Associated alcholol and breweries ltd

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by visitkumaresh, Apr 3, 2015.

  1. visitkumaresh

    visitkumaresh New Member

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    Dear members iam new to the forum and hence bear with me if there is any mistake. I came across this company associated alcholol and breweries ltd while screening for 30% sales growth companies. The details are fy 15E 290 cr revenue and ebita of 30 cr the debt as per sept qtr result is reduced to 56 cr the revenue growth stands at 30% and profit growth at 40% on 3 year basis net block at 97 cr. General reserve at 60 cr promoter has bought in open market 6% and holding at 58% no pledge and no preference capital or warrants pending auth cap is 1.1 cr and issued is 0.9 this company is selling country liquor in MP and has grain based distillery and sells gRain spirit to leading manufactures of vodka. Have IMFL Brand which has low visibility and does bottling for scotch manufactures. The growth and numbers look good but there has been no dividend and operating cash flow is negative in fy 14 and promoter prasna Kumar Kedia is known in MP but the pedigree I don't know they have spends round 40 cr capex and have own power generation the plant is 35 km from Indore in manikara of Bhawa Dist of MP. The BS shows in current assets some loan and advance at 33 cr which looks odd and they are running another brewey Mount Everest in same area were the AR shows they have invested in holdings. Being a liquor sector iam not able to justify its valuations and iam not aware of the promoters history and whether the working capital funds are ok as I see the TR AND TP Looks ok but I feel iam missing something here. I request experienced investors to have a look and post your valuable suggestions thanking you
     
  2. Meenakshi Razdan

    Meenakshi Razdan Administrator Staff Member Moderator

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    Well, I had a quick look. The company is a micro-cap. Its market capitalisation is Rs. 84 crore. It has very low liquidity of only about 2000 shares a day. While the financial results are showing an impressive growth, the fact is that their primary business is to act as contract manufacturers for other brand owners. There is nothing in the public domain about the company or its promoters.

    The price movements are also volatile which is probably due to the low floating stock.

    I think the larger issue is that in companies like this, one cannot invest a large sum for obvious reasons. The management pedigree is unknown. The business model is dependent on the principal brand owner. The financial results are what they are.

    There are some people who are specialists in investing in micro-cap stocks. They go to see the factory, talk to the management, customers, suppliers, bankers etc and do a lot of scuttlebutt before making an investment. If one is prepared to do that kind of effort, then one can think of investing in such companies. However, if no, then such stocks are a strict avoid IMHO. There are several other well-researched companies that one can look at.
     
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  3. visitkumaresh

    visitkumaresh New Member

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    Thank you Meenkashi so much for reply and valuable input I am going to Indore and will try to do the scuttle you mentioned.
    My intention is to find one microcap which has the potential to grow to a mid cap which is not noticed as of now with this in mind would you please have a look at Sree Rayalseema high strength. Hypo ltd manufacturing calcium hypochlorite a water purification chemical I believe he is the only manufacturer in India valuations are ok but the equity dilution and a long time low PE is a worry.
    Can jasch industries become a Mayur uniquoter.
    Once again thanks for your reply and await your response
    With regards KUMARESH.
     
  4. Meenakshi Razdan

    Meenakshi Razdan Administrator Staff Member Moderator

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    Thanks. I will look up the other stocks as well and be alert to any developments. We need to share knowledge and insights. Hopefully, someday, we will also discover the future Mayur Uniquoters, Ajanta Pharma etc.
     
  5. visitkumaresh

    visitkumaresh New Member

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    Do you mind to share any of your stocks you think which is small cap but has the potential to become mid cap but should not have come to notice as of today.
    And one more query do you think it is advisable to go by stanalone numbers while calculating the instrinic value or to consider the consolidated numbers because sometimes iam very conservative and consider only stanalone numbers.
     
  6. Meenakshi Razdan

    Meenakshi Razdan Administrator Staff Member Moderator

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    Well, as a rule I don't invest in small caps, especially the "unknown" types. I prefer to follow the practice of investing only in well known companies with high ROE, low debt etc.

    if you are interested only in micro and small caps, then one strategy is to follow fund managers like Ashish Chugh, Porinju Veliyath etc. Mr. Veliyath has recently bought two small cap companies. Perhaps, you can research them further to see if they appeal to you.

    I think for a meaningful analysis, one has to take the consolidated figures into account. Otherwise the analysis becomes distorted.
     
  7. bholu

    bholu Active Member

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    yes Meenakshi...for small caps you have to do lot of "scuttlebutt" if you want to pick up a winner
     
  8. visitkumaresh

    visitkumaresh New Member

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    Hello Meenakshi I did the scuttle you mentioned I was in Indore so I visited the the disterlerry it is 40 km from Indore and they have renovated it I went along with afreind from MP pollution control board so I was able to spv to people yes they are bottling for international scoth like glen Drummond haig they are major supplier of grain spirit for many vodka' brands but they are not willing to disclose it they have a good office in there own building I Indore the banker also confirmed that it is good account and MP pollution guy checked and confirmed that the capacity enchanted to 80 kpld now and central excise also confirmed it the management is not transparent and they are reluctant to talk but I asked abou the loan and advance in the balance sheet and there Rev gr and about the operating cash flow they responded with positive attitude about the growth any boarders or senior members if they have any additional info please share which will help in arriving for lt investment because there growth is very good fundamental are good the dividend and operating cash will see an improvement in this fy I think members suggestion pl. Thank u
     
  9. visitkumaresh

    visitkumaresh New Member

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    Hello menakashi have you seen the result of Balkrishnan industries and what do you feel can be a good entry price in this or should we try the proxy of tyre industry and invest in oriental carbon and chemicals ltd please your feed back regards
     
  10. visitkumaresh

    visitkumaresh New Member

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    Hello AABL has reported fy 15 results 300 cr Rev 39% growth yoy and EBITA of 33.5 cr NP of 12.5 cr eps of 13 and the debt reduced to 38 cr and from the income statement and BS it looks the operating cash flow postive in range of 18 cr the ROE at 18 % DER 0.57 and ROCE above 20% and yoy loan and advance reduced to 16 cr only thing is still no dividend with this growth and debt to equity ratio and eps can this has any chance of getting its historical PE OF 11, there is a sudden increase in employee cost in this qtr which I didn't understand otherwise the ebita could have been better Meenakshi please throw some light. Regards KUMARESH. Please also do look at Aree Rayalseema hi strength hippo ltd good results.
     
