Indiva Limited NDVAF stock is one of those small-ish Canadian cannabis companies that you just might want to keep tabs on, if not consider NDVAF stock as an investment. So, I wanted to put together the Indiva Limited NDVAF stock Forecast & Analysis. Indiva Limited produces Wana gummies which the company states is the best-selling gummy in Canada. And, Indiva Limited also has the Canadian license for certain Bhang Chocolates labels and, sales of these chocolates are robust. This will help drive NDVAF stock and the reason for my doing the NDVAF Forecast & Analysis.
First, Indiva is a Top-10 cannabis seller with about 2.5% market share in Canada. Not bad. But, I see this as a potential opportunity for investors in NDVAF stock. Indiva limited has some of the best products out there. But, this is entirely unrealized by the market. However, Indiva Limited certainly does not hold the monopoly in that regard.
Given the products they have, if there is continued increases in market share for edibles, the main focus for Indiva Limited, this could potentially propel NDVAF as a sort of slingshot of an opportunity.
Edibles On The Rise
I thought it was interesting that Indiva Limited used data from the State of Colorado. Colorado, of course, was the first sovereignty that voted by the people and launch into sales for legalization of adult-use cannabis products. Because of that, it is considered a mature market. The State of Colorado gives a marker for comparison. Keep in mind, Canada legalized adult-use cannabis in October 2018. Colorado was launched in 2012.
It appears that edibles in Canada have not quite hit the same level of consumption rate on a percentage basis. This says that potential the growth rate of edibles may outpace other cannabis products.
And, the overall market in Canada is still growing so, this again, shows the potential for more growth in cannabis and, by extension, edibles. Given the primary focus of edibles with Indiva Limited, this tells me we will continually see upside potential with revenue.
How much? That remains to be seen. But, as Canada continues to spread and grow with dispensaries and availability, this will mean a continual increase in potential proximity for cannabis companies and consumers.
Future M&A Activity and Indiva Limited
I will forever state that the possibility of M&A activity is very large in the cannabis industry. Companies are going to want to drive revenues and cut costs, the two biggest focuses a company can do to continually grow.
Given that, when I see a company such as Indiva Limited building up a solid base for edibles, I cannot help but think that eventually another company will look toward Indiva Limited as a potential M&A opportunity.
Image a company such as High Tide were to pick up a well-recognized brand such as Indiva Limited, or maybe Sundial Growers with their dispensaries and adding a full line of edibles to their offerings?
I have 108 companies that I focus on here at the site. Very soon, due to M&A activity, 5 are going to lose their spots and be folded into another, bigger entity. I fully expect at some point that I will be looking at only 50% of the number of companies I am currently looking at simply because they will be acquired or merged.
If you are a cannabis investor, this is something you should be looking at as a potential outcome.
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Indiva Limited NDVAF Financial Data
Here is the analysis on the latest financial earnings from Indiva Limited. I will be continually updating the information as more info comes available.
Indiva Limited Gross Profits
But, this is where economies of scale help. The potential increase in gross revenue this year and the years following will allow for a big jump in economies of scale and, by extension, improvements in gross margins.
This is where Indiva Limited will shine in the future. More product moving through the system will enable Indiva Limited to increase gross margins via marginal profits.
Look for improvements here to enable improving gross margins, something I will be watching closely.
Indiva Limited Operating Profits
Whereas gross margins are short of where they need to be, operating efficiencies are within some excellent metrics for success. Many cannabis companies are printing approximately 32.5% for operating efficiencies. And, Indiva Limited is about there.
But, this is where there may be solid future increases in potential. First, revenue for Indiva Limited is expected to double more than after 2 more years from the end of 2021. Given that, if there are zero increases in operating costs, this would push operating efficiencies to 17.5% (You want the lowest possible number).
At that rate; 17.5%, Indiva Limited would be competitive with more mature companies as that is about where the S&P 500 prints on average.
