Amira Nature Foods
Year-to-Date Gains: 77%
Amira Nature Foods (ANFI) went public last October at $10 per share — and now the stock is trading around 40% higher than that offer price. Compared to IPOs in general, however, the past year’s been anything but smooth. ANFI dropped 19% on its first day of trading and didn’t rise above its offering price until early September.
Investors were disappointed with both the pricing and the gross proceeds, as Amira raised only $90 million. Originally, it had intended to repay $85 million of its debt with some of the net proceeds and was only able to repay $52 million.
But that’s all in the past now — and future for Amira Nature Foods is another story altogether. In fact, Jefferies & Co. (one of the underwriters) raised its 12-month target price on ANFI from $14 to $21, reiterating its “buy” rating. It sees four specific things driving Amira’s business: Strong results, U.S. expansion, debt refinancing and the further roll-out of its UK business.
The strong results are obvious. In the first quarter, revenue grew 38% while EPS expanded 62%. But for 2013, Amira generated just $6.8 million of its $414 million in revenue from the states. That’s a growth opportunity; it can and will do better. And the company does continue to gain ground in the UK — good news considering, with the exception of India, Britain is Amira’s fastest-growing market.
In terms of debt, ANFI reduced its obligations in the first quarter by 13% and it has refinanced some of its expensive Indian debt, which will lower interest costs. Plus, Amira’s enterprise value as a multiple of EBITDA is half that of Hain Celestial (HAIN), its much larger peer.