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National Foods Limited

Sarmaaya Desk
Sarmaaya Content Team
National Foods (NATF):

National Foods Limited was established as a private limited company in Pakistan on February 19, 1970, under the Companies Act, 1913, and later changed to a public limited company by the Companies Ordinance, 1984, which has since been abolished. Associated Textile Consultants (Private) Limited is the Company's parent company.

National Foods Ltd is a multi-category food company established in Pakistan. Its primary business is the production and distribution of convenience foods. Food and nutrition products, as well as retail, are two of the company's operating segments. The Food and Diet Items section provides the most income. With over 250 SKUs in 14 categories, including Recipe Masalas, Spices, Pickles, Dessert Mixes, Sauces, Pastes, and more, the National banner now carries a broad multi-segment portfolio.

national-food-history
KEY INDICATORS:
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The total market value of NATF at the present share price is Rs. 42.86 billion.

Sales and Profits:

The table shows the sale and the gross profit that the company has made in some previous years. (All values are in thousands):

Years 2020 2019 2018 2017 2016 2015 2014
Sales 60,904,096 63,499,029 53,729,124 49,247,657 47,999,179 51,200,223 54,444,091
Gross Profit 7,276,126 7,656,601 5,550,446 5,379,838 6,264,308 6,046,784 7,863,774

Over the years, National Foods has made strategic and competitive investments in their brands. This investment has continued to pay off for them, and the company's top line has improved. The recipe mix and ketchup categories were the biggest drivers of this expansion. Both contributed to sales increases of 17% and 20%, respectively. Despite the fact that the local market still accounts for the majority of National's sales, their foreign sector contributed around 9% to the company's bottom line. During FY14, the company shipped commodities worth Rs1178 million to markets in the United States, Canada, the Middle East, Europe, and Africa. Furthermore, National Foods has performed admirably in terms of short-term responsibilities and liquidity concerns. Its working capital ratio has remained consistently below 2.0 over the years, and its quick ratio is similarly below acceptable limits.

Sales for the three months of January to March 2020 totaled Rs 7,312 million, up 28% from Rs 5,714 million in the same period the previous year. It is because of successive business promotion and advertising strategies that boosted sales in local and the international market. Then they also expanded their trade of non-core business.

These strategies helped realize increased gross profit and net profits.

Financial Health:

The company has strong financial health.

Years 2020 2019 2018 2017 2016 2015 2014
Assets 110,660,914 100,545,392 102,736,033 117,530,275 106,599,219 101,410,000 970,485,77
Liabilities 39,233,054 33,930,122 27,022,888 28,767,479 24,444,064 24,997,177 28,459,401
Equity 71,427,860 66,615,270 75,713,145 88,762,796 82,155,155 76,142,823 68,589,176

The Current ratio for NAFT for FY22 was 1.26 which means that is higher than one because it has a higher proportion of short-term asset value relative to the value of its short-term liabilities, a corporation is more capable of meeting its obligations. The financial health is good and so it is better if the investor invests his/her money in NATF. Moreover, the current ratio has increased from 0.136 in FY20 which means that the performance of NATF has been exceptional.

The analyst community is unanimous in their belief that the long-term demand for readymade spices and other food items will be boosted further by the rising female population in the workforce and increased urbanization. Furthermore, the company's aggressive marketing activities and continued brand loyalty will open up new opportunities. In recent times the food industry and the market has grown at an exponential rate and we can predict that if this carries on the stock of National food is bound to gain and make more profits. Although the P/E ratio being 102 means that the stock is overvalued so you have to pay more than the market price to get this stock so investing in this stock will be difficult and risky. But the margin for profit is greater too.




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