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.

Snowman Logistics Ltd - The Hot Snow for Future

The Ace Investor

Snowman Logistics Ltd

  Listed on both NSE: SNOWMAN & BSE: 538635
Currently trading around 60 with a market cap of around 900 crores.

Promoters hold 40.25% stake.
It has a Debt of around 90 crores.

Total Reserves are around 250 crores.

Snowman was incorporated in 1993 by Amalgam Foods as Snowman Frozen Foods Ltd and in 1997 Brook Bond India (now HUL) acquired 23% percent stake in the company. In 2001 Mitsubishi bought a majority stake in the company.

In 2006, Gateway Distripark Ltd became the majority stake owner in Snowman and revamped the company's management structure. In 2010 IFC, USA acquired 20% stake in the company. In 2013 the company was renamed as Snowman Logistics Ltd and in 2014 the company came out with its IPO at an issue price of Rs 47 per share

Snowman is a leading integrated temperature controlled logistics service provider operating across locations servicing customers on a pan-India basis. They have set-up their temperature controlled warehouses adjacent to cities with a large potential for sourcing and/or consumption of temperature sensitive products including the larger cities such as Mumbai, Chennai, Bengaluru and Kolkata.

The company has total warehousing capacity of 98,500 pallets from earlier 49,750 pallets capacity in 2014. The fleet strength is 463.

As per latest quarterly investor presentation: The volume pie chart industry wise shows that: 19% volumes are from Poultry and Meat, 9% and 10% each is Ice-Cream and other dairy products, Agro Items (Fruit/Vegetables, Pulps etc) and Sea Food is at 13% each, Another 10% is from QSR and the rest divided between Confectionery, Healthcare-Pharma, Industrial Products, RTC.

The cold chain sector in India is a combination of surface storage and refrigerated transport. The industry has been growing at CAGR of 20% in last three years and expected to reach Rs 624 (Rs 62,400 crores) billion by 2017 as per an earlier report by ASSOCHAM.

India's cold chain industry is still evolving, Not well organized and operating below capacity.

The Indian cold chain sector is highly fragmented with more than 3,500 companies operating in the sector.

Organized players like Snowman contribute only 8-10% of the entire market size.

The need for cold-chain in India is beyond question, for instance: 11% of the world's vegetables production is from India alone but the trade participation by India in the global trade is only 1.7%.

127 million tonnes of Milk was produced in 2011-12 but cold-storage was available only for 70000-80000 tonnes of milk.

Presently, almost 76% of cold storage volume is utilized only for potatoes.

Potato margins are not high hence it has not proved to be a money spinner.

20-30% of the total fish production is annually wasted in India.

This scenario for a resource rich country is terrible, The resource is going wasted due to lack of cold-storage even as Farmers are committing suicide even due to losses incurred in these wasted crops, Huge percentage of the population do not get proper food.

Whether it is the NDA or the UPA the problem needs to be resolved by the ruling government urgently and it can only be solved by private companies participation, and they will participate if they see a large cake of revenue and for that to happen the GST is also very key.

The GST puts the organized players and the unorganized players in the same bracket by putting same taxation bracket on all, In this case the GST will put great focus on the Cold-Chain sector in India.

As already said the organized sector commands only 8% of the total cold-chain industry, so if this improves there is a large cake for companies like Snowman to take.

The same is with the logistics sector in terms of GST and unorganized/organized businesses, but Snowman offers more of a niche play here. Gati also has the Cold Storage units but Snowman comes minus the traditional logistics business.

Coming to the financials of Snowman it has shown good growth.

The growth has been very good and the company enjoys tax benefits under section 35 AD as per the incentives provided to the cold chain sector.

Including the tax benefits the annual eps for Snowman in FY15 was 1.67 and presently so far in FY16 the EPS is at 0.78, after adding the wonderful March 15 quarter the EPS goes up to 1.64.

It will be interesting to see what the company delivers in the March quarterly results.

Valuation wise Snowman may not look undervalued at current juncture, having a P/E of almost 35 and Market Cap to Sales of 3.85. The current p/e valuation appears to be in line with how the logistic companies are rated (VRL,GATI,SICAL) all are at 30-35 p/e range. Exceptions are BlueDart at p/e of 80 and Allcargo at p/e of 15.

But SNOWMAN is a niche Cold Chain sector play only. Gati Kausar (Gati's cold chain) is a loss making business and revenue wise it trails SNOWMAN by a significant margin.

As far as stock price is concerned, After coming with an IPO at Rs 47 Snowman touched all time high of 135+ in November 2014 within just 3 months of listing. Later in March 2015 the stock crashed to 70 odd levels and from there it again went up to 116 in July 2015.

The last one year has not been great for the midcap-small cap stocks and that shows for Snowman too, from 116 it cracked to all time low levels of Rs 46 in Feb end. At present levels of around 58 odd it is 20% away from all time lows.

This stock on the first look does not look like a Good Value investment for Investors looking at the P/E and Mcap/Sales etc. but while all that gives an indication about current valuation of the company. We have to look at the boarder stuff and understand the industry to spot a future multibagger.

