Besides owning the multinational conglomerate, Mukesh Ambani, the chairman and managing director of Reliance Industries Limited has invested in several ventures.
Huge Surge In Stock In Very Little Time
In one of such ventures, the visionary businessman invested in a chocolate manufacturing company during 2023 which has turned into an impressive return this year.
Interestingly, this surge initiated after Ambani’s Reliance Consumer Products invested Rs 74 crore by owning a 51 percent stake in the company.
Here we are talking about a reliable business partner for the supply of cocoa and chocolate products Lotus Chocolate Company which has commended its operations in 1992.
This firm reportedly is India’s leading manufacturer of premium chocolates, cocoa and cocoa derivatives which caters to local bakers and multinational companies across the world.
Coming to the revenues, the company declared its Q1 results registering revenue growth of 114 percent in July.
This translates to a profit increase of 695 percent as compared to the previous quarter.
The company’s operating income rose by 89004.88% year on year with the present market cap of Rs 899.84 Cr, according to the report.
Strategic Focus On Premiumisation
In the meantime, the Indian chocolate and confectionary industry is likely to grow by a compound annual growth rate (CAGR) of 10%.
When it comes to the chocolate industry, it is largely dominated by international brands such as Mondelez, Ferrero, Nestle and Mars, as they reigns in the industry with a market share of 85 percent.
For the investors, stock market investing can offer significant rewards with prudent stock selection.
But it cannot be denied that it also carries risks if decisions are not made wisely.
There is a reason for the shareholders of Lotus Chocolate Company to rejoice considering the fact that the shares of this Reliance Industries-backed company have provided outstanding returns in recent years.
This share has witnessed a surge of 5,062% with the current market price of ₹1,807 apiece from the earlier ₹35 from September 2021.
The major chunk of this gain came from the last four months, with the stock surging by 404%.
It is noteworthy here that this upward momentum in shares began after Reliance Consumer Products (RCPL), the FMCG arm of Reliance Retail Ventures (RRVL), acquired a 51% stake in the company for an aggregate consideration of ₹74 crore in March 2023.
RRVL is a subsidiary of Mukesh Ambani-led Reliance Industries that serves as the holding company for all retail businesses under the Reliance group.
The chocolate category has experienced significant premiumisation in recent years hence creating a gap in the affordable segment.
Further, the company stated that this presents a substantial opportunity to develop its brands that provide high quality at accessible price points, in the company’s FY24 annual report.
It appears that the rising trend of home bakers and increased consumption of chocolate-based products present substantial opportunities in the B2B space.
Particularly within the retail and HoReCa (Hotels, Restaurants, and Cafés) channels, which the company aims to capitalize on.
But, the rise in global cocoa prices have led to a significant increase in input costs.
This trend is expected to continue in the foreseeable future.
