Vadilal Industries is a play on India's consumption story - of a product where there is large under-penetration and huge unexplored potential. Vadilal Industries having a market share of roughly 20% in the branded category of this fast growing industry; rubs shoulders with Hindustan Unilever in this product category and is a recognisable and visible product and is available at a market cap of just Rs.87 crores
Vadilal Industries is India's third largest Ice Cream manufacturer - the largest being Amul and Kwality Walls (Of Hindustan Unilever) occupying the No.2 position. Infact, Kwality Walls and Vadilal are neck to neck in terms of market share. The company has two manufacturing plants located at Pundhra (Gandhinagar) and Bareilley (UP). Both Pundhra and Bareilly plants are well equipped with the latest world-class manufacturing facilities. The plants have been awarded several quality benchmarks. The company also has a food processing division and currently caters to the domestic and export markets with products such as frozen vegetables and ready to eat snacks.
In the last 5 years, the company's revenues have grown at a CAGR of 18%.
Investment Rationale
There are few factors which make us bullish on the potential of Vadilal Industries :-
Indian Ice Cream Market - India's Ice Cream market currently has a market size of roughly Rs.2500 crores and is growing at around 16-18%. Out of the Rs.2500 crores, organised players account for Rs.1500 crores and the balance Rs.1000 is accounted for by the small regional and unorganised players. The healthy growth rate of the market is what excites us and this growth rate may become higher in the event of power situation in the country becoming better.
Per Capita Consumption of Ice Cream in India - The per capita consumption of Ice Cream in India is just 300 ml/ year. For some, it may just be a statistic - we however see this as a big opportunity in a largely unexplored