Friday, February 26, 2010

Modi Naturals - P/E Players may change its Future

At a time of rising food prices ,everyone is searching for cheapest and healthy food items. Modi Naturals (Foemerly AnilModi Oil) is a company producing rice bran oil since 1974 and it is the largest producer of rice bran oil in India since 2003.Due to High quantities of anti-oxidants and vitamin E ,Rice bran oil is considered as the cheapest and healthiest edible oil. Even though Modi Naturals is the largest company in this field its profit margins are very thin since company sells its entire products to re-sellers and doesn’t own any brand name. Creating a brand name requires huge outlay mainly for advertising .So, till recently company was selling its products in bulk to re-sellers.

Now company decided to move into the retail segment by introducing branded products. This will improve the margins of the company and help to earn substantial profit. In order to augment fund for this expansion company decided to issue 2640000 Convertible warrants to three foreign investment funds (India Max Investment Fund,Prime India inv.Fund and Rahn and Bodmer Co) ,which will completed by March 2010.

In last financial year company posted a turnover of Rs.120/- Crore and a Net Profit of Rs.3 Crore (EPS Rs.7.27) .It already issued a bonus issue in the ratio of 1:1 in September 2009.Currently it is quoting at a price of just Rs.14/- .This low P/E may be re-written with the success of its brand building efforts and funds interest in this company,like JVL Agro (Jhunjhunwala Vanaspathi)

No comments :

Post a Comment


Tweet TopOfBlogs