KM SUGAR MILLS LTD - Interesting Penny Stock in the Sugar Sector

INTERESTING STOCK TO WATCH:
KM SUGAR MILLS LTD.
MCAP: 60 Odd Crores.
CMP: Around 7/-
FACE VALUE: 2/-
CURRENT P/E: AROUND 5

The company yesterday announced its results for March 2016 quarter and the annual performance is as follows :- Link To Results



The company has changed FY year from Sept to March so I put the number by taking four quarters of FY15 as per the calendar year to make it comparable.

The company has turned net profit positive to the tune of 11.69 crores against market cap of 60 odd crores, the reserves have risen, the short-term borrowing has reduced, their is still 155 crores inventory.

The TCD capacity is at 10000, as much as Rajshree Sugars which has around 11500.
KM Sugar has debt to equity of 8, Rajshree Sugars has debt to equity of 14.

Rajshree Sugars stock prices have rallied from Rs 10 odd to Rs 50+ in the recent Sugar Rally. Even as Rajshree Sugars ended FY16 with a loss of 15 crores.

KM Sugar on the other hand has proposed to come out of CDR.

Highly unlikely that KM Sugars share prices can dip below face value when in profit.

UP based Sugar Mills are in focus as there is a global shortage in Sugar supply vis-a-vis Demand.

Past sugar cycle suggest we might be at a infancy stage of a larger bull run in the global sugar prices and sugar shares prices. A famous forum on stock market ValuePickr has a pretty detailed thread on Sugar sector which is updated with the latest buzz and news with charts/logical explanations etc on: http://forum.valuepickr.com/t/sugar-cycles-7-8-years-of-losses-followed-by-2-3-years-of-super-gains/657?page=1


Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have KM SUGAR MILLS LTD in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

After Sugar, Next is AGRI - JK AGRI GENETICS LTD

INTERESTING STOCK TO WATCH
SECTOR FOCUS: AGRI

AFTER SUGAR, ITS AGRI TIME.

JK AGRI GENETICS LTD

BSE: 536493

CMP: 389

MCAP: 140 CRORES

52 WEEK HIGH: 620

52 WEEK LOW: 389

JK Agri Genetics Ltd.(JKAL), is a leading seed company established in 1989 with its headquarters at Hyderabad, Andhra Pradesh(India). JKAL is engaged in research and development, production, processing and marketing of Cotton, Maize, Paddy, Pearl Millet, Sorghum , Sunflower, Castor, Mustard, Wheat, Sorghum Sudan grass, Fodder beet, Tomato, Okra, Chillies and other vegetable seeds.

The company just announced its Q4 numbers and have surprised with small profits which is rare in the march quarter,

For the full year 2016 the company has clocked Sales of almost 189 crores with net profit of 8.01 crores and annualized EPS stands at 22.25.

At cmp 389, the stock is trading at almost 17 x P/E.

Last year Monsoon had a huge short-fall, this time  Monsoon is expected to be very good.

I think the company can do well in FY17-18 with good monsoon.

It was recently reported that there has been shortage of Corn (Maize) seeds and the stock of Monsanto rallied 40% last week on the same news.

MONSANTO GAINS?
Huge corn seed shortage in India for upcoming season
Monsoon preshowers are encouraging for corn

— Darshan Mehta (@darshanetnow) May 12, 2016

Maize Seeds is a key product for JK AGRI GENETICS LTD too.

Peers of JK AGRI trade at rich valuations with Monsanto commanding a p/e of 50 odd, Advanta commanding p/e of almost 40. But these companies are doing much better than JK AGRI and at a much larger scale.

Going forward from here i expect good movement in JK AGRI both business wise and Stock price action wise.

There is also one IPO of a seed company expected sooner or later (nuziveedu seeds)

After recent mad rally in Sugar Sector, i expect the market focus to be drawn towards Agri sector (fertilizers,seeds,agri chem) which is the back bone of India and a major thrust area for the Modi government.

I feel both (traders/investors) can look at JK AGRI GENETICS LTD for both short and long term opportunities.

That's all for now, even though we do not discuss micro and too small cap stocks in a detailed way here anymore, i thought this one was worthy of a post... Will post more such stuff as and when i notice.

Happy Reading!

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have JK AGRI GENETICS LTD in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.