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|
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!