Saturday, July 14, 2012

BUY - INDIA GELATINE & CHEMICALS LTD




Everything with a name tag of Gelatine is buzzing in Dalal Street for the past few weeks.I have already recommended two of these companies ,Nitta Gelatine @ Rs.86 (now quoting around Rs.146) and Narmada Gelatin @ Rs.95 (CMP is Rs.138).Now it is the time of India gelatine (BSE - 531253) This 40 year old KVS group company is in the same line of  business of the other two above mentioned companies –producing Pharma , Food Grade  and industrial gelatine and Ossein .Japan based Nippi Inc. Having 10% equity stake and Konica Gelatin having technical collaboration with India Gelatine.Company’s main raw material is Crushed animal bone.Company selling its products both in export and domestic market.
                                                                     It is foolishness to buy any stock only because of price movement and  without a reason,especially at its 52 week high.So let us look into the major factors led to the turnaround of the fortunes of  this industry.First of all,sharp improvement of demand from the pharma sector for manufacturing of capsules and at the same time lower capacity addition for gelatine due to stringent pollution control norms.The next and most important factor is, some developments in global level.In  mid 2010,Paris based OIE (Office Internationale de Epizooties) which is the monitoring authority of animal health worldwide upgraded India’s status to category 1.At the same time this same authority downgraded some nations and these decisions are based on Mad Cow Disease occurred in these countries.In a later review they maintain the status quo.In such a situation foreign countries preferred Indian Products (being a product from animal bone). This special situation  created shortage of quality gelatine in global market and results in  sharp improvement of prices. On the other hand In India ,Capsule makers who were  importing gelatine from overseas market turn to Indian product due to overseas price increase and sharp depreciation  of Indian Currency.Over all this situation helps gelatine makers from India  a lot and it is expecting  to continue in medium  term due to increasing demand from  user industries,repeated report of Mad Cow Diseases from various foreign countries,low availability of raw material,absence of capacity addition due to pollution issues .etc.Even the price of raw material increased about 25% in last year, companies could easily pass on the same to its customers.
                                                                        India Gelatine posted its best ever result in recent past in last quarter and this trend is expected to continue in next few too.For the full year ended March ,company posted a Sales of Rs.101 Cr,net profit of Rs.7 Cr and an EPS of Rs.7.5.It is an interesting  point to note that out of the 9.4 Cr equity of the company about 95% shares are issued through bonus issues.Company declared bonus shares 5 times in the past after the public issue.For the past four years company is paying dividends without any interruption.India Gelatine currently having a book value of Rs.110/- and trading now @Rs.66/- which is almost half of its book value.Recommending this debt free company as a BUY at CMP of Rs.66 even if it is at its 52 week high.

Click HERE for old posting on Nitta Gelatine

 Click HERE for old posting on Narmada Gelatine




34 comments :

  1. Excellent Work Sir.

    ReplyDelete
  2. Dear Value Pick,

    What is long term perspective of Thirumalai Chemicals?

    Thanks,
    Vishal

    ReplyDelete
    Replies
    1. Dear Vishal

      Based on latest result and the trend of the price of Phthalic Anhydride and Maleic Anhydride-Thirumali is expected to move up.

      Delete
  3. Is it wise to keep holding nitta gelatine.

    ReplyDelete
  4. Sir,

    What's your view on Omkar Speciality Chemicals & Mcnally Bharat Eng for Medium to long term perspective ( 1 to 3 years )

    I am holding Omkar Spec - 500@60 Rs/- & Mcnally Bharat 500@88 Rs

    Thanks in advance,
    Aruna

    ReplyDelete
  5. Hi Valuepick,

    What is your take on RS Software?

    Regards,
    Vikas Karunakaran

    ReplyDelete
    Replies
    1. Dear Vikas

      I am bit skeptical about this management and doubt whether the published result of RS Software is genuine.

      Delete
  6. Sir,

    Any views on RICOH(INDIA)indian subsidery of japanese giant?Management seems to have turned aggressive on indian and chinese subsideries as per their latest website report.

    ReplyDelete
  7. Great work and good selection of stocks.

    ReplyDelete
  8. Dear sir I have v -Guard.india 3600 price of 192 rsSir give me view what can I do ? Hold or sell I m long tearm investor

    ReplyDelete
  9. Dear VP,

    I would like to know your views on Vesuvius India? Please reply.

    Satya

    ReplyDelete
    Replies
    1. Already posted it and no change in my opinion on Vesuvius

      Delete
  10. SIr

    Any particular reason for the stock in T group

    Rgd
    baj

    ReplyDelete
    Replies
    1. Why an investor need to bother about group except 'Z' ?

      Delete
  11. Dear VP,

    Where do you see a major resistance for Granules where we can book partial profits.

    Best Regards,

    Roshan

    ReplyDelete
    Replies
    1. Dear Friend

      I am not a follower of technicals so no comments on resistance and supports.

      Delete
  12. Sir,
    I just got to know your blog today and saw your past record, its amazing, I triesd to buy India Gelatine, its locked at upper circuit, and is it wise to buy at 52 weeks high, and what is your target for the same.

    And

    Any idea on B and A, (BSE code 508136)@ 210.

    Request you to please reply.

    ReplyDelete
  13. Sir

    I think you have a great insight to food companies and ur recoms like dfm foods rocked.

    whats ur call on KOHINOOR FOODS (management quality and recent govt announcement for rice export)

    thnx in advance
    rgds
    Zain

    ReplyDelete
  14. excellent pick. Your Granules India is rocking in down market. Would you still advise to buy it? I hv small qty and was waiting for money to be generated by profit booking on other.

    I think Granules has excellent outlook.

    Very good anaylsis sir

    ReplyDelete
  15. Sir, pls go let us know your thoughts on Jyoti Structure if you tracking.
    I had bot Camline Fine Sciene from 70 FV10 level and still holding. The stock is showing strength and would like to know your thoughts as its an excellent company recommended by you.

    Your guidance appreciated/

    ReplyDelete
  16. Sir, Thank you so much for the EXCELLENT PICK on Granules! Would you still advise a BUY on Granules at these levels?

    ReplyDelete
  17. sir now what to do in gelatin maker company,today rally got halted,is any bad news is on way,should i keep my investment at these levels as i invested today itself or should i withdraw it.

    ReplyDelete
    Replies
    1. Profit bookings by early investors may be the reason, No change in my view on this

      Delete
  18. sir please let me know about cochin minerals , to hold it or not ???? what is the reason behind its sudden downfall ???

    ReplyDelete
  19. Already given a Wake-up call on CMRL few months back

    See the below link and my latest posting in MMB

    http://value-picks.blogspot.in/2012/05/word-of-caution.html

    ReplyDelete

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