SABERO ORGANICS GUJARAT - UPDATE

This stock recommended more than once  here.First @ Rs.55/- (For old posting click HERE) and again @ Rs.115/- .Today it hits its life time high @ Rs.150/-. An appreciation of more than 180 % in 9 months from the initially recommended price.Now many investors  are asking whether it is the time to book profit in this stock. For me it is not a stock to book profit at current level.As you are aware Sabero Organics is the largest manufacturer of Mancozeb and  Glyphosate in India and the second largest in the world based on production capacities. But earlier under the old management this company could not tap the full potential of the available opportunities around the world.Even the company having many product registrations in various countries its capacity utilisation was as low as 25 % till Coromandel took over it .But now in just one year its capacity utilisation is near to 100% under the new management.Considering the expertise of Murugappa group and their aggressive plans in agri related sectors ,one may even consider a BUY at its life time high price of Rs.150/- (only for investors with  patience).I believe company will turn around in next few quarters and  goods days are yet to come  for this company.

SABERO ORGANICS GUJARAT LTD - BUY FOR LONG TERM

Sabero Organics Gujarat is an agrochemicals manufacturer promoted by Chuganee family.Company producing various fungicides, herbicides , insecticides and other speciality chemicals. Company having manufacturing facilities in Gujarat,Jammu Kashmir ,Tamilnadu and marketing offices in Europe, Brazil, Argentina, Phillipines and Australia other than various parts of India..Sabero's products includes Acephate, Mancozeb, Chlorpyriphos, Glyphosate, Dichlorovos, Methamidophos and Propineb.A major portion of its products are exported to various countries in their own brand names and also supplying products to other companies including well known MNC's.About 65% of its total sales is generated from exports and company's major asset is its product registration of more than 250 products in 50 countries.Company having many products registrations and strong presence in Brazil which is one of the biggest agrochemical markets in the world.Sabero came to limelight in recent past after the acquisition of the company by south based Murugappa group .'Murugappa group'is a well reputed business group from South India with deep knowldge in Agriculture related businesses along with others.Success of companies like Coromandel International and EID Parry is best example for their expertise in this field.Other listed companies from the same group includes Carborundum Universal,Cholamandalam Investment,Tube Investment,Coromandel Engineering..etc
Coromandel bought this company at a steep premium of 80 % to then prevailing market price and the deal concluded @ Rs.160/- per share.Also it paid Rs.38.47 extra per share as a non compete fee to the promoters of Sabero.Coromandel's strong marketing network is a big boost to Sabero where the largest customers are more or less the same.Management expertise and deep pockets of Murugappa group is added advantages.Due to lower capacity utilisation and higher overhead costs Sabero posted losses in first two quarters of this FY.In a recent interview Mr.Kapil Mehan MD of Coromandel indicated that they have took over the management of Sabero only in third week of December and their first priority is to enhance the capacity utilisation.He also mentioned that they are expecting the company will back to black in another two quarters. Earlier in FY 2011, Sabero posted a turnover of Rs.412 Cr and a net profit of Rs.10 Cr.I believe the massive capacity of its plants and the ability of Murugappa group will create  a multibagger from current price of Rs.55/-