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Food color gives consumers an almost immediate impression about the freshness, flavor and quality of a product and is thus a very important constituent of any food item.
Dynemic Products is one of the largest manufacturer and exporter of food colors in the world and today we will briefly look at this company.
In fact, we recommended Dynemic to our Alpha and Alpha + members in Mar'16 around 47 odd levels and also closed it with 200% gain in Jun'17.
The stock did quite well after that and went up to 700. But after touching 700 in Oct'21, the stock is down 60% since then.
Looking at the correction, we decided to dig deeper and it's interesting to note that in FY 22 company completed a major capacity expansion for food colors and Dye intermediates (raw material for food colors).
Below, we have shared details from the Investor presentation and Annual Report of the company:
Before that, some good news for medium-long term investors
Individual investor participation in shares dropped to 34 months low in Jan'23. Google trends - Multibagger chart also indicating low investor interest
To know why this is good news for you if your investment horizon is 3-4 years - Click HERE
Dynemic Products - Notes from Investors presentation and Annual Report
- General Points
- 1998 - diversified in food colors industry
- 2000 - Acquired Saffron Dyestuff and Establish 2nd manufacturing facility for Food Colors
- 2008 - Completed Expansion at Unit 1& 2
- 2014 - Acquired land at Dahej for new manufacturing facility
- 2021 - Completed Dahej plant
- Product overview
- Food colors - Water Soluble Color, use in Beverages, Animal Feeds, Dairy Products, Toothpaste etc.
- Lake colors - Water Insoluble Color, use in Pharmaceuticals, Cosmetic & Personal Care Products, Bakery Products etc.
- FD&C colors - US FDA Certified Colors, Use in Food, Pharmaceutical and Cosmetics products
- Salt free dyes - Special dyes Inkjet Industry, Use in Cartridge Ink, Roller Ball point Ink etc.
- Dye intermediates - Chemicals / raw material for Food Colors, Paper Dyes, Textile Dyes etc.
- Backward and Forward integration
- Dye intermediate - By backward integration, at Plant 3 we are going to produce major raw material of Food Colors by our own
- Food colors - Producing Complete range of Synthetic Food Colors in Powder, Granular and in Liquid Form
- Lake colors - Forward Integration : By using Food Colors, we are making Lake Colors
- Core strengths
- Presence Over 74 Countries (including USA and UK)
- Making more than 160 Colors
- One of the largest manufacturers of Synthetic Food Colors in the World
- 3 Manufacturing Facilities with Production capacity 22,644 MT p.a.
- Capacity expansion
- Till FY 21, the company had food colors production capacity of ~3,000 MTPA
- With the commissioning of Dahej Plant the production capacity of Food colors is 6,120 MTPA and Dye intermediates 16,524 MTPA
- Management view on performance going forward
- After China reopening, we have noticed some positive movement in demand which will improve performance in coming quarters
- We expect full benefit of our expansion program to unfold in FY24 and FY25 as we anticipate demand recovery from Q4 of the current fiscal year
- Further, with the volume ramp-up for the new capacities coming in significantly in FY24 and FY25, while fixed costs will generally not increase significantly, the Gross profit to EBITDA conversion will improve in FY24 and beyond
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Disclaimer: This is not a recommendation to buy/sell Dynemic Products. These notes are as announced by the companies on exchanges and only for the purpose of information and education.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
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