GST is key for Snowman and the industry and as PM Modi suggested recently GST is going to be a reality soon lets hope he is right.

All in All i feel: Five years down the line, Snowman can become one famous multibagger in the market.Yes its not very cheap right now but this is a Niche Play and its valuation should be aggressive going forward too. 

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 Snowman Logistics Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

:Links:

Snowman Website

Cold Chain industry 64,000 crore in FY17

Snowman Investor Presentation (latest)

Report on Indian Cold Chain Industry

Another Cold Chain Industry report

PM MODI: GST Reality soon
Latest expansion to 98,500 pallets

Review 3.0 and Update About The Blog

Review 3.0

This post is a periodic review about all the stocks discussed on the blog.

Average return per stock at peak is around 125.40% and Average return per stock at CMP is 31.97%

This has been clocked from Oct 2014 till now in March 2016.

As for last update Review 2.0 on start of January 2016 the average return at cmp was 92.93%.

On this day the average return at cmp has crashed to 31.95%, Maybe because the euphoric small/mid cap bull market is over.

As i have posted on the blog many a times and followed that once a stock goes up by 60-70% trimming the holding to only free shares is safe and then taking a call when to book out fully would depend on industry/market trends.

Out of 23 Stocks 11 stocks went above 60%, meaning only free shares are left in SKM EGG, NGL, MINDTECK, VIDHI, SHILP GRAVURES, WATERBASE, PALRED, PINCON, AXISCADES, CAMPHOR and SAKSOFT.. Many of these stocks have multiplied much above initial 60% upside.

These 11 stocks rallied 234% on an average from discussed levels.

Out of 23 stocks discussed 12 stocks failed to go above 60% from price it was discussed.

That means full quantities of DYNEMIC, GUJ AUTO, RICHA IND, NARMADA GELATINE, PARNAX, SUNTECK, TALWALKARS, SMRUTHI ORGANICS, INDIAN TERRAIN, ARROW TEXTILES, ASSOCIATED ALCOHOL and A M D are still held on. 

These 12 stocks on an average are down: 23.52% from discussed levels.

The last 3 stocks discussed Arrow Textiles, Associated Alcohol and A M D have turned out to be bad.

It is true that investment wise, few weeks or months are not enough to judge a stocks performance.

But one cannot deny the fact that two (A M D , ARROW) out of last three stocks have been disastrous.

I can sense a discontent among readers about the last three stocks, Its like everyone was expecting a TENDULKAR but they turned out to be AFRIDI.

I am also disappointed about these three stocks, Not much for Associated but for Arrow and A M D.

Looking at the discontent, it is obvious the blog is loosing its charm.

Owing to this scenario we asked for suggestions from readers and received some very good suggestions.

We are implementing most suggestions of it from today: No more stock specific discussions every month unless something very special, no prior announcements of write-ups coming up, no posts during the market hours, new blog posts if at all about any stock to be posted only on weekends, Companies under 250 crore Market Cap would be ignored.

Suggestions For The Blog

Dear Readers,

To improve the blog i am keen to have your suggestions.

Suggestions which will make this blog more useful for investors.

Please email your suggestions on theaceinvestor@gmail.com.

I am also looking for co-authors who can contribute to the blog in a meaningful way.

Kindly send your profile too and how can you contribute to the blog.

All The Best!!!

AMD Industries Ltd - Value Pick

The Ace Investor

Amd Industries Ltd

  Listed on both NSE: AMDIND & BSE: 532828
Currently trading around 39-40 with a market cap of around 70 crores.

Promoters hold 66.76% stake.
It has a Debt of around 78 crores.

Total Reserves are around 102 crores.

Established in 1958 Amd Industries Ltd has emerged as one of the prominent packaging players in the industry, providing packaging solutions to some of the biggest brands and companies in the beverage, liquor and processed food categories.

AMD is headed by executive chairman Mr H S Gupta and Mr Adit Gupta is the M.D.

The company's key products are: Pet Preforms (Bottles), Bottle Caps and Crown Caps.

Around 38% of the business is Crown Caps, 34% is Pet Bottles and 20% is for the Bottle Caps (CSD Closures)

The company is headquartered in New Delhi and it has its manufacturing facilities UP, Rajasthan and the company in order to cater to Coca Cola's increasing demand has started to set up another facility in West Bengal.

The company a month back has also set up four new lines of machines at Rajasthan having a capacity of manufacturing 25,000 PET bottles and 22,000 jars in a day.

Earlier, The company's Rajasthan plant was mainly for manufacturing Crown Caps.

Some of the key clients for the company are: Coca Cola, Pepsi, Hindustan Unilever, Foster, United Breweries, SAB Miller and Dabur.

The company was earlier named as AMD MetPlast and came with its IPO back in 2007 with an issue price of 75 Rs Per share.

Let's take a look at the financials of the company :-

The company right from 2007 till now has never reported an loss for its annual results, and right from 2007 till date the company has paid dividend every year to its shareholders even on years when its bottom line was hit.

