Warren Buffett Quotes

Saturday, April 19, 2014

Himalaya International - 'MODI' fying Business. ?



  

Company's major promoter Mr. Man Mohan Malik with Shri Narendra Modi

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Ever since I started writing this blog ,receiving  lot of requests from my readers to recommend low priced /penny stocks.Considering the risks involved in such stocks,so far recommended very few like  Marksans Pharma @ Rs.4 .I have one small request to my readers that , seeing the return  of Marksans ( From Rs.4 to Rs.25 ) ,never jump into this one without studying the company and generating own conviction.As you are aware ,we all are interested to get penny stocks which can give multi bagger returns.But in practice it is not an easy task and it is not possible to decide in advance that a stock will become multibagger. This will happens when many positives comes together and only over a period of time.If we take 10 penny stocks ,hardly one or two may turn as multibagger and even our capital may loose in the rest.This is the reason I hesitate to recommend penny stocks even after  receiving lot of request from my readers after the gain you  earned in Marksans pharma.One more important point – never buy this stock if you have no patience to wait for long time and you are not ready to loose even your capital. It is a strict ‘NO’ to those who demand frequent updates and ‘What to do ‘ messages on a daily basis.
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The Sector
In a country like India ,food processing a is a sector with huge potential.Weather and atmosphere conditions suitable to produce wide variety of food items like   fruits,vegetables,pulses ..etc makes India as one of the most futuristic country in this segment.Large domestic population and comparatively cheap labor offering good scope for this sector for many more years.We have already discussed many stocks from this sector like Tasty Bite Eatables ,DFM Foods,Heritage Foods,Britannia ..etc and most of them already turned as multibaggers.







                                                      
  
The Company 

In this week ,we are looking into BSE listed Himalaya International Limited (HIL) .Company is jointly promoted by Mr. Man Mohan Malik and Mr. Sanjiv Kakkar. Based on the installed capacity HIL is one of the largest food processing company in India.HIL producing,processing and selling Mushroom , Vegetables,Cheese,various types of sweets and appetisers,yogurts...etc.Company selling products under the brand ‘Himalaya Fresh’ and also doing private label business.For sourcing raw materials including vegetables and mushrooms company made contract farming arrangements with local farmers in addition to own cultivation.Company’s main production facilities are located at Ponta Sahib ( Himachal Pradesh ) and Vadnagr ( Gujarat) – the home town of Shri Narendra Modi.In last financial year Shri Narendra Modi Inaugurated Himalaya’s new factory at Vadnagar which costs around Rs.160 Cr and the single largest provider of job for the locals. 



 VIDEO LINK 1

           Shri Narendra Modi Inaugurating Company's new plant at Vadnagar 

            
Financial Performance

In FY 2012-13 ,Company reported a turnover of Rs.112 Cr , net profit of Rs.20 Cr and an EPS of Rs.3.90.Out of its 51 Cr equity promoters holding around.35.44 %  and other large share holders ( > 1 %) holding around 23 % stake in this company .Promoters recently subscribed  896100 shares at a price of Rs.11 on a preferential basis.Company targeting massive increase in top line with increased capacity utilisation in its Gujarat plant.


 




Conclusion

There is lot of skepticism around this company for the past many years. Its never  ending capacity expansion ,relatively large equity base ,non payment of dividend ..etc may be the major reason for that.In addition to this ,since company supplying products to overseas markets  and concentrating in private label business , brand visibility in India is less which is also a reason for commanding lower P/E.Company’s failure to maintain relationship with global food and agribusiness conglomerate, JR Simplot Company with whom Himalaya earlier formed a 50:50 joint venture and later called off may be another reason for investors apathy.In 2013 company decided to  allot 12.5 million warrants to Trydin America LDC but the same not materialised ( Read it HERE)  .Instead of this , in last month company allotted 896100 shares to Himalya International Inc. NJ, USA (Promoter Group). As per company version, non payment of dividend is for conserving resources for recent massive capacity expansion.

