Sukhjit starch & chemicals ltd a undervalued proxy fmcg play

Sukhjit was born in the year 1943, Two discerning young enterpreneurs having spotted the immense potential of the wonder grain "MAIZE", decided to set up a Corn Wet Milling Facility. After due diligence, they chose to set up the plant in a small town-ship called Phagwara in the state of "Punjab & East Punjab Union" also known as the Granary of India. thus giving Birth to .... "The Sukhjit Starch & Chemicals Ltd."

Sukhjit has since grown by judicious and innovative utilisation of its unique traditions to meet the challenge of the future, from a modest begining of 1800 TPA Corn Grind in 1943 to over 200,000 TPA of Corn Grind spread across Four manufacturing Locaions within India and is in the pocess of expanding capacities to breach the 300,000 TPA corn Grind mark by the end of 2009. Sukhjit is a leader in its field and always at the forefront amongst its peers.

Sukhjit's technical expertise of more than 60 yers ensures optium adaptation to end use. Apart from Native Starch, The Company manufactures modified starch, dextrine, Liquid Glucose, HMS, Maltro-Dextrin, Mono-Hydrate Dextrose, Any-Hydrose dextrose, sorbitol-70% Solution and various By-Products, catering to a wide spectrum of Industries.

The Group is headed by an experienced Board of Directors and managed by highly skilled and capable Professionals. A double pronged approach using State-of-the-art technology as well as exploiting indigenous potential is the Company philosphy that has served it well. Years of research and careful Co-Ordination of methodology has resulted in qualitatively superior products meeting striengent customer norms, manufactured by cost effective production techniques.



Future OutlookThe Quest for growth and constant search for excellence both in terms of performance and in breaking new grounds is truely reflected in the company's Philosophy. As the Economy enters the next phase of sustained growth, Sukhjit sets out on a new journey by exploring freash possibilities such as working with alternate commodities - Wheat, Rice and increasing its portfolio of value Added Products HFCS, Sorbitol Powder, Functional Starches, Grain based Alchol, Feeds, Pet Food, Bio-Fuel etc.

Presently quoting around 245 and market cap of around less than 200 cr they have debt of around 120 cr for there food park interesting here is once the food park starts they will have storage capacity for the raw material ie corn year around which will enable them to increase the ebita margins even an 200 basis point will make a huge impact on the bottom line
Secondly the clients are major fmcg players and big pharma names they have good capacity for liquid glucose dextrose and starch derivative market is expected to grow at 12% cagr like China.

The management has nearly 4 decades experience mr l.k.sardana has vast experience in this field they are located in Himachal, Andra, Punjab And West Bengal and one more interesting thing they are consistently paying dividend for last 4/5 years improving there gross block.
Starch derivative market got into wrong side of the investors mood because of Riddhi episode but with a huge potential growth and low valuation and a honest management seems to a potential proxy for
FMCG
Invite seniors comment
Disl. Invested a tracking qty

 

Looks good

10 years story in a nutshell ....




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Please guys post your comments

[PPT]Investor Presentation 2015 - Sukhjit Starch & Chemicals Limited
www.sukhjitgroup.com › images › sukhjit
➢ First entry mover advantages: One of oldest producer of Starch in India and third largest in India as per production
➢ Long lasting relationship with biggest brands and end users
➢ Consistent expansion results in huge jump in capacity from 1800 TPA in 1943 to over 4 Lacs TPA in 2014-15
➢ Diversification across customers and end-markets
➢ Strong management team with proven track record
➢ Consistent & uninterrupted dividend track record for the last four decades
➢ India with its huge population base and low consumption levels offers a massive opportunity to capture

➢Change in Consumer behavior with respect to habits & patterns of food consumption

➢Packaged ready-to-eat food is the order of the day due to ready OTC availability: Increase in requirements of modified and value-added starch products i.e. its derivatives, in the packaged food industry

➢High-fructose corn syrup, also high-fructose maize syrup in other countries comprises any of a group of corn syrups that has undergone enzymatic processing to convert some of its glucose into fructose to produce a desired sweetness.

➢Beer industry substituted sugar with High Maltose Corn Syrup (HMCS) and Dextrose,
both derivates of Maize Starch.

➢Manufacturers of Aerated Drinks yet to substitute sugar with an alternative. Enquiry made by manufacturers of Aerated Drinks and Beer, as to an alternative of sugar has increased in last few years.
•Per capita consumption : Low per capita starch consumption in India of 1.5 kg as compared to global average of 6.1 kg: ¼ of the consumption as comparison to china.
•Abundant availibility of maize and promoting export of value added products: Maize production is expected to increase with higher yield
•Food/Pharma applications: High price of sugar leading to search for its alternatives in food & beverages industry Steady requirement for glucose.
•Rising health consciousness among consumers leading to a higher appreciation of nutritional superiority of products using corn starch & derivatives
•New industrial applications: Modified starch suited for various specific applications resulting in higher efficiency and better quality of end products. E.g. application of cationic starch in paper industry is resulting in lower fiber loss, better printability, etc. Applications of PGS in drilling *New use for starch in manufacturing ethanol

 