From the above table it looks like company is running at full capacity utilization and that is why there hasn't been any revenue growth. But with recent capacity expansion in Rajasthan and the new facility in West Bengal the company should be showing really good growth going forward from here.

Due to the crude price crash, AMD Industries like other packaging and plastic companies will be benefited.

For full year FY16 the topline with just few days left in the FY the top line is expected around 176 crores and the bottom-line is expected at just under 7 crores and the EPS should be at 3.6.

On an EPS of 3.6 at current price of 39 the stock is trading around an P/E of 10.80.

Other packaging names like Hitech Plast which became highlighted due to its client Patanjali's challenge to MNCs is trading at 25 p/e and the same is with other packaging names.

Tin, Plastic, Glass are some of the main and conventional options for Beverage packaging.

While AMD is into plastic, to compare it with someone in the industry we can take a look at Haldyn Glass listed on the BSE and trading at around 30 which has witnessed no growth in the last 6 years but still commanding a p/e of 20 currently that too after it has crashed significantly.

Haldyn at its peak of around 44 was enjoying a p/e of 30+.

Applying a P/E of 20 would give AMD a stock price of 72. This ofcourse is as per FY16 and growth yet to come which should make its EPS much better in the future though.

We have often seen that companies like AMD Industries which lie low due to lack of growth spurt to good heights due to the growth triggers and for AMD the capacity expansion as well as the new facility should felicitate good growth for the company.

The young population of India the catchy promotional campaigns all help the demand of brewed drinks which have slowed off late though.

All in All, I feel Amd Industries is a good business and a value pick at current valuations for Investors.

Apart from fundamentals, Technically AMD has broken out of CUP & HANDLE pattern on the daily charts on back of good volumes.

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 Amd Industries Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

:Links:

AMD Industries website

Arrowtex Screener

Arrow Textiles 2015 Annual Report

AMD Capacity Expansion News

AMD West Bengal new Facility News

Who Killed Kingfisher? (A different take)

(Source: Nanjunda Pratap Palecanda)

Everybody, most of my learned friends want Vijay Mallya arrested. They say he had fun at the cost of Public Money, he should be punished. They say he is a fraud, he lives a rich  and Luxurious life, while not paying salaries to his staff and not paying his lenders and vendors.

Who killed King Fisher Airlines? Have you given a thought? As a citizen of India you should know. As an entrepreneur you should definitely know this. I am sharing below a sequence of media reports from the days of the fall of KingFisher Airlines began. I hope to construct the sequence right, so that you can understand how it was killed. and by whom.. A little, backdrop would be, if you recall, or perhaps can google to verify my statement, Most Airlines across the world were doing bad those days. Many were in the verge of collapse. 

You may note Jet Airways stocks had plunged around the same time in Jan 2012.. 

You May notice, Kingfisher was doing better than Jet Airways. 

Kingfisher  desperately had to infuse funds and this was the best thing Vijay Mallya and his team could have done. 

It was very well placed, But what went wrong? 

    It appeared to be a done deal, what went wrong?

Not just me, everybody seem to think / say so.. then.. 

It was obviously not similar thoughts towards Jet Airways.. then.. what went wrong?

Same SBI had hopes on Kingfisher Airlines..then..

This is the beginning..

Government agency thinks contrary to Market and Banks... why?

Kingfisher Airlines team does, what any serious enterprise does.. 

Why is Kingfisher targeted, while all Indian Airlines were in similar situation then?

Why stop an Airlines from flying? How will an enterprise pay salaries, when agency meant to support the player is keeping it away from raising funds..

Does this help you understand better, what happened?

Its important to understand the share holder details of Jet, particularly, foriegn and Indian Share holders.

Please note Naresh Goyal is not an Indian National.

Note the percentage of General Public & Foreign promoters as share holders in Kingfisher 

Note the general public in Jet Airways and also  foreign promoters 

Etihad was still interested in Kingfisher and not Jet Airways..

 Kingfisher tried things Legally, but what was at play??

Why every possible government machinery tried to scutle Kingfisher Airlines?

Is this the final nail..??

Etihad comes around and agrees to go with Jet Airways.. 

Anad Sharma was the Commerce Minister..

Then met Finance Minister.. Why, all this to help a company held by majority of  foreign promoters?

Why was Indian Government stretching to do this for Jet Airways, while Squeezing Kingfisher Airlines?

This was perhaps the last nail but we know, what else is happening with the (Once) King of Good times..

Who killed Kingfisher Airlines? Who got Vijay Malaya to this state? Who were the beneficiaries? Can an Indian Entrepreneur dare to do things in his own Country again? Will Indian government support her/him, or lead to what happened to Kingfisher Airlines and Vijay Mallya?

I have never had Kingfisher Airlines or any of Vijay Mallya's company shares. I have neither been his Associate nor employee. I am writing this to share with my learned friends, this is the truth I saw. I feel bad for Kingfisher Airlines and Vijay Mallya as an entrepreneur. I don't want such a thing to happen t

DISCLAIMER: This post is not an endorsement of the article published by Najunda Pratap Palecanda but as a different take we found it post-worthy.