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
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
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.
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.
Link to Company Website HERE
Suggested readings
Suggested readings
1 ) In pictures: Narendra Modi opens the largest chilled & Frozen food Project of India at Vadnagar
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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
News on Inauguration of plant
