Sunday, 4 March 2018

LT FOODS CHEAP ,WORTHY AND AN IDEAL INVESTMENT CANDIDATE



In the year 1990, Mr. Vijay Kumar Arora began a small company in the village of Amritsar.
Today, LT Foods is the leading processor of rice and other speciality foods in India.
 It has a strong market presence with its brand ‘Daawat’ and ‘Royal’ are the leader in premium packaged basmati rice in India and US respectively. It has a diversified geographical presence backed by an established marketing network and strong brands. Recently the company has also added organic products and staples to its product portfolio. It has also acquired brands from HUL, further strengthening its presence in the Middle East and North American markets. LT Foods is amongst the largest basmati rice exporter which has high barriers to entry. It is the largest basmati rice player in North American markets where the demand for basmati rice has been increasing
Ashwani Kumar Arora, the CEO of LT Foods, appears to be a visionary.
He has clearly spelt out the roadmap for the Company and also explained how he plans to get it there.
LT Foods expects revenue to double to $1 billion by 2022. We have a clear roadmap. We are leveraging our brands to build an export-driven global food company. Improvements in procurement, processing, sales and distribution should lift operating profit as a percentage of revenue to 15 percent in the coming years from 12 percent,” he said with ice-cool confidence.
He explained that the organic foods portfolio will be the growth driver, even as the core rice business provides strong cash flows.
The ambitious plans announced by LT Foods should catapult it into a higher trajectory of growth and profitability. Hopefully, this will send the stock price surging into the stratosphere  like rocket and translate into multibagger gains

KEY FINANCIAL & IMPORTANT RATIOS TO ANALYSE INTRINSIC VALUATION 

CMP : Rs.93.25     Market Cap:Rs.2,982.55 Cr.     EPS-Rs.  4.42      Face Value- Rs 1

EBITDA(Earning before interest, tax, depreciation  & Amortization (Cr)
(Profit Before Tax)PBT
(Cr)
(Profit After Tax)PAT
(Cr)
Mar’17  : 349.24
Mar’17  : 194.69
Mar’17  :117
Mar’16  : 311
Mar’16  : 119.49
Mar’16  :72
Change  : 12%
Change  : 63%
Change  : 62%

MAR’17 àYEARLY
DEC’17à 9 MONTHLY
NET SALES (Cr)
NET SALES
PBT
PAT
Mar’17  : 3,286.55
Mar’17  :2543
Mar’17  :171
Mar’17  : 109.85
Mar’16  : 2,973.42
Mar’16  :2324
Mar’16  :135
Mar’16  : 83.70
Change  :10%
Change  :9%
Change  : 27%
Change  :31%

Current Ratio
5.20
> 2 is Good,
< 2 is Not Good
A liquidity ratio that measures a companys ability to pay short-term obligations. The higher the current ratio, the more capable the company is of paying its obligations.




Quick Ratio (x)
1.92
> 1 is Good,
< 1 is Not Good
The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. For this reason, the ratio excludes inventories from current assets
Sales growth
18%
CAGR >15% for last 7-10 years
Growth should be consistent year on year. Ignore companies where sudden spurt of sales in one year is confounding the 10 years performance.
Very high growth rates of >50% are unsustainable.




Dividend Yield (%)
0.16
> 1.5 is Good,
< 1.5 is Not Good
A financial ratio that shows how much a company pays out in dividends each year relative to its share price. Dividend yield is calculated as annual dividends per share divided by market price per share.

P/E to Growth ratio (PEG ratio)
0.66
<1 is Good
The price/earnings to growth ratio (PEG ratio) is a stock's price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period. The PEG ratio is used to determine a stock's value while taking the company's earnings growth into account, and is considered to provide a more complete picture than the P/E ratio.
Promoter shareholding
67.18%
> 51% is Good
Higher the better

Interest Coverage Ratio
2.61
> 2 is Good,
< 2 is Not Good
(For Banks & NBFC this is not Valid)
It is used to determine how easily a company can pay interest on outstanding debt. It is calculated by dividing a companys EBIT by the interest expenses.




Debt Equity Ratio
2.40
< 2 is Good,
> 2 is Not Good
(For Banks & NBFC this is not Valid)
A measure of a companys financial leverage calculated by dividing its total liabilities by stockholders equity. The debt/equity ratio also depends on the industry in which the company operates.
Price to Sales ratio (P/S ratio)
0.85
< 1.5 is Good
James O’Shaughnessy: Buy if P/S ratio is < 1.5 and sell if >3
Return On Asset (%)
4.62
> 5% is Good,
< 5% is Not Good
An indicator of how efficient management is at using its assets to generate earnings. Calculated by dividing a companys annual earnings by its total assets




Return On Equity (%)
17.89
> 18% is Good,
< 18% is Not Good
Also called Return on networth, it measures a companys profitability by revealing how much profit a company generates with the money shareholders have invested, it is calculated by dividing the net profit after tax by shareholder's fund For high growth companies you should expect a higher ROE.
P/E ratio
21.

Industry P/E 35
<Industry P/E is Good.

P/E ratio is the most widely used parameter to analyze whether the stock of any company is overvalued or undervalued at any point of time. It is calculated by dividing the current market price (CMP) of a stock by profit/earnings per share (EPS).


