 15th august 2021 is INR 1,136 Crore.

The small Fundamental and technical analysis is given below:

1) Continues increase in annual sales volume.

Fig. 4. AVTNPL Annual sales volume

2) Their margins also started to increase from last year's data i.e. march 2020 results and it was higher than the last 4 years.

Fig. 5. AVTNPL PAT margin

3) If we talk about the solvency ratios, their interest coverage ratio is higher than 9, and the Debt to equity ratio is also pretty low (as per data till March 2020).

 Fig. 6. AVTNPL Debt to equity ratio

4) Cash flow per share is 4.63 as of March 2020 which is higher than the previous 6 years and their valuations are not very high because Industry P.E. is 56.92 and company P.E. is just 21.11...

Technical analysis-

Fig. 7. AVTNPL Weekly candlestick chart

This chart has the highest price range around 60 rupees from 2018, which got a breakout and then a retest of support last week with good volume(market participation). As per the technical analysis of price action, the upside potential is around 50-60% according to the range calculation method of stock price forecasting. With this retest new participants got their area to place their position sizing much stronger. Technical analysis does not work all time, there's always a gap of error in analyzing the future based on past events but it can give better entry and exit levels to investors as well as traders.

There are other companies also, which are doing well, the reader can take same analysis format and choose their own investment opportunity if they found it worth.

Thank you,
Sahil Saini

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