BAMBINO AGRO INDUSTRIES - REPEAT

Bambino Agro is a stock I recommended last year almost at the current rate.Thereafter company altered its Memorandum of Association to venture into some  un related fields .On the basis of this decision ,later I expressed some negative opinion on this stock.After touching a low of Rs.24 now it recovered and ruling close to its 52 week high price of Rs.40 .Now it is learned that ,even the company altered its MOA, it is not in a hurry to move into these fields and decided to concentrate in its core business.Hence re-looking into this  once again.

 

BAMBINO is a  well known brand with pan India marketing network.Company selling pasta, macaroni , noodles and a number of ready to eat items under the BAMBINO brand . Company producing almost 75 items  from 4 manufacturing facilities. Even this company is in operation for the past many years with a good brand recall ,its financial performance so far not creating any excitement.Higher debt level and a possible conflict of interest due to more entities owned by the same promoters are the key reasons for concern.If the promoters are willing to change their mind there is huge scope for wealth creation in this company .Since they hold almost 75 % stake in it, it is easy to dilute some stake and raise funds to bring down debt burden.Considering the brand value and the premium valuations realised in some private equity deals in food sector  it is not an impossible task. In the past I have recommended two companies which faces same situation ( Butterfly Gandhimathi ( to read click HERE)  and DFM Foods - HERE ) and later we realised what has happened with a change in the attitude of management .The market capitalisation of both these companies improved multi fold after some minor proactive steps taken by the management of both these companies.Here in the case of BAMBINO too this is very relevant and the same miracle is possible just by some simple initiatives by the promoters.I believe this will happen in future and they will not waste the big opportunity available .In recent times company expanding to new territories  and introducing various new products.To ramp up its sales force, company recruited many employees in recent past. To sell its ready to eat items BAMBINO started to open retail outlets in multiplexes. Earlier company entered into a distribution tie up with Domino's Pizza ( For details click HERE). Even in the financial front too , company improving its performance in past few quarters. For the quarter ended June 2012 net profit rose 91.55% to Rs 1.36 crore as against Rs 0.71 crore during the previous quarter ended June 2011. Company's year ending is in September and it already posted an EPS of Rs.4.8 in nine months  against last full year EPS of Rs.2.34 .I feel , now things are started to move slowly in the right direction.If management is willing to take some steps like reducing debt,increasing corporate governance standards ..etc  ,this stock will be a multi bagger in long term even from its 52 week high price of Rs.40/-.

Disc:I have vested interest in BAIL

LINK TO COMPANY'S RECENTLY RENOVATED WEBSITE  HERE