• The cash flow and net block details
  
  Fy. 2011. 2012. 2013. 2014. 2015
  Oper cash flow. 45 cr. 36 cr. 15 cr. 35 cr. 62 cr
  
  Net block. 106cr. 112 cr. 180 cr. 198 cr. 217 cr
  The Opm was 18% in 2011 when the corn prices were ruling at present level and last 4 years Opm is around 11/12 now they have the food park which give them the storing ablilty and the corn price are stabilising they have gone farmer education and co farming of maize so with fy 17 revenue expected around 600 cr if the Opm comes upto even 15/16% industry average ( for by products liquid glucose and sorbitol out of 550 cr revenue liquid glucose comes around 200 cr sorbitol 40 cr and by product around 120 cr). At 15% Opm we can expect around 100 cr EBITA and EBIT of around 65 cr if things go smooth we can see some real jump in net profit backed by good cash flow
  Interesting they have consistently paying dividend for last 8 years and this year it is around 50% promoter holding around 60% HNI holding 10% total eq 74 lac so only around 10/12 lac floating share.
  They have not diluted the equity in the past no pending warrants or preference capital.
  They have good clients like zydus Cipla in pharma and Britannia Dabur Colgate in FMCG
  Present price is quoting less than 10 PE and less than 7 PCF and less than 1 book value. The debt is around 160 cr this year reduced to around 120 cr
  Seems interesting please post your comments
• But for sure something is cooking in this counter
  Regards
  Disl invested a small qty

 

Government allocates Mega Food Park project to Sukhjit Starch & Chemicals
Monday, 13 April, 2015, 08 : 00 AM [IST]
Our Bureau, Mumbai
Sukhjit Starch & Chemicals Ltd, a leading starch manufacturer, has been awarded a Mega Food Park project in Punjab.

The ministry of food processing industries (MoFPI) had received 72 proposals both from state governments and private players for 17 food park projects. Out of these, seven projects were allocated to state governments and 10 to private players.

Sukhjit Starch & Chemicals Ltd, Phagwara, was among one of the private players, which were awarded the projects. The commissioning of the park will be undertaken by the company through a separate SPV (special purpose vehicle), which may be its subsidiary company or an associate.

The Mega Food Park will be set up under the policy /provisions governing Mega Food Parks issued by the MoFPI, on a separate piece of land measuring about 55 acre at village Rihana Jattan, Tehsil Phagwara, district Kapurthala, allotted to the company on a long-term lease basis by the Government of Punjab. The SPV will create common facilities for various food processing units like site development, internal roads, drainage, warehousing, factory buildings /sheds for medium & small enterprises (MSEs), effluent treatment plants, laboratories, weigh-bridges, captive power plants, steam generating units and so on in the Mega Food Park, entailing an investment of about Rs 125 crore.

Speaking on the achievement, I K Sardana, MD, Sukhjit Starch & Chemicals Ltd, said, “The company has achieved a remarkable step and I believe this particular project will take the company to next phase of growth. Punjab is among the 12 states, which have been termed as potential location for setting up a park by ministry of food processing industries. Moreover, the proposed food park would not only propel agro industries in the state but also richly benefit the farmers of Punjab and neighbouring states. The Mega Food Park Scheme, based on cluster approach, is modelled on hub and spoke architecture. It aims at facilitating the establishment of a strong food processing industry backed by an efficient supply chain, which includes collection centres, central processing centre (CPC) and cold chain infrastructure.

The scheme envisages one time capital grant of 50 per cent of the project cost (excluding land cost) subject to a maximum of Rs 50 crore.
Now the storing portion of the food park is ready in Phagwara which will enable the company to source raw material at better price hope this coming qtrs will see huge improvement in opm

 

Where did you manage to get the 10 year story - seems very good & could be useful if such data would be available in that format for other stocks? Thanks.

 

Sukhjit Starch and Chemicals :-
A very good company for long term investment -

Market Cap.: ₹ 182.54 Cr.
Current Price: ₹ 247.35
Book Value: ₹ 303.07
Stock P/E: 7.92
Dividend Yield: 2.02%
Face Value: ₹ 10.00
Listed on BSE
52 Week High/Low: ₹ 280.00 / ₹ 217.50
PEG Ratio: 0.76
Return on equity 5years growth: 0.53%
Return on equity: 12.27%
Debt: ₹ 165.02 Cr.
Debt to equity: 0.82
ROCE3yr avg: 14.92%
Profit growth: -0.65%
Price to Cash Flow: 2.92
OPM: 11.10%
Price to Free Cash Flow: 15.52
Promoter holding: 60.67%
Unpledged promoter holding: 60.67%
Investments: ₹ 14.04 Cr.
Return on capital employed: 15.18%
EPS: ₹ 31.23
Dividend yield: 2.02%
Graham Number: ₹ 461.48
Enterprise Value: ₹ 326.93
Intrinsic Value: ₹ 381.99
Price to Sales: 0.32
Industry PE: 0.00
Industry PBV: 0.00
EPS last year: ₹ 31.44
Expected quarterly EPS: ₹ 11.83

Stock is trading way below its Graham No, Book value and Intrinsic value.

 

The stock is not very liquid, average trading volume 1000 shares approx. Is it a concern? @Tilak Sharma