  11. ramram

    ramram New Member

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    even iam tracking this stock for two years the good thing is the consistent growth in revenue and profit on 5 yr basis is more than 35% this fy the debt has come down to 0.5 of equity dont worry about ividend as long as there is no preference capital and equity dilution it is good hope this sector gets a tal wind then yo can get a target of 200 regards ramki
     
  12. adrian007

    adrian007 New Member

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    this company is supplying majority of its production to many vodka manufactures and have bottling agreement with scottish independent distelerries also please note that the annual report shows investment in mount everest breweries which is manufacturing beer if you consider the present market value of the beer distellery this should go way up wait and watch
     
  13. Praisesingh

    Praisesingh New Member

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    wow nice results guys the promoter is prasanna kumar kedia have signed bottling agreement for the single malt glendrummond these people supply to radico and diageo there imfl brand is selling good in mp and the retail investor holding is only 20 lac shares majority of public holding 17% is with two entities with an eps of 13 and the way this guy has grown the fy 16 should surprise with 400 cr revenue and profif in range of 20 cr i think even amitarora and donald were starting a forum on this must watch and start buy. by the way kumaresh dont worry abiut employee cost increase from my experience it is a good sign
     
  14. muthuraji

    muthuraji New Member

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    watch out this company is drawing attention of many hni and even some small cap funds are eyeing with this looking best in the sector i think can get a rereating if the promoters decalre some dividend or increase there visibility for the last 6 months there has been accumalation going on in the band of 75 to 90 silently anybody in the forum please post further info please.
     
  15. stockguru

    stockguru Active Member

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    Since it is a micro cap it is very tough to do a through research about the company.This usually applies to all the micro cap or small mid cap companies. As a general rule if there is less transparency or very little knowledge about the company an investor might avoid that company. However there are some of us who are have more risk capacity than the others. In that event, I would suggest you see the indirect indicators about the company. The first one is a consistent dividend payout. If the company claims to have increased earnings year after year and its dividend is also increasing gradually, it might be a soothing factor. The another one is increase of promoter holding. If the company price is grossly undervalued then promoter would be the first one to understand it and would keep on acquiring shares of the company atleast till he reaches the 75% level as mandated by SEBI. These are not the ways to judge a company or do analysis for the same but these are just a couple of ways in which one can at least determine whether a company is minority shareholder friendly or not. Of course if one is investing his hard earned money much more analysis should be done.
     
  16. visitkumaresh

    visitkumaresh New Member

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    Thanku guys for your feed back I didn't know so many of you are following this stock as the stock be mentioned above the promoter has increased his holding by 6% also in the public holding 17 % is holder by two guys may be a promoter proxy
     
  17. Praisesingh

    Praisesingh New Member

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    I was checking screener.in so I found that even Ayush Dalal has confirmed he has invested see about the company not disclosing full details is because as per bottling and grain spirit supply agreement some companies insist on non disclosure hence AABL is not in position to come out fully but now itis time to understand that 35 % growth with low debt and improving roe and dividend will follow so it is time to start buy I also noticed that for last six months some 95% delivery volume is happening in this counter if the promoter comes out with any good news since the fundamental are supporting this will zoom to 200 let's see the AR. Regards.
     
  18. visitkumaresh

    visitkumaresh New Member

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    Mr praise thank u it is not ayush Dalal it is ayush Mittal he has invested in this and tracking it and even he is trying to dig further to find out the pedigree of the promoter As far as iam concerned I don't discuss the price of the stock or the Sensex numbers or target it is important to understand the buisness model and promoter quality with the help of senior members so that we can go for long term investment even now I have mailed to the management requesting them clarification on the employees cost and there understanding with Mount Everest breweries if you see this stock is already recommended in capital market in February and informed investor March 16 issue by pratit Patel I have even got a mail from Poniranju also regarding this let us dig a little further thank u and regards
     
  19. Praisesingh

    Praisesingh New Member

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    Thanku kumaresh sir I gave a target price because that what is given in informed investor magazine also Mr Ashish Chugh is given a feed back that it could go upto 200 any how on the promoter I found that Prasanna KUMAR and Sushil Kumar Kedia are looking into day to day operations of the company and they have more than two decade of experience in liquor industry and In Indore they have proper reputation unlike other liquor barons these guys are decent and don't have any bad history If they declare a resonable dividend this will come to the attention but already iam telling you some accumalition is going on from nov 15 slowly with 90% delivery volume even in the volatile market this has been in the band of 75/90.
     
  20. visitkumaresh

    visitkumaresh New Member

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    One more interesting thing I noticed is total authorised capital 1.1 cr issued 0.9 cr 53 lac shares held by promoters 23 lac shares held by corporate bodies(out of which 17 lac by two entities) persons holding more than 1 lac share capital 2.5 lac shares so totally floating stock is 10/12 lac from January 2015 5 lac shares delivery volume if we discount the price spike in January the average price is between 75/85 over 3 lac delivered without January volume average delivery volume has ally's been 90% so somebody is accumulating this I smelling something can anybody throw light
     
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