   


  

Click on the above image to read MD’s  explanation for some of the negative events related with the company.




Even if company may  not be a great success in marketing side ,it has built a fully integrated sizable capacity for production of mushrooms, french fries, onion rings, appetisers, mozzarella sticks , fruit yogurts and cans of soups.Now it is the time to concentrate in marketing efforts and brand building.Since company claiming its major sales from overseas ,that itself through private label and online stores selling Indian ethnic food items,
there is practical difficulties to check the genuinity of sales figures provided by the company .
 
 Check product listing in Amazon.com HERE 

Check product listing in another selling point HERE

But I believe ,Its production facilities itself deserves much valuation compared with the current market cap of just Rs.66 Cr. The sector in which company operating is one with huge potential and the reported numbers are very good.A possible change in power equations post election may augur well for Himalaya International.Even without this  factor stock of a food processing company below 3 P/E seems very cheap where the average industry P/E is close to 15.



If everything is correct and company can materialize its future plans ,stock may turn as a dark horse from current level of just Rs.13 in next few years.Stock listed only in BSE with scrip code 526899


  VIDEO LINK 2

Himalaya International Celebrating Shri Narendra Modi's Birthday with CSR Activities


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Notes : 

1) As I mentioned at the beginning ,investing in penny kind stocks always risky and advisable only for high risk takers.

2) Many of the information provided above taken from publicly available sources,company claims and projection which is prone to higher degree of errors and I have no guarantee about its accuracy .Assumptions arrived on such factors  may result in wrong judgements and hence requesting self study before acting on this recommendation.

3) I have vested interest in HIL




                                                   News on  Inauguration of plant 






Wednesday, April 16, 2014

DFM FOODS LTD - UPDATE

DFM FOODS LTD initially  recommended  @ Rs.48  hits its life time high  today @ Rs.334 . Earlier around  Rs.250 ,recommended to book partial profit in this stock and keep the remaining quantity.Those with some risk appetite can still hold the balance for long term.

Old Recommendation Link HERE

Tuesday, April 15, 2014

PAPER PRODUCTS / SEQUENT SCIENTIFIC - UPDATES

PAPER PRODUCTS LTD


Paper products recommended @ Rs.61 ( Recommendation HERE) hits its life time high (adjusted to stock split)   today @ Rs.102 . Still recommending to HOLD this MNC stock for long term

SEQUENT SCIENTIFIC LTD

This stock initially recommended to Rs.138 and repeatedly requested to HOLD despite poor working results thereafter .Today stock hits its 52 week high @ Rs.235 .I believe company is now started the ground work to become a niche play in selected segments and recent exit from specialty chemical business and formation of new joint venture company with Shasun Pharma is only a beginning in this direction. After subscribing lot of shares through preferential offer in last two years,promoters recently acquired shares from open market too even at a price higher than Rs.200. Requesting to HOLD this stock with patience for long term.

You can access detailed report on this stock HERE


Saturday, April 12, 2014

PANACEA BIOTEC LTD - REPEAT







No introduction about Panacea Biotec is necessary to my regular readers.We have discussed more than once about the reasons for a sharp fall in its share price from  Rs.400 level to below Rs.100 level. Panacea Biotec – the second largest vaccine maker in our country – passes through  some tough business environment   during past 3-4 years.Earlier many of its vaccines excluded from  the WHO per-qualification criteria  and debt related issues resulted in erosion of more than 50% of its peak net worth. Now ,after many quality related inspections  UNICEF permitted the company to resume the supply of vaccines. (  Read details HERE) . On the other side company is in the process of reducing its debt burden and already admitted for a CDR.I believe ,this is the turn around time for Panacea Biotec and the right entry point too .Company is expected to report better numbers from this quarter onwards and strongly recommending to enter in Panacea at CMP of Rs.107 with a medium to long term view. Stock listed in both exchanges .

Link to Company Website HERE



Disc : I have vested interest in Panacea Biotec 

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