Buy Anmol, target price Rs 255: Khambhatta Securities

Khambhatta Securitues has a strong buy call on Anmol India Ltd with a target price of Rs 255 in its latest report. At the time of filing this report, the market price of Anmol India was Rs 200. The company has a market share of Rs 196 crore.

Listed on NSE and BSE, Anmol is a bulk supplier of imported coal, providing end-to-end coal supply chain management solutions. The company specialises in supplying high GCV coal, USA coal, Indonesian coal, Saudi pet coke and USA pet coke, commanding a sizeable 16% share of the USA coal market in India. Anmol’s operating model is centred around procurement management, stock handling and sales while its coal platform leverages proprietary technology to generate leads, close deals and mine existing clients.

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Anmol has a robust client base of over 1,000 customers with approximately 120 new clients added each year while having long-standing relationships with a majority of bigger clients. A bulk dealer of coal, the company imports coal from the international market in quantities of 1 lakh ton per shipment as it delivers the coal to customer sites in quantities of 35 tons in outbound shipments.

The report states that after acquiring an import licence in 2013, the company now commands a significant 16% market share in USA coal in India. Recently in 1Q FY22, Anmol started bulk import of Indonesian coal. The company’s tech platform, which was launched in 2015, enables it to forecast demand at the individual customer level.

Anmol employs several strategies with the objective of de-risking its operations and business in the areas of inventory management, SCM and currency risk. Vijay Kumar, Managing Director & CFO, Anmol India Ltd said, “We mitigate operational risk by avoiding speculation and selling a major part of the inbound supply (50% to 60%) in advance as it is shipped from the dispatch port.” Vijay Kumar added, “We also utilises our bargaining power to effectively negotiate with traders to pass on the dollar risk to them to the maximum possible extent.”

The company plans to expand geographically within India while adding new commodities to its product portfolio are expected to generate incremental growth in the mid-to-long term future, as per the report. Anmol recently commenced direct import of Indonesian coal 4200 GAR as it looks to enter into coking coal and South African coal going forward. This company targets to generate 20% to 30% of overall revenues from new commodities in the coming years.

The report states that Anmol is expected to register a healthy growth in sales and profits going forward, driven by high demand for imported coal as the company expands its product portfolio and geography of operations.

The report further states that at current levels, the stock trades at an attractive 8.8x FY24E EPS and has as it has assigned a target P/E multiple of 13.0x FY23E EPS The research firm recommends a BUY and has set a target of Rs 255 with an upside of 48%.

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