Edible Oils include Palm oil, groundnut oil, mustard oil, sunflower oil, olive oil, soybean oil and coconut oil among others. The demand for edible oils in India is primarily driven by rising urbanization, increasing incomes, an increase in health consciousness among people, and the expansion of the food processing industry.
This article will talk about the best edible oil stocks in the market and an industry brief.
Edible Oils in India
India is among the top producers of edible oils in the world. Still, the demand cannot be fulfilled and imports of as much as 140 Lakh tons were made in the year ending 2022 in order to meet the demand which far exceeds the amount of production. The imports made satisfy more than 50% of the demand for such oils.
After the Russia-Ukraine war, India’s oil prices had been rising, and the dependency on imports played a heavy role in increasing the difficulties that the country was already facing. In the budget 2022, finance minister Nirmala Sitharaman announced a scheme to reduce oil dependency of India on such imports.
Rs. 1500 crore was allotted to increase the production capacity of the oilseed in the country. Another 600 Crores to encourage oilseed farming in order to reduce the oil dependence on imports.
Knowing the importance of these oils in almost all households in India, it can be inferred that the industry as a whole is growing or at least stable and not in a risky phase.
Best Edible Oil Stocks
The stocks that will be discussed further are as follows –
- Adani Wilmar Limited
- Gujarat Ambuja Exports Limited
- Sarda Proteins Limited
- Patanjali Foods Limited
- BCL Industries Limited
We will be discussing these stocks one at a time below –
1. Adani Wilmar Limited
Yes, a shocking name probably, but it is on the list. Every stock has its own share of lows in its span of trading and this stock is having its time. Looking at the history of the company, they have been performing fairly well and at par when compared to its peers.
|Market Capitalization ( Rs Crores)||51,811|
|Debt to Equity Ratio||0.34|
|Return on Equity||10.95|
The company has a low debt to equity, which is a positive sign. The FIIs are still investing in the company, the company has been consistent in the past eight quarters and has also generated increased cash from its operations in the past year. The candle stick chart of the stock is definitely not bullish and does seem like it might take another couple of months for the stock to stabilize.
The annual revenue of the company rose 46.2%, in the last year to Rs 54,385.9 Crores and the Net Profit rose 10.5% to Rs 803.7 Crores in the same period.
2. Gujarat Ambuja Exports Limited
Founded in 1991, Gujarat Ambuja Exports is engaged in the manufacturing of Corn Starch Derivatives, Soya Derivatives, Feed Ingredients and Cotton Yarn other than Edible Oils. It has a production capacity of more than 1200 tdp and earns 30% of its revenues from the oils it produces.
|Market Capitalization ( Rs Crores)||5,300|
|Debt to Equity Ratio||0.13|
|Return on Equity||22.44|
The stock has given 13.7% returns in the past year, not to ignore a high beta though, indicating a high risk too. The current ratio of the company, however, is high, since 2 is the ideal number to be. Gujarat Ambuja might be reserving a little too much of its reserves to be prepared for a fall given that the stock hasn’t been performing its best in the past 2 quarters. The past year on the other hand has been well for the company, it recorded an increase of 40.6% in its net profits. The Return on Equity(ROE) for the last financial year was 22.4%, more than 20% in the last financial year which is also a good sign.
3. Sarda Proteins Limited
Incorporated in 1991, the company deals in Edible Oils and Agri Commodities. They also deal in wholesale trading of Mustard Oils, Refined Oils, Guar Seeds and Mustard Seeds.
|Market Capitalization ( Rs Crores)||9.5|
|Debt to Equity Ratio||0|
|Return on Equity||12.88|
The company has a shockingly low market capitalization of the company when compared to its peers. However, the company is already at par with other companies in terms of other important parameters. The PE of the stock 20.96 is above the industry median, and the return on equity is also not among the least in the industry. The current ratio of the company is way too high which cannot be a very good sign. However, since Sarda has a low beta indicating a low risk, a small investment may be worth a shot.
4. Patanjali Foods Limited
Patanjali Foods Limited or formerly Ruchi Soya, the name you must have heard, is engaged primarily in the business of processing of oil-seeds and refining oil for edible use. The Patanjali group had acquired Ruchi Soya for Rs 4,350 crores.
|Market Capitalization ( Rs Crores)||34,418|
|Debt to Equity Ratio||0.72|
|Return on Equity||16.51|
This is another high current ratio company in the list. The company has had a good year with its annual revenue flourishing with an increase of 48.2% and the net profits increased by 18%. The stock price of the company too increased by 16% in the past year outperforming the industry by 5.1%. The PE of the company is also lower than a majority of other players in the market indicating fair pricing. The return on equity of the stock is also on the higher side when compared to its peers.
5. BCL Industries Limited
Incorporated in 1976, BCL Industries Ltd Limited is a part of the Mittal group. The company is in the edible oil and distillery business in India. The company has Soyabean refined oil, cottonseed refined oil, palm refined oil, and mustard oil under the brands HomeCook and Murli. The company has more than 65% of its revenue generation from Edible Oils itself.
|Market Capitalization ( Rs Crores)||1000.8|
|Debt to Equity Ratio||0.71|
|Return on Equity||23.16|
The year has been good for the stock since it rose by 5.7% in the previous year, even though this was an underperformance when compared to the market, the stock performed relatively better than other stocks. The annual revenue of the company rose by 39.4% in the last year and the net profit rose by 101%. The Return on Equity for the same time period was 23.16%, which is a healthy measure and indicates a productive use of the capital to generate profits.
These were the best edible oil stocks in India. Most of the stocks in the industry have had a rough past year, majorly due to the war. Not every stock that hasn’t performed well is bad or not worth investing in, these were just the stocks that have performed better than some others in the market. The industry will definitely be back at its prior measures soon and will perform better.