Technically the stock after touching high 0f  Rs 108.65 ,corrected to Rs.86.80.After double bottoming starts journey to upwards. Support Rs.86.38,78.14,74.12 & Resistance- Rs.100.37,108.61.
Good buying Zone Rs 86 to 74.

Wednesday, 21 February 2018

MULTIBAGGER PENNY STOCK


Sanwaria Consumer Limited; A FMCG Food Processing association of the Sanwaria Group; BSE-NSE Listed; was merged in April 1991, by Lt. Shri Ram Narayan Agrawal and started its exercises in 1993. It is one of the greatest facilitated sustenance processors in India and is possessed with the matter of gathering and offering of Rice, acceptable oil and staple support things like Pulses, Sugar, Soya Chunks, Wheat Flour, Rice Flour, Salt, Suji, Maida, Besan, Daliya, Soya Meal et cetera.

The Company started its voyage with the little Solvent extraction cutoff of 200 TPD in Itarsi and from that point it investigated every possibility. At present the Company is having the limit of 2500 TPD of Solvent Extraction Plant, Soya Refinery of 250 TPD and 500 TPD of Rice Milling Plant. It's all units are masterminded in Madhya Pradesh; the center of India; Registered Office is arranged in Bhopal and It's the place Soyabean, Paddy, Wheat are available in abundance close by Skilled, semi-gifted and inept work. It is ISO 14001, 22000, GMP and Halal Certified and Government Recognized Export Trading House. The Company has a strong scattering interface with respectable brands like Sanwaria, Narmada, Sulabh and Nashira.

The Company has wandered into coordinate retail by opening up ATM measure retail outlets under the brand name ' Sanwaria Consumer Shoppy ' to achieve the end client specifically.

The Group has supported introduction in assembling/handling/exchanging of Soya Products, Rice and rice related items, sustenance grains and heartbeats. In Addition, the Company has denoted it's essence in universal market for Import and Export for its different items and has a 100% Subsidiary in Singapore.

The Company has fabricating units at 3 area - Mandideep, Itarsi and Betul, deliberately situated in the nourishment creation and utilization belt in India.

As of late, the Company was positioned 336th in among 1000 India's finest Companies based on Turnover by "The Financial Express
Company’s premium products basket consist of:
Basmati Rice (Exotic • & Premium- Raw/Sella)
Refined Soyabean Oil, Refined Rice Bran Oil/ Fortified with vitamins,

Chakki fresh Atta fortified with Soya Flour

Chakki fresh fortified Protein
• & Iron rich Atta
Maida, Suji, Rawa, Besan, Daliya, Pulses (Dals),

Soya Flour, Soya Chunks (Bari)

Salt, Sugar, Poha

Soya Meal, Soya Meal High Protein

Rice Flour, Lecithin

Aqua Feed

Poultry Feed and others
The Company is foraying into direct retail by opening up company owned retail outlets under the brand name ‘Sanwaria Kirana’ to reach the end customer directly. The Company has already opened up 11 stores at different locations of Madhya Pradesh and another 10 retail stores are in pipeline. It is venturing into different geographical locations through Franchise Route. It has a plan of opening 100% subsidiary in Dubai to get the overseas market business of Middle East & Africa and initiate the business in Singapore through 100% Subsidiary which will get business from rest of the world along with cheaper finance facilities.
Post rebranding, Sanwaria is standing at the cusp of growth. The increase in product portfolio, backing of strong FMCG players (like Patanjali, Dmart and ITC), direct retail selling plans and global expansion sounds like all growth levers have been unleashed simultaneously. If they play their cards well, the business could see exponential growth in next 4-5 years. Also if the margins improve in coming quarters, as has been claimed by the company, quite surely the rerating in company’s Price to Earning multiple would happen. From a single digit levels (9.82), it can grow to more comparable PE valuations with its peers like KRBL (28.87), LT Foods (13.8) and Chamanlal Sethia (12.23).

SANWARIA CONSUMER LTD – KEY FUNDAMENTALS

  

Market Cap.: 1489 Cr.        

Stock P/E: 18.48                 

Dividend Payout Ratio: 4.18%  

Face Value: 1                      

Listed on BSE and NSE   

52 Week High/Low: 34.40 / 3.55 

PEG Ratio: 0.89                 

Debt to equity: 2.4              

Interest Coverage Ratio: 2.46          

Current ratio: 7.25              

Promoter holding:66.68%

Price to Sales: 0.31            

Pledged % : 7.46%           

Enterprise Value: 2392 cr

NPM last year: 1.12%   

SANWARIA CONSUMER LTD – FINANCIAL RESULTS

Sales Growth:

Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
1,968.66
2,458.64
2,644.67
2,695.25
3,512.44
4,793.39


The Patanjali Effect:
Sanwaria Group was producing many products for Patanjali Trust.
In the company’s AGM proceedings  has formally disclosed that they are supplying to Patanjali and are increasing the extent of their association with more products and Pan-India presence as we speak.

It is good to buy shares of Sanwaria Agro @ Rs 16 to rs 20 & Good to hold for Long Term.