Kamal Kabra is such a reclusive investor that we haven’t heard much of him. However, his credentials as a top-notch stock wizard are established by the fact that Rakesh Jhunjhunwala, the Badshah of Dalal Street, paid tribute to him and referred to him in the same breath as Radhakishan Damani, Ramesh Damani, Nimesh Shah and other stalwarts.
Kamal Kabra and Dolly Khanna were the first to recognize the potential of Heritage Foods. Kamal Kabra was first seen at the counter in September 2009 when he and Ayush Kabra held 1,23,450 shares each. He later got Usha Kabra to scoop up a chunk of 1,51,000 shares. Dolly Khanna joined the party in June 2010 when she bought 1,34,348 shares.
Ashish Kacholia also jumped into the fray in November 2012 by buying 1,94,000 shares. However, he appears to have sold off his holding.
All parties have benefitted immensely from the investment in Heritage Foods. Kamal Kabra is sitting on gains of 636% since his investment of September 2009 while Dolly is basking in gains of 511% since her investment of June 2010.
As of 30.09.2015, Kamal Kabra’s holding (including in the name of Kamal Shyamsundar Kabra) stands at 4,93,800 shares. Dolly Khanna’s holding stands at 2,34,476 shares.
Vijay Kedia is the latest stock wizard to be charmed by Heritage Foods. He bought 2,34,000 shares on 6th November 2015 at Rs. 456 per share. His investment is worth Rs. 10.67 crore.
Heritage Foods’ USP is that it is run by the family of N. Chandrababu Naidu, the strongman of the Telegu Desam Party and presently the Chief Minister of Andhra Pradesh. His wife (Nara Bhuvaneshwari), son (Nara Lokesh) and daughter-in-law (Nara Brahmani) are the promoters of the company with a collective holding of 40.03% as of 30.09.2015.
(Chandrababu Naidu and family with NAMO)
Nara Brahmani is incidentally the granddaughter of the late N. T. Rama Rao, the legendary film actor and founder of the Telegu Desam Party.
(Nara Brahmini, CEO of Heritage Foods)
In a rare treat, Vijay Kedia himself explained the investment potential of Heritage Foods. He made the following salient points:
(i) Heritage Foods presently has sales of Rs. 2000 crore. It is projecting sales of Rs. 6000 crore by the year 2020;
(ii) The company has low debt of only Rs. 50 crore. It also has cash of about the same amount;
(iii) The stock is cheap because the present market cap (Rs. 1100 crore) is about half of the sales. Hatsun Agro, the nearest competitor, is trading at a market capitalisation of about 1.5x its sales;
(iv) The reason for the low valuation is the retail business. The company has 90-95 retail stores which are not profitable. This is the main drag. The management has stated that the retail business will turn profitable by FY 2017-18;
(v) If the company does achieve the projected sales of Rs. 6,000 crore by 2020 and is valued at 1x the sales, the stock will be a 6-bagger in five years.
Vijay Kedia’s analysis is borne out by the Q2FY16 results furnished by the Company. The results were blockbuster. The total income surged to Rs 586.83 crore as against Rs 512.38 crore in Q2FY15 while the net profit tripled to Rs 15.29 crore as against Rs 4.83 crore in Q2FY15.
| Heritage Foods Ltd – Q2FY16 Financial Results | |||
| Particulars (Rs cr) | Sep 2015 | Sep 2014 | % Chg |
| Net Sales | 586.83 | 512.38 | 14.53 |
| Total Expenses | 551.63 | 495.08 | 11.42 |
| Operating Profit | 36.44 | 18.11 | 101.21 |
| Net Profit | 15.29 | 4.84 | 215.91 |
| Equity Capital | 23.2 | 23.2 | – |
Heritage Foods has also announced the decision to invest Rs. 170 crore over the next four years. It also stated that the loss-making retail division would break even on an EBITDA basis by Q1FY17 and turn profitable on a PBT basis by FY2017-18.
The Investors’ Presentation furnished by the Company also provides information about the Company’s performance and potential.
One more indication that the good times will roll for Heritage Foods comes from Chandrababu Naidu’s tweet:
Australia will work with AP in fishing, diary & mining sectors. Glad to meet Minister Mike Nahan. pic.twitter.com/wRpYwu2Em8
— N Chandrababu Naidu (@ncbn) November 2, 2015
(Australia will work with AP in fishing, diary & mining sectors. Glad to meet Minister Mike Nahan)
If there is some big-ticket collaboration with Australia on dairy (misspelt as ‘diary’ in the tweet) products, it goes without saying that Heritage Foods will be a big beneficiary.
It is also worth noting that Andhra Pradesh has been ranked 2nd on ‘Ease of Doing Business in India’ by the World Bank.
AP is ranked 2nd on Ease of Doing Business in India by World Bank. Great to see the results of our leader's vision. pic.twitter.com/QDBUEqfZHz
— Lokesh Nara (@naralokesh) September 14, 2015
(AP is ranked 2nd on Ease of Doing Business in India by World Bank. Great to see the results of our leader’s vision.)
So, it does look like Heritage Foods, under the dynamic leadership of Nara Brahmani, will achieve the promised targets and bring great cheer to all the super-savvy investors who have invested in it!
why are you post these articles so late… i mean Kedia securities bought this stock on 9th Nov’15 and other ace investors are already into it but this stock never came into lime light…hope from tomorrow onwards it will be on anyones radar…
Over discovered. Its revenues will be 6000cr as it says, lets see, but its best is behind it.
Good to note the company’s prospects, especially in AP. No doubt, the company will see traction in coming years, as long as CBN keeps CM’s chair and his supreme leader NaMo holds reins in Centre.
But where are the ethics? A CM will, by all means and at all costs, protect HIS company (no matter, it is promoted by his wife, son and daughter in law). This is exactly the crony-capitalist connection to the politicians that we have to get rid of, if we need a wider involvement of entrepreneurs in our country. In any country, small enterprises, promoted by common folks contribute the largest to the economies, while crony-capitalists loot tax payers money in one way or the other (tax sops, loan write downs, subsidised lands etc). On one side, the influenced-governments small businesses will be left to die, and on the other, these politico-capital companies will thrive and prosper with their loot.
Question is, Will anything out of the Australian business prospects be left to any competition by the dear CM? Will there ever be a level playing field for all and sundry?
So investors, make merry as long as it lasts. You can make hay when the sun shines. But remember, winter comes every year! Sometimes, with an El Nino kind of effect, it comes even in summer! Similar to what happened to the so called hot 2014 Modi (BJP) wave that went cold in Delhi and Bihar this year.
truly its dangerous cocktail of business-politics kiiling our country for that only we change central gov
Dolly khanna always take entry in reasonably OK stocks at favourable price most of the time.She also start exiting when stock price start overshooting fundamentals.We need to notice it at the earliest.I would be happy if get alert some how about her entry immediately.Generally information is public when stock is out from buying range and I would not help in her exist by buying at higher levels.
Not sure if Heritage Foods is a good investment idea, needs deeper analysis. The price to sales is no doubt attractive at 0.55 but Price to book value is 5.5, the Graham Number is only Rs 200 (stock price is 510) and the intrinsic value is just Rs 225.