Shares of Amira Nature Foods Ltd. (ANFI) surged more than 30% on Wednesday as the Dubai-based provider of packaged Indian specialty rice increased its revenue and EBITDA guidance for fiscal 2015.
Currently, the company expects both revenues and adjusted EBITDA to grow more than 25% in fiscal 2015. This is driven by the company’s ongoing distribution gains and market expansion in international markets, including India, one of the key markets for basmati rice. Earlier, in its second-quarter fiscal 2015 earnings release on Nov 24, the company expected its revenues and adjusted EBITDA to grow 20%.
Amira reported significant improvement in year-over-year fiscal second-quarter earnings. The company has recorded positive earnings per share growth over the past year which is expected to continue over the upcoming quarters as well.
Increased demand and favorable pricing environment for Amira’s products, coupled with increasing gains in its core Indian and Middle East markets, continue to benefit the company’s revenues. Further, the company is foraying into the untapped markets of the U.S., U.K. and Continental Europe.
In October, this year, Amira expanded its scope for distribution of its products following an agreement with Asda, a fully owned division of Wal-Mart Stores Inc. (WMT). In the same month, the company entered the lucrative Indian e-Commerce market by partnering with the country’s largest online retailer, Snapdeal.com. In our view, with such agreements, Amira will continue to grow revenues by expanding in core as well as non-conventional markets.
Amira’s growth in core markets, like India, is profitable as Basmati rice is used extensively in Indian cuisine. India’s rapidly growing middle class with rising incomes is a positive for Amira as families are willing to spend more on better quality food. Further, with its strong presence in some high growth international markets, Amira is poised for strong growth, going ahead.
Stocks to Consider
Amira currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the Consumer Staples sector include The Hain Celestial Group, Inc. (HAIN) and United Natural Foods, Inc. (UNFI). Both these stocks carry a Zacks Rank #2 (Buy).
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