But, I doubt that Indiva Limited would be able to double revenues without simultaneously increasing operating costs. Simply, operating costs entail SG&A, encompassing Sales, General, & Administrative. If you want to make an omelette, you have to break a few eggs. And, likely sales costs will increase.
Nonetheless, revenue is expected to continue beyond the $85M print for 2022 to an expected $150M in 2025. There will be plenty of room for growth in revenue to merit increases in Sales.
Indiva Limited EBTIDA & Net Profits
EBITDA is just on the cusp. And, with increased revenues, this will allow for improved metrics in gross margins, the one place that Indiva Limited is lacking the most. If Indiva Limited gets to doubling its revenue in the next two years as projected then, this will be the fuel to achieving the economies of scale in order to get to EBITDA profitability and then net earnings profitable.
The only real concern I have is the juggling act that Indiva Limited is doing with its cash on hand amidst its burn rate and, the downward move in total equity.
Indiva Limited Cash On Hand
Intentionally, the image above of Cash/Debt ratio is left at 1.00 to show how any one company compares. If you view enough of these you get an idea to where any one image measures to others.
Indiva Limited is very low in this regard. Unfortunately, there is a burn rate that will make this difficult. But, the burn rate is not dire. Instead, this is an opportunity for Indiva Limited to improve its balance sheet and foundation positioning. The products are there. Management is there. What needs to happen next is that scaling up gets Indiva Limited to EBITDA break even. Then, a move toward improving the balance sheet.
Indiva Limited Total Equity
What drives future revenue and profits? Increasing total equity. Unfortunately, Indiva Limited total equity is continually sliding lower. A firm needs assets in order to increase its potential future revenue. Having to take on increasingly higher levels of debt in order to fund operations could be problematic.
Somehow, Indiva Limited needs to scale up revenue in a way that overcomes its burn rate. Then, they need to clean up the balance sheet and work to improving its foundation. Basically, they need to give themselves more curb appeal in order to be sellable. Thing is, every day, NDVAF is sellable on the stock market and, that is the big crux of this. Then, there needs to be steady, increasing total equity.
Indiva Limited NDVAF Stock Forecast
Indiva Limited NDVAF DCF
Expectations are that we see about USD$55M in revenue this year, 2022. Then, 2023 should drive the revenue up to about $85M. I used a softer increase in EBIT levels throughout the years as Indiva Limited has not achieved EBITDA profitability just yet.
But, the rate of increase in revenue should easily drive economies of scale allowing for EBIT to hit about 15% of revenue this year, and then continually increasing to approximately 30% after 4 more years’ time.
Given a potentially large increase in revenue annually, and a progressive increasing climb in margins, this should add more and more to the bottom line profitability for Indiva Limited.
Also, I used a slightly lower “popularity contest” rating for this DCF as I do not see Indiva Limited being a large entity in the sense that they are going to attract worldwide eyeballs for investing.
Still, the outcome is solid as an investment opportunity in NDVAF stock.
Is Indiva Limited NDVAF Stock A Good Investment?
Edibles are a solid segment of the industry. And, Indiva Limited is sitting on a great product list. And, if cannabis revenues continue to climb in Canada, and more consumers move toward edibles to moderate the levels on edible levels, there is plenty of upside potential with Indiva.
I do not consume cannabis… despite my birthday being 4/20. I know. Complete waste. I see this as more of an advantage when analyzing a cannabis stock as a potential investment. The reason is that I believe the market should determine how good a product actually is via an economics term: Dollar Votes.
If the vast majority of consumers believe that a product is good, and because of that revenues continually climb, who am I with my opinion to say otherwise?
The Best Product Offerings
Given that, I am well aware that the products that Indiva Limited has get consumed at high levels. The gummies are said to have the highest market share. And, Bhang Chocolates are some of the most acclaimed in the United States.
Given these variables, I believe that Indiva Limited will continue to execute on its plan and grow the company. And, owed to increasing revenues and economies of scale, I believe that Indiva Limited will be able to become a profitable cannabis company that investors in NDVAF stock will be well-rewarded for owning.
Indiva Financial Data
Indiva NDVAF stock Financial Data
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